Health Insurance and the Web Worker

30 Comments

For web workers, and anyone self-employed, obtaining affordable and comprehensive health insurance is one of our biggest challenges. Don’t put it off…you never know when a catastrophic illness or accident will affect you or your family. Last night in his State of the Union address, President Bush introduced a plan to try and make it easier for individuals who don’t have insurance through employers to get covered. Without getting political, is it enough? Depending on where you live, Individual market health insurance for a family of four can cost $1,000 per month or more, and typically offer higher deductibles and less benefits than group-purchased plans through an employer.

While we watch this insurance-reform-through-the-tax-code wind its way through the political process, there are some resources online to help us make insurance decisions today. Apologies to our international readership, this post only applies to web workers living in the United States. If you live outside the US, and have tips to share, please leave a comment.

Steve Case’s new Revolution Health website, currently in public preview, has some helpful and clear information available on the subject. Read GigaOm’s coverage of Revolution Health here.

You enter your zip code and some data about yourself and the members of your family you want to cover, and the site clearly lays out plans that may be available. Unfortunately, the comparison service does not currently work in HI, WV, VT, RI, ME, OR, MN, MA or NY. If you live in a searchable state, it serves as a good starting point. Results may vary. For my own zip code, only one provider’s plans were listed. This is similar to other insurance search/comparison sites such as ehealthinsurance.com. Revolution Health will be adding broker services this year. In the meantime, the site’s educational articles on insurance are very easy to read and understand.

The State Coverages Initiatives website has a great deal of information on specific insurance programs that may be available in your state, including group purchasing arrangements for the self-employed and small business owner. Don’t miss their state coverage matrix which lists options state-by-state.

The Health Insurance Resource Center is another easy-to-understand site with a special section to address the needs of the self-employed.

You might want to look at the associations and professional organizations you belong to. Many are connected to local brokers who may offer discounts for members, or they may be purchasing association health insurance directly. Look for larger organizations that serve a local audience, such as a Chamber of Commerce. Step cautiously, as there have been some scandals with disreputable companies here. Check credentials, and talk to others.

Once you’ve found an acceptable insurance policy, talk to your accountant about the tax implications. Did you know that if you’re self-employed (and turning a profit), you can deduct up to 100% of your insurance premiums on your return?

AllFreelance.com has compiled some resources for getting quotes and information on health insurance for the self-employed.

There are a lot of issues around insurance that are too complicated to cover here. Do your homework and talk to brokers and other professionals. Revolution Health has some tips here. Don’t rely on the Internet alone to answer all your questions.

Web workers, how are you handling the challenge of health insurance? Do you think the President’s new plan will help?

30 Comments

ronaldfilian

Self Employed..Get the HDHP HSA plans, with any reputable insurance company. A HSA plan with your helath insurance plan (HDHP) will give you additional tax deductible benefits. and you can shop online Ron

Heath

Yes it does sound quite easy to quote and apply through a site like ehealthinsurance but easier is not necessarily better. Take your time and read what you apply for, the people that price shop and go for the lowest rates end up with coverage that has many holes in it. For example, if you pick a plan that has a very attractive premium it may have no brand Rx coverage…in this case you would go bankrupt if you ended up with an illness that required expensive brand name drugs.

Heath

Make sure to read what you apply for so your coverage does not leave you hanging when you need it most!

trademark registration

This is actually a very big issue right now. It’s very difficult to obtain quality health insurance for us “web workers”. There are a lot of options, but how do you know which are good? It’s like a shot in the dark, almost. Sigh.

lkeyes

My wife and I have a subchapter-S corporation, and we get coverage through our local Chamber of Commerce, which has a CIGNA plan. There are various rates and deductibles; we use the medical savings account version with a $2500 deductible (each) at $535 per month (new rates as of 1/2008) for the two of us. Worst case, then, is that we could be out $5000 on top of our premiums of around $6,000. The monthly rates have gone up 14% and 8% per year in the past two years.

With the MSA you can add up to the deductible each year; and if you don’t spend the money on medical expenses you get to “keep” it, or like an IRA. All contributions to the MSA are deductible, and the as of this year, the full amount of the fixed premiums are also 100% deductible. (Finally).

The MSA route is probably a viable way to go, especially for younger workers without families who may not use the deductible. For us middle-aged folks, it is less attractive, as we are finding that we are spending close to the full deductible amounts each year for both of us.

I also have a State Farm disability policy, and a Mutual of Omaha accident policy. which pay (partial) salary replacement and hospitalization for accidents respectively. This adds another several hundred in premiums each year.

Dental and eye doctors are paid from the MSA.

The whole system is absurd. We pay almost double our mortgage payments each month, with the cost rising each year. Any transaction causes piles of paperwork, often months after treatment. When I lived in Canada and Europe, I experienced their more socialized systems, which far superior for routine treatment and which included things like free rides home from the hospital after treatment, and even house calls (!)

Kate Murphy

I think it’s really helpful that sites are being created where you can compare prices on medical procedures, especially at a time when health care can be so confusing. I also found another site, http://www.healthplanone.com, which is a health insurance broker that allows you to compare plans side by side in order to find affordable health insurance

Suzanne

I work at eHealth and was just notified eHealthinsurance was just nominated for a webby award for the People’s Choice Award in health insurance. This is a great opportunity for consumers to get their voices heard. You must vote before April 20th.

Here’s the link: http://pv.webbyawards.com/

whilevegassleeps

all I know is that insurance is insane. I just got one quote for my partner and I for about $400 per month. The deductible wasn’t crazy high, but it was bad enough. I hate that there’s a “penalty” in this country for being self-employed. :(

-=- christopher

my Las Vegas blog is over here

Ronnie Ann

I have been listening to radio discussions of the new plan and people supporting it keep saying freelancers currently get no deduction for their premiums. I don’t think that’s exactly true, since there is some deductibility for those of us with large enough healthcare costs who itemize or people who technically have the plan set up as part of their business and make a profit. (Not being an accountant, I may be off on this, but I think this is right.) That said, access to good healthcare for freelancers is a huge problem and President Bush’s plan offers little reprieve. Many freelancer’s barely make enough to behefit from deduction-type benefits. (By the way, Dave Notik is right about Freelancer’s Union in NY. It is great and needs to be cloned in other states.)

I am especially concerned by the hidden time bomb called the Alternative Minimum Tax (AMT), which has slowly been trapping more and more people. Basically, there is a tax that hits you at a certain income level and, no matter what deductions you think you are entitled to, this tax can force you to pay the formulaic minimum. I would imagine this would include the new healthcare deductions that our president claims is designed to help so many. Just something to watch out for as inflation pushes more of us into the AMT trap.

Jason

I personally use a plan with a very high deductible ($5K). It is a PPO plan. In the end it works out that if I need to use medical to the max that year I’m out about $1500. But if I don’t I’m a couple grand a head. Use it wisely, I did have a broken bone a couple of years ago that happened to stretch out from December of one year to January of the next, that’s right $10K in medical bills. It’s a gamble for sure.

Mary Deaton

Marry someone who works for an employer! Okay, that is not really a good way to solve the health insurance problem. I found that out when my husband was “down-sized” and thought he, too, should become a freelancer. Never mind that just our COBRA payments were $860 a month; to get that same coverage once COBRA expired was going to cost in four figures.

Web workers should not wait until they need health insurance to get some. At minimum, you need to have catastrophic coverage in case you end up in the hospital from an accident or serious illness. This can cost under $100 a month.

For long-term reasons, you also need a history of health care coverage to be able to upgrade to higher levels of benefits in many insurance companies. Currently covered individuals often get better rates than those who have no history of health care coverage.

If you are covered by a spouse’s insurance, you have health care coverage history. You should find out what the costs are to convert to private pay with the same company if your spouse leaves the company or if you leave your spouse.

I wouldn’t hold my breath waiting for the politicians to provide universal health care, or even any substantial help.

Mike Gunderloy

Independent Web workers in Washington state doing anything software-ish may want to check out the Washington Software Alliance – you can get into their group Blue Shield as a member firm, and you can be a member firm with as few as one employee.

John Watson

If you are reasonably healthy, it’s easy to choose a plan with a high deductible and get a huge discount on your monthly rate. You pay more each time you make a visit to the doc but the monthly savings more than make up the difference.

Pam

I have a lot of questions about this plan. Why do I get a tax break if my employer is providing insurance to me? I don’t need the break, it’s covered, right? What tax bracket do I need to be in to benefit from this additional tax break? How will employers respond to this break to their employees – will this encourage them to pass the costs on to the workers? The 4500./60k tax break is fine for families that earn that much, what about lower income families? Will they earn the same tax credit and more importantly, given their income level, will they be able to really use that break to pay for their coverage? With all these additional tax breaks, where will the funding come for the proposed basic health plans?

I’m not expecting WWD to answer these questions, but I do hope that those who are working on this new proposal are asking them. Personally, I don’t need more deductions, I max out on them already. I need an affordable complete plan that offers better coverage (dental and optical, anyone?) without dinging me with copays, prescription costs, high deductibles, rejected claims due to complex referral rules…and so on.

JP

I’m a US citizen web working in Central America. Does anyone know of any reasonable plans that permit you to live out of the US?

Neal Watzman

I’ve had my FileMaker Pro consulting practice for almost 20 years and during much of that time have purchased my own health insurance. As mentioned it was frustrating and expensive. I dreaded the annual renewal because rates would go up hundreds of dollars and I’d often waste a lot of time contacting agents and searching for new plans that I could afford.

Two years ago, my wife found a full-time job with a local school district that offered excellent coverage. For the first time our family had dental coverage in addtion to only a co-pay rather than a high deductible. What a savings!

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