Finding health insurance for self employment can be daunting. My goal in this article is to help you understand the cost of qualified health insurance, how to save money on health insurance, and other potential solutions for affordable health insurance.
Cost of Qualified Health Insurance for Self-Employment
My clients have an average health insurance premium per person of roughly $395 per month. Most self-employed individuals will qualify for savings, but $395/person is the average full cost of a plan. This consists of $0 deductible plans, high deductible plans, and everything in between. Regardless of the kind of plan they have, this can be a lot to justify. This average cost per person would mean that a family of 5 (2 adults, 3 kids) would be paying $1,975. That’s another house payment! The best way to offset this cost is to see if you qualify for the Assisted Premium Tax Credit to make the net cost as affordable as possible.
How to Save Money on Health Insurance
Most self-employed individuals/families will qualify for an Assisted Premium Tax Credit (especially with the new changes in the ARP Act). Advanced Premium Tax Credit is simply a government subsidy that can only be used towards the monthly premium cost of a qualified health plan. My average client qualifies for $379 tax credit which means that my average client’s net cost per person is $16 per month.
What if you are a high income earner and don’t qualify for the tax credit? If you have pre-existing conditions, then you are probably okay paying the $395 per person per month cost for a qualified plan (which covers pre-existing conditions). This could be your monthly cost due to your medical costs being higher than the premium you are paying. However, if you are a healthy person then you may want to consider other potential solutions for your health insurance coverage.
Other Potential Solutions
There are two other potential solutions you can consider. The first one is, Short-Term Medical Plans and the second one is, Health-Sharing Programs.
Short-term Medical Plans
Short-term medical plans can be a great option in most states. Some states do limit the coverage length to 6 months which makes them less than advantageous. However, several states allow for 12 month coverage. In case you become ill during that duration of time, you can easily switch to a qualified plan in the next AEP (Annual Enrollment Period). Prices do change throughout the year depending on when you sign up for them. Although Short-term medical plans typically don’t cover certain things, such as, preventative services, medications, or mental health, they are a good option for unexpected medical costs. They often require health underwriting and may not be the best option if you have expensive pre-existing conditions.
Health Sharing Programs
Health Sharing Programs are a type of program I certainly have mixed feelings about. Due to the rising costs of qualified plans, Health Sharing Programs became a popular alternative solution for those who did not qualify for a tax credit. If you are considering this type of program, it is important to understand that the only guarantee is that they don’t guarantee anything. Health Sharing Programs are not obligated to cover your medical costs if they don’t want to, even if you are paying them a monthly cost. It is important to understand that many health-share companies have gone out of business in the past several years. In this case, any unpaid medical bills are likely not going to be paid.
Another disadvantage is most health sharing programs require the member to pay up front for medical bills and will reimburse the member after a claim has been filed. Many families are left waiting a year or two or more for their health insurance bills to be reimbursed. This is not an ideal situation for catastrophic claims.