Health - 10 Individual Health Insurance Tips

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Deciding what to do about health insurance benefits is often a great cause for concern for many would be entrepreneurs that are debating making the jump to being self employed. It often seems that there are so many options for a self employed person to choose from with group health insurance versus individual health insurance and association plans and discount cards and plans through the local Chamber of Commerce – the list just goes on and on!

Here are 10 things that you should know to help you save money on your health insurance plan and hopefully take a little bit of the headache out of your self employed health insurance search:

1. Be Tax Efficient – right off of the bat you should know how your particular type of business structure handles health benefits. For example, if you are self-employed as a sole proprietor and you make a profit for the year on Schedule C of your tax return then you can deduct 100% of your health insurance premiums on the front of your 1040 all the way up to your Schedule C net income. S Corporations, C Corporations, LLC’s and partnerships may have different ways to best be tax efficient when it comes to structuring a health benefits plan so speak with a qualified tax advisor so that you can plan ahead.
   
   
2. Consider an Individual Health Plan – individuals health insurance plans are usually about half the cost of a similar group health insurance plan; even if you are comparing plans from the same insurance company. Why is this? With a group health plan everyone is accepted while on an individual health insurance plan one must be somewhat healthy to be approved for coverage (unless that person is eligible for plan that is guaranteed issue by Federal law – a HIPAA health insurance plan). This seems counterintuitive as one would think that if you buy something in bulk that it would be cheaper but not so with health insurance. Consider the fact that with individual health insurance the insurance company gets to pick and choose who they will offer coverage to (the people that they think are the healthiest [least risky to insure]) while on the group health insurance side everyone is accepted.
   
   
3. Evaluate Your Health Status – knowing the difference in cost between individual health and group health brings us to the importance of knowing your health status. If you and your family are all the picture of perfect health then almost always you should apply for the cheaper individual health insurance plans (as long as you choose a reputable trustworthy company with comprehensive major medical plans).
   
   
4. Know How COBRA Works – COBRA health insurance is group continuation coverage that will be offered to anyone that leaves a company with 20 or more employees for any reason other than gross negligence. (Note that this is a simplified definition of how COBRA health insurance works and there are other ways to be offered COBRA and other important details so be sure and do a little digging if you find yourself wondering whether you should accept the COBRA offer). These plans can be quite expensive as they are still group continuation plans and of course your previous employer will not be kicking in any of the premium cost as they likely were before.
   
   
5. Don’t Fall for A Marketing Pitch – some insurance companies and associations will try and make you believe that their plans hold specials benefits for you and are designed just for the self employed. They will tell you that you can get special tax benefits by choosing their plans when in fact that is not the case. Remember, insurance rates are set by the insurance company and regulated by your State’s Department of Insurance so you can’t get a better “deal” on insurance based on where you purchase it from.
   
   
6. Consider a Medical Reimbursement Plan – health insurance benefits can be a great way to attract, reward and retain employees but don’t think that the only way to do that is to offer a group health insurance plan. You can also structure these plans to reimburse your employees for the much cheaper individual health insurance plans and still get the employer tax deduction.
   
   
7. Find Out if You Are Eligible for A Group Health Plan – insurance is regulated at the State level so the Pennsylvania health insurance regulations are different from the Arizona health insurance regulations and so on. In many states the minimum number of employees needed to form a group is 2. However, some states offer health insurance for groups of one as well. Just keep in mind that these group plans are guaranteed issue and are therefore great for those who have health issues and are unable to get individual coverage. If one is healthy then they will end up paying 2 to 3 times what they should just to get on a group plan instead of an individual health plan with similar coverage.
   
   
8. Understand How the HIPAA Laws Work – the HIPAA health insurance laws are designed to protect people who have done the responsible thing and kept their health insurance coverage but for reasons beyond their control have their current coverage taken away from them (the most common scenario is when someone elects COBRA coverage but after the COBRA time period is up [18-36 months usually] then that person cannot get coverage in the individual market with a regular fully underwritten individual health insurance plan so the HIPAA laws step in and give that person a guaranteed issue individual plan).
   
9. Consider an HSA – Health Savings Accounts are great ways to save money by having a lower monthly premium and also getting some very attractive tax benefits.
   
   
10. Compare Quotes – compare quotes from at least 3 different health insurance companies side by side to get the best rate. Stay away from indemnity plans and discount cards unless you are forced to go that route because you cannot obtain a full major medical health insurance plan.
    
    

Finding the right health insurance plan for you can be easy if you know what to look for, and you have good trustworthy assistance from a professional health insurance agent. Work closely with your agent and tell him your needs and requirements for a health insurance policy. Let him do the work in finding the best suitable plan for your situation.