HEALTH INSURANCE FOR THE SELF-EMPLOYED

Becoming self-employed often means leaving the comfort of employer-provided affordable and easily obtainable health insurance. The following tips may save you some of the frustration you may encounter as a self-employed individual in the market for health insurance.

Do your homework – Research the company and policy thoroughly before buying insurance and you may save hundreds of dollars yearly. Here are some guidelines to consider….

• Become familiar with the different policies available. Being ignorant will not help you in your decision-making. You have a wide range of resources such as the Web to determine the pros and cons of each policy. You may even qualify for subsidized insurance through a state or federal insurance marketplace.
• If you have employees – see if a SHOP group policy obtained through a state or federal marketplace meets your needs.
• Determine the companies which offer the type of policy that best fits your needs. After you have decided on the type of insurance you need, research the agents and local companies that offer the policies you are looking for.
• Obtain in writing what the policy will pay for and what it won’t. The description of the plan needs to include the total out-of-pocket expenses you will be liable for and the coinsurance limit. In addition, request a detailed explanation on reimbursement of office visits, prescriptions and emergency room visits. It might also be helpful to find out the hospitals and medical groups included in the plan’s coverage area and the reimbursement percentage of each one.

Make annual or semi-annual payments of premiums. Ask your agent about service fees and discounts. If you pay annually or semi-annually, the service fee may be waived, and you may receive a discount.

A higher deductible should be taken into consideration. You may want to consider changing to a higher deductible if your family is healthy and has been for a number of years. A higher deductible could significantly reduce your premium. Plans with deductibles over $1,300 for a self-only plan or $2,600 for a family plan that limits out-of-pocket expenses to $6,550 for a self-only plan or $13,100 for a family plan may qualify you to have a health savings account to which you can make an above-the-line tax deductible contribution of up to $3,350 or $6,750 for a family plan (a higher contribution is possible if you are age 55 or older). These amounts are for 2016 and are adjusted for inflation. Check with this office for amounts for other years.

Participate in an independent group plan. To help lower the overall cost of insurance premiums, most self-employed people join associations to enroll in a group health plan. If an existing group health plan is not available, consider starting one within the trade association with which you are affiliated.

Tax Deduction Considerations – A self-employed individual may deduct, in computing adjusted gross income, amounts paid during the tax year for insurance that constitutes medical care for the taxpayer, spouse, dependents and any child of the taxpayer who hasn’t attained age 27 as of the end of the tax year if certain requirements are satisfied. A “child” includes the taxpayer’s child, stepchild, legally adopted individual, an individual lawfully placed with the employee for legal adoption, and an eligible foster child. There are no other qualifications other than being the taxpayer’s child; thus income or marital status has no bearing.

If the self-employed person considers these issues in the initial process, finding an affordable and convenient health insurance should be effortless. Contact this office for further assistance.