MEDICAL INSURANCE FOR INDEPENDENTS

Whether you opt for an Affordable Care Act (ACA) plan or another option, it pays to know how to get health coverage when you’re your own boss.

Let’s say you decide to quit your full-time job with benefits and start your own business. In addition to finding the right desk and desk chair, you’ll need to start looking for a new health insurance plan.

When you work for a company, they choose the insurance plan you’re in and pay some or all of your monthly premium, or the cost paid for your health insurance. Plus, the human resources department is there to answer your questions as they arise.

It’s different when you’re self-employed.

Insurance brokers can explain the different types of health plans and help you find one that fits your needs. Whether you go with a broker or shop on your own, here are some things to consider when choosing a health plan if you’re self-employed.

Know how long you’ll need your plan

The first question you might ask yourself is how long you will need the plan. If you only need coverage for a short time, say, until you get another full-time job with benefits or qualify for Medicare, a short-term health plan might work for you.

Terms will vary, depending on the state you live in.

If you plan to stay self-employed long-term, you might consider getting your health plan through the Affordable Care Act (ACA) Marketplace . It is a website run by the federal government where you can buy health insurance. If you get a plan there, it might include a premium tax credit (a kind of discount) if you qualify.

ACA plans can be found at healthcare.gov or through your state’s version of the marketplace (sometimes called an exchange). You can also buy health insurance policies through a broker.

The best thing about ACA plans is that they must offer some coverage, such as preventive and emergency care. And they can’t deny you coverage or charge you higher premiums if you have a pre-existing condition, like cancer or diabetes.

Consider what kind of coverage you’ll need

The needs of a healthy young adult just starting a career will vary from those of married people with three children. Someone who doesn’t take prescription drugs regularly, doesn’t have a chronic medical condition, or visits the doctor only once or twice a year might choose a plan with less coverage.

Short-term plans typically have lower monthly payments than plans that meet ACA guidelines. But short-term plans may deny coverage for pre-existing conditions and set a maximum benefit amount (a limit on the services you can get that are part of your plan). You must answer medical questions to apply for short-term insurance, and you should check any plan you are interested in for its exclusions, limitations, and plan provisions before you buy.

In contrast, an individual or family who manages a health condition or seeks medical care several times a year might prefer the stronger coverage of an ACA plan. Those plans have to provide coverage for both preventive visits and emergencies.

Understand what’s on and off the network

Health insurance plans have a network that is made up of doctors and other health care providers who have a contract with the health insurance company.

Some plans have large national networks. Others limit the network to a certain geographic area or health system. If you travel frequently or have business in different states, consider plans with a nationwide network. Short term plans tend to have wider nets.

If it’s important for you to keep your doctor, double check that your doctor is in the network of the plan you’re considering. A network doctor accepts your health plan. You can call the health insurance company to confirm or check the website. However, if you see a doctor who is not in your network, you may have to pay full price for medical services.

Know what it will cost you

Your budget is an important factor when choosing a health insurance plan. And one economic aspect of being self-employed is that your health insurance premiums are 100% tax deductible. Check with your tax professional to see if you are eligible.

If you buy a plan through the ACA, you may qualify for a premium tax credit, which lowers your monthly payment. You may also qualify for what is known as a cost-sharing reduction, which helps lower your out-of-pocket costs. These could include things like your deductible, which is the amount you must pay before your insurance pays the rest. These could also include copays or coinsurance – payments made each time you receive health services.

Even if your household income is too high to qualify for a tax credit, you can still purchase an ACA plan and pay full price. Short-term care plans have lower monthly costs, but don’t qualify for tax credits.