The Fate of Self Employed Health Insurance Under Health Care Reform

It is challenging for self-employed individuals to apply for health insurance coverage because they are on their own. And they have to deal with it along with daily business operations. The changes that the health care reform brings, add to the uncertainty that self-employed individuals face. When the health care reform was new, there was a lot of speculation pertaining to self employed health insurance. But a year has passed and we learn more and more about the reform and its effect on health insurance plans.

We know now that the reform can be beneficial for you depending on the size of business that you have. If you are self-employed or a small business owner (you have less than 25 employees), it will be better for you to change to an  LLC (limited liability company) or be incorporated and offer health insurance to your employees. You can now be sure that you will be covered in a self-employed health insurance plan because the reform makes it easier and more affordable for you to acquire coverage.

Here’s how it will be beneficial to you:

• If you are a small business owner with less than 25 employees and you pay 50% of your employees’ premiums, you can get up to 35% tax credit.
• If you have just started to become self-employed, it is expected that you’re still having a hard time trying to afford to purchase an inexpensive health insurance coverage.  But starting in 2014, those whose income is 400% below the poverty level can get subsidies to help them afford to buy health insurance.
• You can be assured of coverage despite having pre-existing conditions. In 2014, insurers will no longer be allowed to deny or delay coverage because of a pre-existing condition. For children, this particular provision of the law already started as of September 2010.
• The establishment of health insurance exchanges per state or Small Business Health Options Programs (SHOP) will allow self-employed individuals and small business owners to purchase health insurance plans at lower premium rates.

The downside to the mentioned benefits is that most of the provisions of the reform didn’t take place until 2014, particularly the subsidies. Meanwhile, there is no financial assistance for sole proprietors to be able to afford health care. And since the federal government created a high standard of benefits package, self-employed individuals are expected to pay about 10% more on their insurance premiums.