Considering Becoming Self-Employed, Know Your Health Insurance Options

At present there is the concern for affordable health care for all Americans.  Small business people and the self-employed are faced with expensive private insurance companies that charge exorbitant premiums for self-employed and small businesses. The self-employed and the small business owner are currently in a precarious position, one the one hand, unable to pay for high self-employed and personal health plans but making a living and therefore unable to able for state Medicaid plans.a

If you have left your current employer to start up your own business, chances are you have enrolled in the consolidated Omnibus Budget Reconciliation Act of 1985 better known as COBRA, the good side of this is that you are still covered for up to 18 months after you left your job, but the downside is that COBRA, is still very expensive. Since your employer is no longer paying the bulk of your premiums, which are in some cases up to 80 percent, you are faced with paying the entire cost on your own.

What happens if you decide not to take advantage of the Cobra Plan?

Yes you can purchase health insurance on the open market, as long as you are in good health and have not had any policies rescinded before, and oh yes your credit rating is good as well.  You will need to calculate how much money you can come up with out of pocket, should a medical emergency occur and then you would have to choose a plan that is as streamlined as possible for what you need for yourself and family. What you don’t want to do is not have coverage at all. You don’t want to risk your business and your life savings to a bankruptcy.  Nearly 60 percent of all bankruptcies in America happen because of the inability to pay medical expenses.  You do not want to become part of the statistics.

However, if you have COBRA now, you would have the same coverage that you had when you were employed.  If you have a pre-existing condition and the group policy you had covered that pre existing condition, it does not necessarily mean that once you go out on your own, it will be easy to get the same benefits in a private policy.  Some employers do not cover pre-existing conditions. You would have to make sure before the expiry of your COBRA eligibility what the state laws are and get an insurance advisor to help find a good health insurance private plan.

On the other hand, before trying a private plan, you may decide to take advantage of your spouses group plan after you leave your current job to start up your own business.  The advantage of this group plan is that normally health insurance companies cannot refuse you on a family plan, if you have a pre-condition, nor can they rate you, (increase your premiums based on that pre-condition).

Some states such as New York are known as guarantee issue states and these states cannot deny you or raise your health insurance premiums based on a pre-condition. However the conditions for coverage would still vary among these states.  For example the coverage may only apply if you are already covered with a policy somewhere else and are wishing to switch over to a guaranteed issue plan.