Health insurance for the self-employed

Running your own business can be empowering, but it's important to make sure your health needs and the medical requirements for your family are met. That takes some investigating, but there are many affordable health insurance programs for the self-employed. Here are some tips to get you started.

 

Sole Proprietorship has advantages. When you establish a business as a sole proprietor, there are significant tax advantages. All depending on how you set up your business, you can deduct anywhere from 40 percent to 100 percent of your medical insurance costs. This creates opportunities for selecting from a wide variety of plans. They can include a "high-deductible" health insurance plan. You'll pay the first thousand dollars or more of your medical costs; after that, your insurance will pick up any catastrophic expenses you or your family incur. If you link your high deductible health plan to a "health savings account" (HSA), you'll get the added benefit of a 100 percent tax deduction for contributions you make the account. Plus, you can reimburse yourself for your out-of-pocket health-care expenses by tapping funds set aside in the HSA.

 

For the small business owner: insurance for you and your employees. The U.S. Small Business Administration recommends group health protection, either a traditional group plan or a health maintenance organization plan. Some plans offer medical self-care and health-promotion programs to encourage employees in healthy lifestyles.

 

A good place to check for affordable health insurance plans for you and tour employees is on the Internet. An insurance Web site can cut through the labyrinth that sometimes occurs when you're looking for a specific product or program. Internet sites also offer names of brokers who specialize in small business health insurance.

 

Check out professional organizations. Some business, professional and trade associations offer group health coverage to their members. That coverage is underwritten by a state-licensed insurance company. As a member of such a group, you are eligible to participate in the health plan and cannot be turned down for coverage because of your health status, says the National Association for the Self-Employed. Ask your local Chamber of Commerce or groups to which you belong whether they offer a group health plan.

 

Take advantage of U.S. government-approved Health Savings Accounts. In 2003, the use of Health Savings Accounts (HSA)s was made easier for small businesses and self-employed individuals to access. Endorsed by the U.S Small Business Administration (SBA), these accounts offer tax free advantages for the small business owner and sole proprietor. For example, 40 percent out-of-pocket medical expenses may be tax-fee under the HSA program, and routine medical costs can be covered by setting up accounts of $2,600 for an individual, or $5,150 for a family (indexed annually for inflation). Contact your local SBA office for more information.

 

SOURCES: Sole Proprietorships Defined,Inc.com,http://www.inc.com/articles/2000/05/19685.html; Small Business Insurance & Risk Management Guide,

 

Affordability in Health Care Survey - Trends in American Micro-Business (June 2002), National Association for the Self-Employed, Washington, D.C.; Update on Individual Health Insurance (Aug. 2004, revised), Kaiser Family Foundation/eHealthInsurance; The HSA Insider, Washington, D.C.; U.S. Department of Labor, Washington, D.C.; Council for Affordable Health Insurance, Alexandria, Va.; "Small Business and Health Care" U.S. Small Business Administration Publication