Travel Tips

A Few Thoughts on Health Insurance

Without a doubt, the most frequently asked question I hear is, “What about health insurance?” While I understand why it comes up so often, it shouldn’t be the first concern when starting a business.

We all know that the health insurance industry has gotten out of control and even large companies have cut back on employee coverage. Your challenge as a self-employed person is to find the best deal you can—and then get on with the more interesting aspects of your business. Although I’m not an expert on insurance, I do have years of experience shopping for my own health coverage. Here’s what you need to know:

Think entrepreneurially. Health insurance is one of the costs of doing business. As an entrepreneur, you get to decide what benefits and perks you want to give yourself. Health coverage is just one aspect of the bigger benefits picture.

Go shopping. If you’ve always been covered on the job, you may never have done this. There are several Web sites where you can compare coverage and prices. Start at eHealthinsurance.com and Digitalinsurance.com.

Talk to an independent insurance broker, not just agents for a single company. A good one will help weed out the plans that don’t fit your situation. You can locate an independent rep via referral from a self-employed friend or in the Yellow Pages. Since these folks are usually self-employed themselves, they should bring insight to your special needs and concerns.

Also check out the coverage now offered by Costco, which may save you money.

Change your requirements. Instead of shopping for coverage that includes all those little incidentals like doctor visits, realize that your most urgent need will be for a large medical expense. I recommend that if it's appropriate (i.e., you’re in good health), your main need is for major medical coverage. Not only will you save enormously on monthly premiums, your out-of-pocket expenses will probably be far less than if you included those things in your coverage.

Be aware of the benefits. As a self-employed person, your health insurance premiums will be a tax deduction.These days, health insurance premiums for
self-employed people are 100% tax-deductible. So if you pay, say, $500 a month for health insurance and you're in the 25% tax bracket, that's a tax savings of $1,500.

A further help in the tax department is the new Health Savings Account, where you can make contributions, then reclaim the money to pay medical and prescription bills. It’s another tax deduction. If you factor the tax savings in, the true cost of premiums goes down.

Join a group. You may be eligible for membership in a professional association or alumni group which offers health insurance at group rates to its members. Even so, it makes sense to compare those programs with plans that you can purchase on your own. You may find a suitable plan for less money from an independent broker.

Review your plan periodically. I’ve changed carriers several times when premiums soared. While shopping for health insurance may not be your favorite activity, it makes fiscal sense to compare your plan with other options every year or so.

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Security is mostly a superstition. It does not exist in nature, nor do children as a whole experience it. Avoiding danger is no safer in the long run than outright exposure.

~ Helen Keller

Copyright © 2003-2005, Barbara J. Winter. All rights reserved.