Self-employed include farmers, contractors and small
business owners, freelance writers, lawyers etc. There are some factors that
separate self employed health insurance from ordinary health insurance. Cost
- Self-employed health insurance is costlier than the one's provided through an
employer (like a company). This is because in larger groups the cost of
insurance gets distributed as compared to smaller groups. This is one of the
reason people are reluctant to go for self employment. There are ways and means
to reduce this cost which will be detailed subsequently.
Tax Benefit -
Fortunately the self-employed health insurance premium is 100% tax deductible.
The tax code makes it difficult for most people to deduct the cost of their health insurance premiums.
However, if you are self-employed, pay for your own health insurance premiums, and were not eligible to
participate in a plan through your spouse's employer, you can deduct all of your health, dental and long-term care
insurance premiums.
What's more, you can also deduct premiums that you paid to provide coverage for your spouse and dependents.
This is technically considered a personal deduction, not a business deduction, but it is only available to the self-employed.
Reducing Costs - The best way to reduce this cost is to go for family cover
in your spouse group insurance through his/her company (that is if your spouse
is working). Another way is if you employ between 2 to 50 people, you can go for
group insurance.
If you are leaving a corporate job you can opt for COBRA
(Consolidated Omnibus Budget Reconciliation Act). COBRA is a law that makes it
mandatory for your employer to provide the option of retaining membership in
their health insurance plan.
However you will have to pay the entire monthly
premium part which was paid by your company earlier. You may be surprised at the
high cost of the premium which may run up to 500$ a month.
Temporary Health
Insurance - If you are planning to remain self employed for a small period of
time and plan to join another company later, you can opt for a temporary
insurance. This is the cheapest type of health insurance available today.
However annually the premium keeps increasing as you grow older.
If you have none of the above ways to reduce insurance cost then the only way
is to go for standard individual policy. As mentioned earlier they are usually
costly but are very important for insuring the future.
