This is Part III in a series called Health Insurance for the Self-Employed: When doing what you love doesn’t come with health insurance. The posts in this series focus on the importance of health insurance and finding, evaluating, and enrolling in individual health insurance. I’ll also discuss strategies to save money and different ways to access health insurance or find health care.
What parts of a health insurance policy should I look out for? David Weliver from Money Under 30 wrote an excellent summary of the most important terms to understand. Here is a handy list of definitions by David, but definitely go to his website to see more in depth descriptions and examples:
- Premium: The monthly fee for your insurance.
- Deductible: How much you must kick-in for care first, before your insurer pays.
- Co-pay: Your cost for routine services to which your deductible does not apply.
- Co-insurance: The percentage you must pay for care after you’ve met your deductible.
- Out-of-pocket maximum: The absolute max you’ll pay annually.
Shop around and find at least two policies. Then compare and contrast their premiums, co-pays, and benefits.
Also, know what services the insurer will “cover.” Plan ahead. Know if you will regularly need a service, such as mental health counseling or physical therapy. Then look for the plan that has the best benefits for that service, such as the lowest priced co-pay per session, access to your doctor, or a greater number of covered visits per year. Some plans have a maximum number of routine services allowed per year.
How can I find out how much I would have to pay for health insurance? Whether or not you use any services, you will have to pay a monthly premium to the health insurance company.
Your monthly premium typically depends on your gender, age, state of residence, number of dependents, and whether or not you use tobacco.
I haven’t looked up the cost of health insurance since I graduated from college. That summer, I was between jobs and without insurance. I used ehealthinsurance to search for an individual policy. I signed up for one that cost $60/month. Then I canceled it as soon as my first job started and employer-sponsored plan kicked in.
Today I used the same website and entered some basic info about myself, listed above. I found fifteen policies, ranging between $286 to $500/month. The highest deductible for any of the plans was $2000.
Another place to find a quote could be The Freelancers Union. Joining the Union is free and is open to anyone who is an “independent worker.” I entered my old New York City zip code. My lowest premium was $235/month for a high-deductible plan of $10,000 per year. Depending on your state, health insurance may not be available for you to purchase through the union. But other insurance may be, such as dental, disability, and life.
Should I get a high-deductible plan? Generally, the higher the deductible and out-of-pocket maximum, the lower the monthly premium. Be careful. If your deductible is higher than you have saved or could reasonably save within the next year, then consider paying a higher premium that you can afford for a plan with a lower deductible that you’re comfortable with.
How is Obamacare going to change things? Starting in 2014, the Affordable Care Act (ACA) will make some big changes to your health insurance options. There will be government subsidies for health insurance depending on income. The Kaiser Family Foundation developed this subsidy calculator. You can also use the calculator to estimate how much you could spend on health insurance. There will also be a penalty for those who go without health insurance, payable at tax time. For excellent summaries on the ACA and how it may affect you: Karen Datko at Money Talks News and Karawynn at Pocketmint.
Do you have preexisting health conditions? Starting in 2014, no health insurance provider can deny you a policy or charge you a higher premium even if you have a pre-existing health condition. Period.
Are you 26 years old or under? You are eligible to remain on your parent’s or guardian’s health insurance policy. Even if you are married, unemployed, are employed and have insurance options through your employer, or file your own taxes.
Do you have a spouse or partner whose policy you can share? You may be able tag onto his/her employer-sponsored health insurance policy. Or you both could share one policy if you are both self-employed.
Health insurance can be costly. But in the next and last post of this series, I’ll discuss ways to save on your monthly premium without taking on too much risk to your finances.
Other posts in this health insurance series:
Part III: How much does health insurance cost? (current post)
Part IV: 8 ways to save on health insurance or health care (upcoming post)