Top 5 Health Insurance Tips For Self-Employed
It can be daunting to figure out how to ensure your family and you have health insurance. You don’t want unexpected medical costs that slow down your new venture. These tips may help.
Because of today’s challenging job market, more Americans start their own businesses and become “accidental entrepreneurs”.
Perhaps it should. You don’t want unexpected medical costs that slow down progress of your new venture.
Your health insurance covers more than just medical care. Insurance companies can negotiate lower rates with medical providers. You are also protected from financial losses due to injuries or accidents that could lead to your company going bankrupt. These are five money-saving strategies if you are looking for cheaper health insurance or are uninsured.
To ensure that you get the best possible health plan, you will need to look at all options available in your region. While you could purchase directly from the insurance company they won’t be able to compare their plans with other providers. When you shop online through a licensed agent like eHealthInsurance.com, you can compare plans from leading carriers in your area, compare rates and benefits, read customer reviews, and apply for coverage. Your state insurance department regulates the prices so you will pay the same monthly premium online as offline.
Many of today’s “accidental entrepreneur” were laid off recently by former employers. COBRA is a federal program that lets you temporarily extend your employer’s insurance. It is an attractive option, and COBRA premiums are subsidised by the federal government at a 65% discount. However, it could still be too expensive. LegalZoom’s eHealthInsurance partner has identified twenty states where families can save more than $500 annually by buying coverage on their own instead of signing up for subsidized COBRA. If you don’t have a pre-existing condition that makes it difficult for you to obtain coverage, it is worth considering your options.
Lock in Your Rate
Your insurance company could increase your monthly premiums if you are purchasing private health insurance. A “rate guarantee” is a way to temporarily protect yourself. You can ask a licensed agent for help in finding out which companies offer rate guarantee. Some companies may lock in your rate automatically for the first year. Other carriers might offer to lock you in for a longer term in return for an extra monthly fee. If you pay an additional $21, a carrier might extend your rate guarantee for 24 months. Make sure to do the math and compare your savings to a rate hike that could make your coverage prohibitive.
Take your Health Insurance Premiums off of your Tax Return
If you are self-employed in your state, premiums paid for your health insurance may be allowed to be deducted from your federal tax return as an ‘above line’ business expense. This means that you can not itemize. However, premiums paid in any month that you were eligible to join an employer-sponsored plan for health insurance cannot be deducted. Also, the amount that you are allowed to deduct cannot exceed your self-employment income for that year. Ask a tax professional for more information about the tax implications of different self-employment types in your state.
Take a look at HSAs
An HSA can be used to save tax and then add on to a HSA-eligible plan for health insurance. HSAs can be a good option for self-employed individuals for several reasons. HSA-eligible policies are major medical plans that offer a lower monthly premium than other plans. They often have a higher deductible and a lower monthly premium. These plans allow you to put a portion of your income into a savings account. You can earn interest tax-free, and then use the funds to pay for eligible medical expenses. The tax-free interest accrues from year to year. In 2021, the IRS will allow individuals to save up to $3,600 while families can save $7,200 in an FDIC insured health savings account (HSA).