When you are starting a new business, you concentrate so very much on the details—location, organization, advertising and finance, to name a few—that your thoughts of health insurance might take a back seat. You know you should have it, but there are so many other things that you have to care of that it slips into a low-priority slot. When the dust settles, it’s time to revive it and take a good look at your options.
Your COBRA Option
COBRA or the Consolidated Omnibus Reconciliation Act of 1985 allows you to carry your previous insurance plan from your old employer for up to 18 months. You’ll notice a rather large increase in the premium price, however: You have to pay the full amount instead of sharing it with the employer. There is no change to the policy stipulations, though. It’s the same plan. The only thing that changes is who is ultimately responsible for payment.
Life Partner Option
Life Partner coverage is a second possibility. If you are covered under your partner’s health insurance policy, the basic coverage can be adjusted to include a family—you too—instead of just the partner. Premiums, deductible, co-pay and coinsurance amounts may change for family coverage, but you would have health insurance as well as your partner.
Individual Policy Option
An individual policy is also an option, but within that category there are two options for the self-employed. One option is a policy that is issued to individuals as individual entities: Your premiums, deductibles, coverage restrictions and limitations are based solely on your medical history and claim activity. Your financial risk is a burden carried only by you.
The second option can be described as a policy for a “group who are individuals.” This “individuals’ group” is constructed identically to the employer’s group policy. The members opt to share risk of others’ health claims, not just their own.
Every individual who purchases this group policy has the same group number, just like an employer’s plan, and has the same coverage and limitations as everyone else in that group. If the group experiences a lot of health claim submissions, the group could experience a rise in premiums. Your financial risk isn’t carried by you alone, but by others as well.
Association Policy Option
You might find a reasonably priced policy through an association, such as your local Chamber of Commerce or other professional organization. NAFE or the National Association of Female Executives might endorse a group plan for those who qualify. AARP is another possibility if you qualify.
The Small Business Service Bureau—not to be confused with the Small Business Administration—and the Freelancers Union both have health insurance options for the small business owner that are reasonably priced within the area of self-paid policies.
Guaranteed or High-Risk Insurance
First, guaranteed coverage is determined by individual states. Some require that insurance companies grant coverage to individuals who can pay the premiums, regardless of medical condition or history. Usually, premiums are expensive, and deductibles are high, but coverage is coverage, especially when you need it.
High-Risk pools are special group-type coverages where everyone with high-risk conditions share financial risk. Insurance companies that offer these policies are, in essence, segregating the financial drain from their other policy holders. The high-risk pool will cease to exist in 2014 under its conditional creation under the Patient Protection and Affordable Health Care Act. When it ends, those who were covered will transfer into the states’ health insurance system.
None of these options are as cheap as partial-premium payment through an employer for an individual plan, but they all offer the protection and peace of mind that comes with it.