Insurance for the self-employed

Image courtesy of and Stuart Miles


I really want to start my own business, but I’m scared to death of giving up my health insurance. I know the Affordable Care Act is currently under attack, and I just don’t want to take the leap with something so important hanging in the balance. What would you recommend?


Ah yes, Insurance. It can be tricky to navigate once you’re outside the safety net of an employer, but there are a few options that are available to you. And truthfully, there is nothing wrong with staying in your job while you build a business — Especially if you have health concerns that necessitate consistent insurance. Yes, it may take a little longer for you to launch your company, but when you are ready to make the jump, you do actually have a few options in addition to the Affordable Care Act (ACA), also known as Obamacare.

Enrollment periods for the ACA generally open towards the end of the year. If your situation changes, (ie: you get laid off, you move, etc) you may be able to enroll or change your plan outside of that period. You can learn more at or if your state has it’s own marketplace, you can contact someone there for information. For example, in Washington state, we have, where you can speak to a real person to get help and guidance.

If you find that those options don’t meet your needs, there are other ways that a small business owner can get insurance the insurance they need for an affordable price. Remember, no matter which path you take, insurance costs can potentially be tax-deductible as a business expense!

High Deductibles Increase Your Monthly Cash-Flow

Erik Lehtinen of Integrative Wealth recommends high-deductible plans to bring down the monthly cost of insurance premiums. The higher your out-of-pocket expense for any kind of claim, the lower your monthly rate will be. This is true with any health-care plan, no matter where you sign up.

To further decrease costs, if you are able to forego preventative or maternity care and just receive catastrophic insurance for emergencies, your premiums will be much lower as well.

Catastrophic Insurance (High-Deductible Health Plan — HDHP)

Catastrophic Insurance is just that: for emergency use only. If you get the sniffles, or want a cosmetic procedure, chances are you won’t be covered. However, if you get mauled by a lion at the Zoo, or otherwise encounter an accident, the insurance will cover the necessary expenses. Each company that offers catastrophic insurance has it’s own guidelines, stipulations, and requirements, so be sure to read through your plan thoroughly and ask questions.

Barry Maher is a self-employed speaker that prefers his catastrophic plan. Although it has a $5200 deductible, it allows him to have a Health Savings Account for non-emergencies. This way, he can use his HSA for minor illnesses, and to pay the deductible of the HDHP in the case of a true emergency.

Health Savings Accounts (HSA)

Health Savings Accounts are available to those who enroll in a catastrophic, high-deductible health plans (HDHP). Money deposited into a HSA is not subject to federal income tax at the time of the deposit, and funds roll over year to year if they are not spent. These funds are only allowed to be spent on qualified medical expenses, but without federal tax liability or penalty. This also includes medications with a doctor’s prescription. If you are collecting federal or state unemployment, you can use your HSA to pay your health insurance premiums.

If, at some point, you lose your HDHP insurance, you’ll still have access to your HSA, but won’t be able to contribute additional money to it. In the case of death, you can name a beneficiary.

Using Auto-Insurance as Catastrophic Insurance

Talk to your car insurance provider to see what kind of medical benefits they offer if you get into an accident. This option is good for people who live a healthy life, but want to be protected while out on the road. Beware: even if you get hospital coverage and loss wage coverage due to an accident, this type of insurance won’t help you if you get an illness. This is purely accidental coverage.

Generally, auto insurance coverage applies to the injured, no matter who was at fault. Additionally, automobile medical insurance can pay for, partially or completely, your health care insurance premiums. Medical payments through an auto insurance plan typically over doctor visits, hospital visits, surgery, x-rays, EMT and ambulance fees, nursing services and care, prostheses as well as funeral costs.

Health Insurance Through Memberships

The self-employed can seek insurance benefits through a variety of membership organizations. These organizations pool together their resources and are able to get discounts on premiums and care that individuals don’t have access to.

Members CU, a Credit Union based in Traverse City Michigan, offers a variety of health, auto, and life insurance to its members. If you’re currently a member of a credit union, check to see if they offer similar benefits. (It’s another great reason to move your money from big banks!)

The National Association for the Self-Employed offers group health benefits for its members, as does the AARP.

The Alliance for Affordable Services represents nearly 80,000 individuals and small business owners nationwide and provides discounts on legal, health, and personal financial services.

Get the discount!

You may be surprised how many low-cost and free options are available to you…For example, many dental schools offer free or reduced-cost cleanings, exams, and procedures. And Planned Parenthood has been a huge help in assisting young women and men with basic health screenings and exams.

Bartering allows you to trade your businesses goods and services with other members of a bartering club. If you offer graphic or website design, you could trade that with an chiropractor or opthamologist for health services.

These bartering services could be run through your local chamber of commerce, or you could sign on with a national organization like The International Reciprocal Trade Association or the National Association of Trade ExchangesCraigslist is another place you can find people to swap services with under the “Barter” heading.

Amy Rose Herrick, ChFC was successful with this method, stating, “We have used a barter network to pay for about $10,000 braces on two children too over a couple of years time and general dental cleanings, crowns and fillings for another perhaps $3,000 or services used.”

Also, many doctors and clinics offer discounts to patients who pay cash, instead of go through their insurance provider. You just need to ask!

“I have found that my doctors offer lower fees for self-paying patients (at least half of what they charge insurers)” discovered Becky Meyers of Magnolia-Sky “Additionally, my pharmacy signed me up for discounts through programs they have, which has saved me a bundle of money on prescriptions, two of which I take on an ongoing basis.”

Finally, take advantage of the daily deal sites. Many times you’ll see chiropractic adjustments, massages, dental visits, and health-club memberships at deep discounts. Health care isn’t just about protecting you when you’re sick, but keeping your body in optimal shape to prevent illness in the first place. Groupon and Living Social all offer daily deals on a wide variety of products and services.

Need more information? Visit the The National Association of Insurance Commissioners (NAIC) website: Insure U for Small Business. They provide helpful information and tips about insurance for owners of small companies and home-based businesses as well as changes in the health care laws.



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