Health insurance is a little bit different for those who are self-employed. A self-employed person is a freelancer, consultant, independent contractor, or any other self-employed individual who has no employees. You are still required to get health insurance and will incur a penalty if you don’t. The good news is that under most circumstances, depending on the health insurance provider’s definition and requirements, you are considered a business and can generally apply for coverage outside of the enrollment period.
Some insurance companies allow direct contracting of self-employed people, but some restrict direct contracting to companies of a specific size. Regardless, HSA, SBSB, and the Connector are available to you and offer a wide scope of plans that meet the Commonwealth’s minimum coverage requirements.
There is a hitch, though: You have to prove that you are a company. That means you are required to provide documentation, such as 1040 Schedule C or a Standard Industrial Classification (SIC) code, which indicates the company’s type of business. For instance, a consultant might use SIC code 8748 for Business Consulting Services.
The SIC codes, in addition to age and zip code, help dictate the cost of the premium.
The three preferred partners function a little differently when it comes to self-employed individuals. Health Services Administrators and Small Business Service Bureau consider you a small business, and you can apply for insurance at any time. There is a charge, though. HSA charges a yearly administrative fee of $125, while SBSB charges an $85 annual fee for one to four employees and $225 for five or more.
The Health Connector is a little different. The Connector serves as the Insurance Marketplace for the Affordable Care Act and offers insurance to individuals/families and small businesses. A self-employed person, however, is classified as an individual and not a small business. That person then is subject to the 60-day Special Enrollment Period and the yearly Open Enrollment Period.
A major advantage of the Connector, however, is that for those eligible, it can offer assistance in paying the monthly insurance premiums. This service can be helpful to independent contractors just starting a new business or going through a rough patch. Health, including health premiums, is one of a person’s top eight expenses. When you couple a hefty premium with housing, food, and transportation, the numbers add up quickly.
The Connector will assess one’s financial situation and family size to determine if assistance can deter part of the cost of the premium. Another advantage is that the Connector does not charge individuals or businesses a fee for its services.
It is also important to note that dental insurance is available through all the preferred partners at any time during the year.
So Many Choices
There are literally dozens of plans from which to choose. What should you consider when making a decision? Ask yourself the following questions:
Is your primary care physician or specialist in the network? Check the same for anyone who will be covered under the plan. This is an important step, as some doctors are no longer accepting new patients. Some plans limit their network to a specific set of hospitals as well.
How much deductible can you afford? The deductible is the amount of money you have to pay annually before the plan begins to pay for covered services and typically ranges from $500 to $3,000. The operative words here are “covered services.” If you receive care for services not covered—acupuncture, for example—the cost will not go toward your deductible. You have to absorb the entire bill for the treatment and still pay a deductible for future covered services until your deductible is met.
Also consider the benefits that are subject to deductibles. Some newer plans apply deductibles to office visits and even medications, so there will be more initial out-of-pocket costs.
What is the maximum you are required to pay before the plan pays 100 percent of covered services? For some plans this can exceed $7,000 a year.
What is the monthly cost? Remember you have to pay the premium whether or not you receive services.
There Is Help Out There
Finding the right plan for you can be time consuming. If you have neither the patience nor the time, you can use a broker at no charge. In Massachusetts, insurance brokers are more commonly referred to as producers. A list of licensed producers is available on the Massachusetts Division of Insurance website, which allows you to search by name, zip code, or license number. HSA, SBSB, and the Connector also have lists of producers licensed to sell their products.
The insurance plan has to work for you and meet your personal needs. For instance, if you are healthy and have few office visits, you might opt for a plan with a lower premium but higher out-of-pocket expenses. If you have chronic illnesses, however, such as diabetes or high blood pressure, and have multiple visits a year, a higher premium with lower out-of-pocket expenses may work better for you.
Choose wisely—generally, this plan is yours for a year.
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