Self-Employed? How to Pick the Best Health Insurance Plan
For many self-employed people, the prospect of health insurance is overwhelming, a task you’ll take care of “someday.” But going without health insurance is like leaving your house without wearing pants: not advisable. Yet arguably, one’s a lot easier to do than the other.
Or is it?
Health insurance may seem complicated, full of acronyms and industry-specific terms. But — surprise! — finding the perfect health insurance plan is easier than you think. Here, we cover all the basics so you can have coverage, too.
What Are the Different Types of Plans?
In this section, we’ll cover the different types of plans, who qualifies, and what’s covered or not covered depending on which you choose or are eligible for.
In-Network vs. Out-of-Network
Perhaps you’ve heard those terms, wondered what these networks are, and had no idea what it means to be ‘in’ or ‘out’ of one. A network is a group of doctors and medical specialists across medicine. They’ve contracted with insurance companies to provide healthcare services to those in that plan.
Doctors and other medical professionals are “in-network” when contracting with particular health insurance. If there’s no contract, they’re “out-of-network.”
- HMO stands for Health Maintenance Organization.
- HMO plans are a string or network of providers offering different specialties under that network’s umbrella.
- Individuals signing onto an HMO plan are usually only allowed to see the providers who are part of the network.
- An HMO plan will contract with out-of-network providers on your behalf. But that’s if you need a specialty service that no doctors or medical providers within their network provides.
In cases like this, you would need a referral, and then the provider would contract with the insurance company so you could receive care. These contracts between an HMO insurance and an out-of-network provider are “Single Case Agreements.”
- A PPO is a Preferred Provider Organization. A PPO plan has a network of providers. However, the plan does allow members to go outside the network.
Members should be aware that if they seek a provider outside the network, the insurance may reimburse them at a lower rate.
Medicare & Medicaid
- Medicare is an insurance program for those 65 and older and younger people with disabilities.
- Medicaid is an insurance program for lower-income individuals.
Both are run through a collaboration of the federal government and whichever state a person receiving the benefits lives in.
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What Are the Costs Associated with Different Plans?
Not all insurance plans are equal. For instance, some have lower monthly premiums and higher deductibles. Here, we’ll go over the different types. That way, when choosing the right plan, you can confidently pick one that works and maybe even save money.
Most insurance plans have a deductible. A deductible is an amount that you pay before the insurance kicks in. The deductible usually resets every calendar year. For example, if you had a $1,000 deductible, you would need to pay $1,000 worth of costs out of your pocket. After you meet that amount, your insurance will start to pay their portion for the rest of the calendar year.
Some plans have no deductible, and others have a $10,000 deductible. Specific plans may exclude regular wellness visits from the deductible. That includes a yearly visit with a primary care physician for preventative care. If this is the case, you’ll only pay your copay, regardless of whether or not you’ve met your deductible for the calendar year.
A copay is the fixed dollar amount you pay for every medical visit. For instance, if your copay is $15, every visit with a preferred provider within the network would cost you $15.
The copay amount is different depending on which plan you choose.
Copays may also apply to other things, like prescription medication.
Some people confuse copays with coinsurance. Coinsurance refers to a percentage of the health care costs incurred that insurance deems you responsible for.
Regardless of your plan type, you’ll pay a monthly premium. A premium is a set amount you’re responsible for, regardless of whether you seek medical care during that month.
The Affordable Care Act (ACA), also called Obamacare, opened up avenues for people who:
- Couldn’t afford healthcare
- They had previously been denied health insurance because of a preexisting condition.
The ACA allows these people to have health insurance and better access to care services.
The annual income determines the monthly premium for those who use the ACA to get health insurance.
Are you on the lower end of the income spectrum?
Then, a portion of your monthly premium is paid with a government subsidy.
Even those who receive health care insurance from an employer usually pay a monthly premium. This is deducted from their paycheck and reflected on their pay stub.
The amount differs depending on the plan and the number of family members receiving coverage under that plan.
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The out-of-pocket maximum is the full amount a person will pay before the insurance company reimburses medical care services at 100%. For some individual plans, that amount could be $10,000 for the individual and $20,000 for the family. The out-of-pocket maximum resets every year.
How To Offset Out-of-Pocket Costs
Some companies and membership groups help pay for the out-of-pocket costs, picking them up on your behalf. They may reimburse you for copays and the amount you owe towards your deductible. We also refer to this as “supplemental coverage.” Some also pay for lost wages due to an accident or other benefits your plan does not include, such as vision, dental, and even life insurance.
Taking Supplemental Coverage One Step Further
At Selfgood, we decided to take supplemental coverage one step further. As a result, our members get discounted dental, vision, and medical care. But as you’ll see, we didn’t stop there.
Here are some of our members’ favorite additional benefits:
- Unlimited Teladoc appointments
- Virtual mental health services
- Patient advocacy and negotiation services to lower medical bills
- Wellness tools and program discounts
- Unbeatable prescription drug and medication discounts
- Access to essential legal document templates
- Exclusive pet insurance offers
We aim to support you and your new small business or freelance career by providing an all-encompassing place you can rely on for everything that’s not directly related to your business.
Our members turn to us and our expertise when they need support. Now, you don’t have to spend valuable time researching or navigating the less enjoyable ancillary aspects of being self-employed.
We also offer supplemental benefits, which help fill the gaps when you can’t afford the best health insurance policy.
How Can You Pick the Best Plan for You?
All the terms we discussed earlier are essential because they’ll determine the type of plan you’ll choose.
In a nutshell:
Plans with a higher yearly deductible (the amount you have to pay out of your pocket before the insurance company pays) usually have lower premiums – the amount you pay each month for health insurance.
Plans with a lower deductible usually have a higher monthly premium. So how does this knowledge apply to you. How can it help you choose appropriate health coverage and save money?
Age & Overall Health
First, you want to consider your age and your overall health.
Many individuals who are young and healthy and don’t see the doctor regularly opt for an insurance policy with the following:
- Lower premiums
- A higher deductible
- A higher maximum out-of-pocket
The logic behind this is that their annual medical costs are meager besides wellness visits. They don’t regularly see a doctor or a string of specialists, so they don’t need expensive treatment or care. Therefore, spending more on a monthly premium for benefits they will likely not use doesn’t make sense.
Of course, no one can bank on their health. Cancer or other medical issues can always appear out of the blue, and as we all know, medical care isn’t cheap.
No matter which plans you opt for, you can always change them during the open enrollment period.
Older people — or those with a medical condition that needs to be managed with regular doctor visits and prescription drugs — usually choose a plan with a higher monthly premium but lower copays and deductibles.
You can choose the right plan depending on your situation and level of comfort. But, again, if you decide to switch your plan, you can during the open enrollment period.
You’ll find different options if you receive your insurance through the health insurance marketplace. These include “tiers,” such as gold, silver, and bronze.
- The gold plans are those with the highest monthly premiums. But they also have lower deductibles, copays, and maximum out-of-pocket amounts.
- Bronze plans have the opposite, lower monthly premiums, but come with a higher deductible and maximum out-of-pocket.
- Silver plans fall somewhere in between.
Where Can You Find the Best Health Insurance Plan for You?
Now you’re a pro – you feel comfortable with a plan with a low monthly premium and a high deductible. How does a freelance photographer, videographer, or welder seal the deal and get insurance coverage?
Well, there are a ton of companies that prey on people’s hunt for health insurance. First, they’ll ask for all your information, promising to give you an estimate of what to expect. But then they’ll bombard you with telemarketers calling, texting, and emailing you incessantly. To spare yourself from that, the best way to choose and secure a health insurance plan is to go to healthcare.gov. There, you’ll see all the coverage options in your state, and you’ll be able to choose the best insurance plan.
What About Vision and Dental?
When Can You Enroll?
Open enrollment happens once a year, usually toward the end of the year. However, you can enroll anytime if you don’t have health insurance. Your health coverage will usually take effect at the beginning of the following month.
Other situations or life events that allow you to make adjustments that fall outside of the open enrollment period are:
Why Is Health Insurance So Important?
Unforeseen medical expenses are one of the reasons many Americans end up filing for bankruptcy. The number has changed since the Affordable Care Act paved the way for more Americans to get insured. Yet, dipping into savings or taking out six-digit loans to cover cancer treatment can wipe out savings, college funds, and a good credit score.
Health insurance is not something a freelance barber, freelance hair stylist, or freelance bartender should go without. No matter how healthy you are, life comes with unforeseen circumstances—for example, tripping over a curb while engrossed on the phone and ending up with a broken wrist.
A Quick Recap
- HMO plans allow you to see doctors and specialists within their specific network of providers.
- PPO plans let you see both in- and out-of-network providers. However, they may reimburse non-network providers at a lower rate, and you may be responsible for making up the difference.
- Medicare and Medicaid programs give low-income or individuals with special needs medical care. They’re possible thanks to a collaboration between federal and state governments.
A plan with a high monthly premium usually has a lower annual deductible, copay, and out-of-pocket maximum. Therefore, this plan makes economic sense for those with medical conditions or who visit the doctor frequently.
A plan with a low monthly premium usually has a higher annual deductible, copay, and maximum out-of-pocket. Plans like this are typical for healthy people who rarely seek medical treatment beyond wellness visits. Instead, they hope to eliminate the total costs associated with medical care by paying less monthly.
Some assert that health is wealth, and we agree. We believe that for you to be able to live your dreams, build your business and flourish, you need to take care of yourself, too. We hope that you feel inspired and empowered and are doing what you can now to take care of yourself in the future. We’re here to support you, giving you the confidence and push to venture out and realize your full potential.
A Selfgood membership is there when you’re ready to explore your health insurance options. Learn more about our health & wellness benefits.