I left my job and started my own business a little over a year ago. I have only a few months left of COBRA coverage. What are my options for getting health insurance to cover me and my family? Am I going to have to find a “real job” in order to get something affordable? I don’t want to go without insurance and I don’t want to give up on my idea.
Taking the Final Leap Into Business
Dear Taking the Final Leap,
Congratulations on starting your own business. It takes courage to do that.
To find all of your options for health insurance, visit the HealthCare.gov website. You will choose your state, and then answer a series of questions about yourself and your family. The website will then display the options that fit your circumstances in your state. It will also give you links to the programs available to you. It is an excellent tool that I highly recommend.
In some states, self-employed people can buy small employer health coverage. A small employer plan has several advantages over individual plans. The major advantage is that the small employer plan rate is not based upon your health. Rates also tend to be more stable for small employer plans. In addition, the small employer plan will be more similar to your former employer’s plan. Before looking at individual plans, make sure that the small employer option is not open to you.
Whether you end up with a small employer plan or an individual plan, make sure you consider plans that offer Health Savings Accounts (HSAs). These have great tax advantages, useful to a person who owns a business.
If your former employer was a large business, your COBRA coverage may have been cheaper than your options as a self-employed person. Brace yourself for the possibility of paying more and having a higher deductible or lower benefits. Your start-up business craves all of the cash you can get. So you may be tempted to buy a plan that has very low monthly cost, and very low benefits. The danger is that when you or a family member needs care, you will not have the money to pay your share of the bill.
The challenge will be to find a plan that does not drain your cash every month but also does not have a too-high deductible that could hit you when your business needs money.
I know you can meet this challenge – you are a small business owner!