As a home-based business owner, one of the top challenges you have to face is finding affordable health insurance solutions for you and your family. Most health insurance plans for companies offer good rates for large groups. Individual plans are more expensive and this is one of the reasons why people stick to jobs they are no longer enthusiastic about – because the job offers health insurance coverage.
Entrepreneurs do not have this safety net and find it difficult to juggle their expenses in such a manner as to squeeze in an expensive individual health insurance plan. However, there are ways in which you can benefit from your entrepreneurial position and gain access to more affordable insurance policies for you and your family. It will not happen overnight, right after you opened your business, but with perseverance you will be able to cover your family’s future healthcare expenses.
These are some of the options which you should look into and choose the one which fits your situation:
1. Join Other Home-Based Business Owners
When you join forces with others, you will definitely gain negotiating power. As a single person, even as the owner of a LLC or S-CORP, you have zero arguments for negotiating terms and conditions to your advantage with insurers. As part of a group of, say, 15-20 entrepreneurs, all home-based business owners like you, the situation changes.
As far-fetched as it seems, it is perfectly legal to form a group with other people in your position and negotiate health insurance rates for the respective group. Insurers only care that they will have a significant group of people signing up and paying monthly premiums. To give your group juridical power, you can register it at your local chamber of commerce, alumni association or trade organization.
2. Join a Professional Association
Find out what professional organizations you are eligible to join and then start exploring the various options they have for members. Professional organizations do not exist only to add an extra line on your resume. Members actively assist and help each other, form business partnerships, and provide support (up to their abilities) in a similar manner to a trade union, and offer business and learning opportunities to its members.
3. Seek Small Business Health Insurance Plans
Some insurers will offer health insurance coverage for small businesses under the “group of one” structure. Its terms are slightly better for you than those of an individual health insurance, but still no match for those you would obtain as part of a larger group.
The next aspect you should consider, once you have selected an insurer, is the type of health insurance you want to opt for. There will be so many terms and acronyms thrown at you, that you will probably get lost in translation. Here is a quick and clear explanation of what you can choose from:
⦁ Fee-for-Service (FFS): with this type of health insurance plan you are free to select your hospital and doctor of choice. You will make your own appointments, pay for medical services out of your pocket and then submit a reimbursement claim to the insurer. This is the most flexible health insurance type from the point of view of freedom of choice, but also the most expensive;
⦁ Health Maintenance Organizations (HMO): with this health insurance option, everything is managed by the insurer. They schedule your appointments, select the hospital and the doctor who will see you, and determine the need for any medical intervention or treatment;
⦁ Preferred Provider Organizations (PPO): you get (somewhat) the best of both worlds with this plan. You will be offered a list of hospitals and doctors affiliated to the insurer and you are free to select one of them and make your own appointments.
There is one last option you should know about: the health savings account (HSA). This is not health insurance per se, but it is a special type of account where you can deposit pre-tax money, be able to deduct a portion on your tax return and use in case of incapacitating illness or urgent and expensive medical interventions.