The prolonged recession and slow recovery has created a brand new bunch of self-employed consultants and independent contractors. Along with the joys of trading long commutes for long hours working in your pajamas come some sobering realities. Paychecks no longer end up magically in your bank accounts every two weeks and health insurance is really expensive when you have to pick up the whole tab yourself. You’re on your own with the first problem, but we can offer some solutions for the finding affordable health insurance when you’re self-employed.
If you live in one of the handful of states that mandate guarantee issue for small groups of one to 50, you’re in luck. Not only can you not be refused a policy, you can’t be charged higher premiums because of pre-existing conditions. You may be subject to an exclusionary period or look-back period for that condition. However, that’s capped by federal law at six months for the look back and 12 months for the exclusion. If you can show proof of qualifying health care coverage within 63 days of your application for a new health care plan, you’re also legally entitled to credit against any waiting period. You’re also guaranteed renewal unless you defraud the company, move out the service area or default on your premium payments.
Currently, Colorado, Connecticut, Delaware, Florida, Hawaii, Maine, Mississippi, New Hampshire, North Carolina, Rhode Island and Vermont require insurers to guarantee issue small group plans to the self-employed. Depending on which of these states you live in, you may be offered a basic plan, a standardized plan, your choice between the two or something else such as a High Deductible Health Plan.
Whatever plan you choose or are offered, the odds are good that it will be cheaper health insurance than what you can obtain as an individual. Small group premiums are determined in one of three ways: medical underwriting; community rating or modified community rating. Group policies that are medically underwritten (everybody applying fills out a health history) are still limited to a plus or minus percentage of the average small group insurance rate for the state (specific details will vary depending on your state’s laws) . States with community rating laws require insurers to charge the same premium to everyone living in the same geographic area, without regard to their age or health. Modified community rating laws allow the insurer to make some adjustments based on factors like age, smoking habits or gender.
If you don’t live in one of the states mentioned, you may still be able to find group health insurance through an organization, club, professional association or affiliate group. You’ll have to join and pay the annual dues, but you’ll probably recoup that in what you’ll save on annual health insurance premiums.