Finding good health insurance is one of the biggest challenges of being self-employed. You can purchase individual health insurance in the open market, but you'll pay higher premiums than you would if you worked for a company and participated in an employer-based group plan.
Factors that could influence the cost of your individual health insurance include:
- Personal health history
If you're shopping for health insurance and looking to save money, consider checking out price quotes online or consulting a health insurance agent. Choosing a high-deductible health insurance plan also can save you money over the long haul, although you may have to pay more in upfront costs.
You may be able to get cheaper insurance through a trade group or other professional association of which you are a member.
Pre-existing conditions and health insurance
Finding individual health insurance is even trickier if you have a pre-existing health condition that causes insurers to shy away from offering you coverage. But you still may have options. Some states require health insurance companies to offer coverage to everyone, regardless of an individual's health status.
As part of federal health care reform legislation, U.S. citizens with pre-existing conditions who have been without health insurance for at least six months now can obtain coverage through a pre-existing condition insurance plan (PCIP).
PCIPs will be available until 2014, when health care reform legislation prevents all health insurance companies from denying coverage to adults with pre-existing conditions. A health insurance exchange program will replace PCIP at that time.
Disability insurance options
Disability insurance is another important form of protection if you are self-employed. This type of coverage replaces a percentage of your income if you become ill or are injured in an accident that prevents you from working.
Such an interruption of income is more common than you may think. Forty-three percent of all 40-year-olds will have a disability event that lasts for 90 days or more by the time they turn 65, according to the Insurance Information Institute (III).
Like health insurance, most people purchase group disability insurance through their employer. That's not an option if you're self-employed, but you can buy a policy directly from an insurance company or financial planner. These policies generally will replace 50 percent to 70 percent of your income if you no longer can work, according to III.