Health Insurance Options for Freelancers
by Brain Jenkins
One of the most difficult aspects of being a freelancer is finding health insurance.
Those who are newly self-employed may never have purchased their own health insurance
before, and some are taken by surprise by the high cost of keeping a family insured.
There are options for freelancers, but the process may take some time. It is wise to
shop around thoroughly and compare the pros and cons of each plan available. Which plan to
choose is reliant on a number of factors unique to the individual applying, so they should
carefully weigh their options and needs so their health insurance does not become a burden
on their new business.
Differences from Group Health Plans
Many individuals are surprised that a private health care plan costs so much more than
the plan they had at their previous job. When a company of any size offers its employees
benefits, it does it in part to supplement salaries and make their organization more
desirable to quality workers. The business will organize with an insurance company to get
a group discount for enrolling all of their employees in the program.
This kind of group program means everyone has the same rates regardless of their age
or condition, as compared to an individual insurance program where each person gets rates
specific for them. Additionally, in a group plan, any rate changes or increases take
affect for the group as a whole each year, and any one individual's rates will not change by itself.
This group rate is usually significantly lower than most independent insurance rates,
and as an added benefit, the employee usually only has to pay part of it. Many companies
supplement the cost of an employee's plan by paying a certain percentage of the fee
themselves. The rest of the cost is deducted directly from their paycheck.
The Consolidated Omnibus Budget Reconciliation Act of 1986 was signed into law by
President Ronald Reagan in order to revise and add new federal labor laws. COBRA deals
with the issue of health care for those employees who have lost coverage due to a qualifying
event. If the employee loses their coverage status, under the rules of the law they
are allowed to continue their previous health insurance coverage for a period of time.
Not all self-employed individuals will be covered under this law, but those who have
experienced divorce, separation, or death that leads to a loss in coverage can continue
their plan for 36 months. Those who had their work hours drastically cut or had their job
terminated can continue their insurance plan for 18 months. These are not permanent
solutions and do not cover those who resigned from their previous job. Those who do
qualify can use COBRA to take advantage of affordable coverage while they are developing