Many people dream of becoming self-employed, but aren't sure how they'll find affordable health insurance on their own. Laura covers six tips to find the best health coverage when you work for yourself or lose job-based insurance for any reason.
Tip #4: Consider a high-deductible plan
With health insurance, if you’re in relatively good health, a high-deductible plan can make sense.
With many types of insurance policies, a smart strategy to cut premiums and save money is to raise your deductible. A deductible is the amount you have to pay first before your benefits kick in.
With health insurance, if you’re in relatively good health, a high-deductible plan can make sense. But the downside is that if you do get sick, you’ll have to pay much more out-of-pocket before your payouts for covered claims begin.
When you choose a high-deductible health plan, not only do you pay lower premiums, but you’re also allowed to contribute to a health savings account (HSA).
Contributions you make to an HSA are deductible on your tax return, which mean they reduce your tax liability. You can take distributions from the account to pay for medical expenses—such as doctor co-pays, prescriptions, and supplies—before your deductible is satisfied and your health benefits begin.
You can also use HSA funds for a long list of other types of expenses, even if you don’t have insurance for them, such as going to a dentist, ophthalmologist, chiropractor, or psychologist.
With Obamacare, the highest deductible and least expensive plans are called catastrophic plans. They’re technically only available if you’re 30 years old or younger and don’t allow you to use a subsidy to help reduce the cost.
However, if you’re over 30 and experienced any of a number of financial hardships, you’re also eligible for a catastrophic plan. If you don’t qualify, there are other high-deductible plans to choose from. Just remember that you risk having to pay more out-of-pocket in return for lower premiums.
Read or listen to How to Save Money on Healthcare with an HSA to learn more.
Tip #5: Shop your plan every year
Once you become self-employed and get your own health insurance, it’s still important to shop plans every open enrollment because your medical needs or income may change.
Additionally, competitors are always coming in and out of the health insurance marketplace. The companies that were doing business in your ZIP code last year may not be the same set of players this year.
In other words, it’s likely that another insurer now offers a plan that’s similar to or better than yours, for a lower price. So, if you don’t shop you could easily be leaving money on the table.