THE DECISION TO
work for yourself or someone else often boils down to one issue: health care.
While employees generally pick up the tab for only a small portion of their own health insurance, most business owners get stuck with the entire bill. And that’s no small change. In 2007, for example, the average annual premium for an employer-sponsored plan amounted to $12,106 for families and $4,479 for individuals, according to the most recent employer benefits survey from Kaiser Family Foundation in Menlo Park, Calif.
To limit their costs, entrepreneurs (if they’re lucky) latch on to their spouse or partner’s employer-sponsored health insurance. Others make their premiums more manageable by opting for plans with high deductibles, which typically only cover catastrophic illnesses. Still others — particularly start-up entrepreneurs — simply forgo coverage entirely and plow everything back into the business, a risky strategy that could backfire if they become ill or injured.
These daunting circumstances discourage many would-be business owners from taking the plunge. However, depending on what state you live in and which type of plan you select, getting health care on your own may not be such a stretch after all.
Here are some solo health-care options:
Coverage Through Cobra
What If I Have a Pre-Existing Condition?
Under the Health Insurance Portability and Accountability Act, insurers are required to provide coverage no matter a person’s health status as long as that person gains coverage within 63 days of leaving a previously covered position. That means if you have a pre-existing condition or a chronic illness and you go without coverage long enough, you may hinder your ability to gain full coverage in the future.
In contrast, states including New York, New Jersey, Maine, Vermont and Massachusetts guarantee coverage regardless of an individual’s health status. In New York, for example, health care is guaranteed, says Sara Horowitz, executive director of the New York-based Freelancers Union, a national nonprofit representing self-employed individuals. “That means you must be offered a plan.” And once you’re eligible, she adds that “everyone gets the same price.”
In some states, participating in high-risk health insurance pools may be a possibility. In Oregon, for example, if you’ve been turned down by an individual insurer, you may receive coverage through the
Oregon Medical Insurance Pool
. Premiums in these programs typically vary based on where you live, choice of plan, age and number of insured. Additionally, waiting periods may apply. For more on high risk health insurance pools, go to
For start-up entrepreneurs unsure about whether or not their business will succeed, it may make sense to extend your coverage via the federal Consolidated Omnibus Budget Reconciliation Act, or Cobra, says Matt Tassey, an independent insurance broker in Portland, Maine. Through Cobra, previously insured employees may extend their coverage for up to 18 months after leaving a job. While the price for Cobra coverage (including a 2% administrative fee) usually rings in at around $400 a month for individuals and $1,000 a month for families, it may be particularly attractive for people with existing medical conditions, as they can be denied coverage in most states, Tassey says. (See related sidebar for more information). For state-by-state coverage offerings visit Georgetown University’s