Health insurance, or a lack thereof, is a major threat to public health across the nation and has been for many years. Approximately 27.5 million Americans had no health insurance in 2018, and this is only rising, particularly in the elderly.
The self-employed are also highly likely to not have adequate health insurance. From excellent coverage to a smart discount card for prescriptions, there are options available for all self-employed Americans.
COBRA Health Coverage
With 8.7 million Americans unemployed in July 2021, it’s no surprise that we have seen the rise of the “accidental entrepreneur”.
If you fall into this category, you may still be able to get health coverage via the Federal program COBRA. At your own cost, your former employer’s health coverage can be extended.
The 65% Federal subsidy on the premiums makes this an attractive option if you’re eligible.
Make Sure You Lock-in Your Rate
If you need to purchase private health insurance, be aware that insurers may increase your premiums every so often.
When shopping for coverage, search for what’s known as a “rate guarantee”. These guarantees ensure that for at least the first year of your policy you won’t see an increase in your premiums.
Take Your Health Insurance Premium Deductions
A clever trick for the self-employed is to deduct their health insurance premiums from their tax returns. These are considered “above the line” business expenses and can be filed through your Federal tax returns every year.
The only catch is that you can’t deduct premiums if you were eligible to join an employer-sponsored health insurance scheme. Also, you can’t deduct more than your gross income for the year.
See Also: Tips For Filing Taxes When Self Employed
Open up an HSA
HSAs are tax-advantaged savings accounts designed for people who want to save to cover any potential medical expenses.
The self-employed are the perfect fit for HSA-eligible health insurance because they come with lower premiums and higher deductibles.
Taxwise, HSAs are not eligible to be taxed and any interest earned is also tax-free. Plus, unused money rolls over tax-free into the following year, so there’s little to no downside.
Get a Prescription Discount Card
While purchasing generic drugs is an option, sometimes your condition may require a brand-name drug. Due to affordability issues, it’s estimated that 46% of Americans use at least one card per month.
These cards provide discounts on medications, with just a small monthly fee required to maintain them. Shop around for these cards to supplement your health insurance policy, or if you’re unable to afford private insurance at all.
Depending on how often you need to fill a prescription, these can be excellent value for money.
Understanding health insurance for the self-employed can be tough, but there are viable options available. Make sure you shop around and do your research to ensure you’re receiving the coverage you actually need at a price you can afford.
It’s the best long-term investment you can make in your business’s greatest asset: yourself.