As unemployment rates have risen, many people have found success as a contractor doing freelance, project or consulting work and in turn need to find their own individual health insurance policies.
Buying an individual health insurance policy seems overwhelming but insurance experts say consumers can shape their own policy and also have more legal recourse than if they were enrolled in a group plan.
· Compare specific plans. Make sure you understand if it’s an HMO or PPO. Find out if your current doctors would be covered. And whether or not prescriptions are covered.
· Consider a high deductible plan. This would allow you to put money in a Health Savings Account, which offers tax advantages.
· Try trade unions, trade affiliations or worker’s guilds you belong to as a freelance/contract worker. If these organizations cannot provide a health plan they may help you find a health insurance plan at a discounted rate.
· Consider your state’s insurance high-risk pool. High-risk pools are self-funded by health insurance plans in 33 states to help people who cannot get health insurance due to a serious medical condition that deems them uninsurable, according to the National Association of Health Underwriters (NAHU). Keep in mind this is a more expensive option than traditional health insurance coverage. The Life and Health Insurance Foundation for Education has information about high-risk health insurance coverage in your state.
Individuals shopping the private market for health insurance policies have a wide range of options and are also eligible for tax breaks allowing them to deduct health insurance costs.
“When you’re paying for your premiums you’re in charge and you don’t have to worry that your employer may go bankrupt,” says Frank Darras, an insurance attorney in Ontario, Calif. “You can decide exactly what you want and you have so many more rights than someone in a group policy. If you’re in a group policy you have fewer legal rights.
The COBRA subsidy, which was initiated in September 2008 and offered discounted premiums for individuals who lost their job, ended in May 2010. If you are recently out of work you can either pay the standard monthly COBRA cost or shop for a short-term or an individual policy. In some cases, those who are unemployed or working on contract can find a better deal on their own and shouldn’t automatically accept COBRA as the only option for health insurance.
“The nice thing about choosing an individual plan is you get to design the policy that works best for you,” says Robert Slayton, an insurance broker in Illinois who is also president elect of the Illinois State Association of Health Underwriters, a state chapter of NAHU.org. “If you work for an employer, they’ll tell you here’s the plan and you may not like it at all.”
Short-Term Policies
Short-term policies are ideal for contract workers who are anticipating a new job shortly, Slayton says. The coverage lasts from 30 days to one year.
A short-term policy is a benefit to many consumers because there’s no arduous medical examination and no waiting period, Slayton says. Nearly everyone who applies for a short-term policy will get it, but because these policies don’t cover pre-existing conditions, they are quite limited.
An insurance company could turn down coverage because they argue that a “new” condition may be related to a pre-existing condition. For instance, there’s a chance a person who was taking high blood pressure medicine be denied coverage for any new heart problems if an insurance company says the condition is related to high blood pressure.
“If you have a specific date when you’re going to get regular coverage, then a short term policy is perfect,” he says. “But if you’re looking for a full-time job, you should buy a regular health policy.”
Shopping for a health policy
Buying a basic policy is ideal for people who want more coverage and are not sure how long they’ll be self-employed.
Finding the best policy is hard, but health insurance expert Tom Loker encourages consumers to get referrals from friends.
Loker, Chief Operations Officer at Ramsell Holding Corporation a healthcare management company in Oakland, Calif., says consumers should look at the types of associations they’re involved in and that might also help them get some discounts.
“Groups come in funny places in different parts of the country,” he says. “You’ve got people in religious groups with their churches. You’ll see small business associations. You want to look around at all of the groups you’re in and see if they can help you find a group policy.”
Future changes
Insurance leaders are divided on how the new health insurance law will impact cost for consumers purchasing health insurance on the open market. Lawmakers are also trying to make changes to the current legislation and leaders are unsure how the rules will shake out in the end.
One thing is certain the current new rules allow more people to be covered. For instance, an insurance company can’t turn down children with pre-existing conditions. Starting in 2014, adults with pre-existing conditions must also be accepted.
In 2014, the reform legislation also sets up new places to shop for health insurance that is called exchanges. Health insurance exchanges are intended to make shopping for health insurance easier for consumers.
