Leaving your day job to become a full-time freelancer may mean gaining your professional independence. But for many, it also means slipping out from under the corporate benefits package—including the health insurance plan.
More than 43 million Americans lack basic health insurance coverage, notes the Health Insurance Association of America or HIAA (www.hiaa.org). The group estimates that by 2007, that number could hit 60 million. Coverage deficits are common among small and home businesses. More than 300,000 members, some 56 percent, of the National Federation of Independent Business (www.nfibonline.com) lack employer-sponsored insurance coverage.
Going without insurance
Why do so many workers go without insurance? Several reasons ring true with today's uninsured worker. One is cost. In the early to mid-'90s, competition in the health insurance arena kept prices low. Then in the late '90s, prices skyrocketed. As recently as 1997, our family of five had been paying around $300 a month for full coverage under a preferred provider organization, an open plan and health maintenance organization hybrid that allows access to a book of doctors. Then, as our carrier saw competition winnowing off, our prices began to rise. Today, we're paying almost $600 a month.
Another reason is uninsurability. When employees leave employers, they often have a grace period to find new coverage before the policy terminates. Some people with chronic conditions have lost their coverage or let it lapse. In many instances, once coverage has lapsed or ceased, private insurance carriers are under no obligation to offer coverage.
Here are quick tips you should consider when deciding on an insurance policy:
Know what level of benefits you want. Eliminate unnecessary items to lower your premium. Understand the mandated benefits that cannot be removed from your policy. Decide if you want to have copayments or deductibles. Remember that pre-existing conditions will increase your premium.
Things to consider
When looking for health insurance coverage, consider what "level of benefits" or the list of covered treatments you need—realizing that by nipping unnecessary items from a plan you can lower the monthly premium. However, depending on the state, some items are "mandated benefits" or mandatory coverage areas and cannot be removed—even by the insured.
You'll also have to decide whether you want copayments (what you'll pay to the care provider at the time of service), and what your pain threshold is for out-of-pocket expenses (usually your maximum deductible of any injury or illness). Remember: Any pre-existing conditions, such as diabetes or asthma, that likely require continued care, will hike your monthly premium.
Finding the right plan
Now, it's time to weigh pain versus premium and decide what kind of plan you want. An HMO is a popular option that can cut premium costs by limiting access to physicians and benefits. A PPO provides access to more doctors, providers and facilities, but typically not as many as a traditional "open policy." With fewer restrictions come higher premium costs, according to the HIAA.
Beyond moving into an HMO, the typical matrix for cutting monthly premiums is to raise your deductible (the amount you'll pay on each occurrence before the insurance kicks in), or lower your lifetime benefit (the amount of expense for which the insurance ultimately is liable in the event of a long or catastrophic illness). This requires some soul searching to determine your financial risk aversion. If you cut your costs upfront, you're betting on not getting too sick or injured.
Once you've decided on a plan and what you're willing to spend, finding insurance is the next step. Try these outlets:
- A spouse's program. This can be the easiest and least expensive alternative for married couples. Although they may provide health coverage, company-issued benefit programs often offer several options from a single provider, meaning there's little to no opportunity to shop for a better program.
- Writer's groups. Check with any writer's groups to which you may belong. Groups like the National Writers Union and the Society of Professional Journalists provide insurance.
- COBRA. The Consolidated Omnibus Budget Reconciliation Act requires that former employees be afforded access to continued benefits from a previous job for 18 to 36 months (depending on the status of the beneficiary) following termination. Just one catch: All premiums are paid by the employee, and they are often three times higher than if the employer were paying a share of the premium.
- The chamber of commerce. Call the local chamber of commerce to see if it offers its members policies. Chambers often align with local insurance agents, brokers or companies to offer benefits to individuals or small groups.
- Your peers. Ask among your peers, neighbors and friends for referrals to trusted health insurance agents.
- The state insurance commissioner. Call the state insurance commissioner's office to see if the state participates in a small business coverage pool, or a separate "catastrophic insurance" pool. The former lumps small businesses into a group program that makes the group plan more enticing for insurance companies to extend coverage. The latter is for workers or business owners who have been rejected by a commercial carrier or employer because of a pre-existing or chronic condition.
- The National Association of Health Underwriters. Contact the NAHU (www.nahu.org), an association of independent health insurance sales agents, to locate an agent who can provide the service or coverage you need.
- Go online. Visit the following Web sites: Insweb.com and www.ehealthinsurance.com. These online organizations comparatively shop insurance needs and premiums with several insurance carriers, depending on the state, provider and client needs.
- Small business associations. A move is afoot to allow small business associations, trade groups and other alliances to band together across state lines to increase the number of members—and lower the premiums.
- The Agency for Healthcare Research and Quality. To learn more about quality health insurance coverage, and for information, checklists, charts and questionnaires visit the agency's site at www.ahcpr.gov.
Once you've found it
While hunting down leads on insurance, try to locate three agents or sources of coverage, and get a quote from each. Make sure you're setting up the same levels of benefits and coverage, so you can compare similar policies.
With the quotes in hand, get a copy of the provider directories for primary care physicians or general practitioners. Look for physicians whose names you know or have been recommended. Ask your own primary care physician if he or she is on the plan, and also for the names of some specialists to see if they're included. If you've just moved to the community and don't know any physicians, scan the names for board certifications and other credentials.
Finding insurance is no small task, and having it is no guarantee that you will keep it indefinitely.
Does the writing business perplex you? Let Jeffery D. Zbar seek the solutions in his monthly Business column. E-mail your ideas or questions to email@example.com.