Recently, I read an article in this publication, ‘The Middle-Class Struggling with Health Insurance.’ Health insurance costs are certainly an issue for virtually everyone today, especially the self-employed & those working for small companies. Many companies are trying to cut costs & those cost-cutting measures may eliminate employee health coverage, forcing employees to find coverage on their own. Consequently, many employed individual persons & families are now facing the same challenge small business owners have been facing for years?finding affordable insurance.
The nation’s uninsured population of approximately 45 million has risen dramatically in recent years. According to Todd Stottlemyer, president of the National Federation of Independent Business in recent testimony before Congress, nearly 63% of the uninsured are small business owners or employees of small businesses.
Many uninsured are unaware of an alternative to costly individual health polices. Individual policies, unlike group health insurance, have premiums based the risk factors of the particular individual persons covered by the policy, meaning the risks are not shared by a large group, making the polices much more expensive than group insurance. Without knowing about alternatives to individual polices, many will simply elect to forgo health insurance once confronted with the enormous costs of individual health coverage.
Individual polices not just are expensive, they limit the insured’s ability to design a plan that meets their needs. Individual health polices are usually ‘off the shelf’ polices that have set coverage.
In addition, many who leave a corporate position & enter business for themselves are shocked at the real cost of health insurance. While in their previous position, their employer was paying a portion of their premium. What they paid was not the premium for their insurance, but a percentage of the premium. When faced with the reality of having to pay the full premium themselves, many refuse, leaving themselves & their family uninsured.
Health insurance costs are undoubtedly rising. The cost of healthcare continues to increase, from the cost of visits to the doctor, hospital costs, pharmaceutical costs, emergency care, & all other aspects of healthcare.
Yet, perceptions about healthcare & insurance have not changed. People want the freedom of self-employment, or to work for a small company, but they want the same benefits & costs they have become used to when working for a major corporation.
The self-employed & those working for small companies must rethink their concept of health insurance. Health insurance, like auto insurance & home insurance, is designed to protect against catastrophic loss, not for every sniffle. Rather than viewing health insurance as a go straight to the doctor free card, health insurance should be viewed as protection against disaster.
Home insurance does not protect against losing a single shingle or two. It protects against catastrophic roof damage. Auto insurance does not protect against dings, minor dents & flat tires, it protects against significant loss due to accident, fire, theft, or other damage. Health insurance should be viewed no differently for the self-employed. It’s protection against major loss, not minor dents & dings.
In addition to a change in the way health insurance is perceived, uninsured people, whether self-employed or working for a company that does not provide a group policy, have alternatives to the costly individual policy. Joining a group to purchase health insurance through business or industry associations can not just reduce the cost of the health insurance policy; many times the individual has the freedom to design a plan that works for them & their family. Moreover, association policies are typically available to both self-employed & employed individual persons & families.
Calynn Colceri, a hair stylist, had an individual plan through a well-known national company. She had bought her individual ‘off the shelf’ plan based solely on price. She was unhappy with the coverage, which did not meet her needs & she was distressed that the company increased her premiums on a regular basis. By showing her a group plan through an association, I helped her design a plan that meets her needs precisely, expands her coverage in many areas, & is cheaper than her individual policy. Not only have her premiums decreased & her coverage improved, she has also gained a number of additional business benefits that directly affects her business through her association membership.
If designed correctly, self-employed individual persons can also take tax credits for their deductibles, dental, vision & other medical expenses, up to 100% of the costs, further reducing the real costs of the health insurance. To determine how much, if any, tax savings one would be eligible for, a tax professional should be consulted.
Although a serious issue, health insurance can be a manageable expense for most Americans. Certainly, it may require a new mindset regarding the use of insurance, but if approached rationally & by seeking out group alternatives to the individual health policy, health insurance need not actually be the financial monster it’s perceived to be.
Bobby Kirby, Field Representative for The National Association for the Self-Employed & licensed agent for The MEGA Life & Health Insurance Company. Administrative Office: N. Richland Hills, TX. He may be reached at 623-537-5886 or via e-mail at kirbybobby@yahoo.com Or visit his website at http://www.bobbykirby-nase.com
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