When you make the switch from full-time employee to full-time freelance writer, your health insurance options will change dramatically. If your spouse is still employed, you may be able to enjoy their group health benefits. Otherwise, you’ll be seeking an outside source for health coverage. There are more options than you may believe. I can’t cover all of them extensively in a single post, so feel free to post questions in the comments and I’ll do my best to answer. If there’s interest, I can delve deeper into these options in a future post.
COBRA
COBRA is a Federal law that lets you know your employer's group coverage and benefits for 18 to 36 after you leave your job. The catch: you have to pay the full cost of the plan. That monthly cost could be significantly higher than what you’re currently paying. How much more? It varies. If your employer covers a high percentage, e.g. 90%, of your health insurance premium, you’ll probably be shocked when you see your COBRA payment. (My COBRA payment was $418 per month vs ~$80 when I was still employed.)
COBRA will be effective as long as you make your payment on time and your ex-employer continues to offer the plan.
HIPAA Health Coverage Portability
If you’re currently on COBRA and it’s about to end or it ended less than 63 days ago, your state must allow you to buy insurance through the high-risk pool. You won’t be denied for pre-existing conditions, though there may be a waiting period for pre-existing condition coverage. You must have exhausted your COBRA no more than 63 days ago to be eligible.
Here’s a page with links to 35 states’ high-risk pool pages. If you live in one of the other states, health insurance companies servicing your state generally must offer a HIPAA-eligible health care plan. You may need to provide a certificate of eligibility from your COBRA administrator to be approved for the plan. (I went with this option after my COBRA expired in March. My plan is $318 based on my gender, age, and $2,500 deductible.)
Private Health Insurance
You can apply for health insurance directly with an insurance provider like United Health Care, Humana, or Blue Cross and Blue Shield. A website like eHealthInsurance.com can help you find health insurance companies that service your state. If you have no pre-existing conditions (your medical records will be reviewed), you’ll probably be accepted for private medical insurance.
A pre-existing condition is a health condition you had before you applied for medical coverage and can include something as common as asthma. Insurance companies may impose a waiting period before they cover pre-existing conditions, they may charge you a higher rate, or they may deny your application all together.
If you can’t get health insurance because of a pre-existing condition, consider COBRA or your state/Federal pre-existing condition insurance plan (discussed next).
Pre-Existing Condition Insurance Plan
As of March 2010, you have access to a health plan if you have trouble getting health insurance because of a pre-existing condition and you’ve gone six months or more without health insurance. (Why six months?) Some states, like Arkansas, California, and New York, have their own plans. Premium costs vary by state and range from $200 to $2,000 per month.
If you live in a state without a pre-existing condition plan, you’ll have access to the federal plan. Monthly cost is based on age, starting at $338 per month up and going up to $721 per month. HealthCare.gov has more information about the plan, including deductibles, prescription plans, copayments, and out-of-pocket maximums.
Note: In 2014, it will be illegal for a health insurance company to deny coverage based on pre-existing conditions. Supposedly that means health coverage for all that can afford to pay, but that’s 3 ½ years (and another election) away and much can happen between now and then.
Group Health Coverage
Check your local Chamber of Commerce to see if there are individual plans available. You may get better rates and coverage than if you went with private health insurance. Certain freelance unions also offer health insurance or health discounts:
- Freelancers Union
- Media Bistro
- National Writers Union (currently NY residents only. Nationwide program is in the works according to their website.)
High Deductible Health Plans
If you’re in good health and only go to the doctor for check ups, consider a high deductible health plan (HDHP). These plans have lower monthly premiums, but higher deductibles – a minimum $1,200 for an individual or $2,400 for a family. You can open a Health Savings Account (HSA) with an HDHP and deduct your contributions.
The drawback of an HDHP is that you have to cover your medical expenses out of your pocket until you meet your annual deductible. Because of that, your doctor may require you to prepay your medical services. If you get an HSA, try to get one with a debit card you can use to pay for your medical services. Otherwise, you can pay out of pocket and reimburse yourself out of your HSA.
Small Group Health Insurance
In some states, you qualify as a small group in terms of group health insurance eligibility, even if you’re the only employee of your business. If this applies to your state, your business can generally* get group health coverage without being denied for pre-existing conditions. These states define a small group as one with as few as a single employee: Colorado, Connecticut, Delaware, Florida, Hawaii, Maine, Massachusetts, Mississippi, New Hampshire, North Carolina, Rhode Island, and Vermont.
In all other states, a small group is a minimum of two employees (maybe you and a spouse). And in some states, the other employee can waive coverage, which is almost like having a group of one. Michigan, New Mexico, and Oklahoma define a small group as 2 individuals but have rules that require health insurance companies to grant coverage to self-employed workers (In, NM you must have at least one dependent).
*While Federal law does require health insurance companies to guarantee health plans sold to small groups, this guarantee doesn’t apply to sole-proprietors. Fortunately, some states do have “guarantee issue” requirements. I got these details from Kaiser State Health Facts.
Future Discussion
I originally intended to talk about the things you should consider when you’re shopping for health insurance – deductible, coverage limits, out-of-pocket maximums, etc. – but I went down this rabbit hole and liked how it turned out. In a future post, I'll go over details on weeding through bad and ugly health plans to finding the ones that provide at least some decent benefits.
Thank you for writing this! Very, very useful information on a very confusing topic.
One of the biggest concerns I have as a freelancer. Fortunately, I can be on my husband’s plan but he’s about to go out on his own too. I used to sell health insurance for a living but I have never bought it. I grew up on military dependent insurance and then went from group plan to group plan with my employers. When the Hubs starts his own business, it will the first time I’m on the other side of the desk when it comes to heath coverage. I’m not ashamed to admit I’m a little nervous about it.
Good luck! Hopefully this list of options will help you as you figure out what type of health insurance you and your husband are going to have.
It’s solvable, P.S.! I’ve been on a plan with my chamber, and I gather AARP (for older writers) has health insurance for members, as does Costco! There are plenty of options but you have to do a lot of legwork to figure out what works best and is most affordable.
Good luck with it!
AARP doesn’t have a group plan, so people with pre-existing conditions are still left out in the cold. I joined AARP specifically because I Was under the impression that they’d have a group plan for hubby and nope, they don’t.
Also, NWU offers group insurance to states other than NY through TEIGIT. States include California, Texas and Florida. https://www.teigit.com/index.cfm
The six month wait for the high-risk pools is just an effort to control entry to some extent. It lessens the number of people who can jump on board and controls costs. Florida’s pool has been closed since the 90’s and only had about 25 members–it’s so costly that I don’t know how they are going to sustain this.
If you live in a state with single-person, guaranteed issue group plans for businesses, make sure you check on the dates that you can apply. For instance, August is the only month that you can in the state of Florida. Also, not every insurance company offers these plans, so make sure you check with an agent.
AARP DOES have individual plans, which are good for those who are in good health and they are likely less expensive than individual plans outside of AARP, but I wouldn’t take that for granted. I wasn’t impressed witht heir overall membership privileges.
Has Freelancers Union expanded their coverage to out of New York? Last time I checked, you had to be in NY to use them. I’m still in NY, but hopefully, not for much longer.
I was a union member and still lost my health insurance, and haven’t found anything affordable to replace it. So, currently, I have none. I just can’t get sick or injured, that’s all.
COBRA was waaay to expensive when I lost my insurance, and so were all the other plans I investigated.
Looks like their health is for NY. But they do offer dental elsewhere. Just took a look at that, and their dental plan actually looks much better than most dental discount / insurance plans I’ve seen available for the self-employed. So if nothing else, that’s worth a look. I might even review it further and sign up for that — dental’s been the toughest to find a decent deal on.
NWU is the only union I know of that offers group outside of NY.
Ahhh the trying to stay healthy. Good stuff here. My best secret there is to get that way off early, and stay fit. Way more simple to maintain it vs. to gain it back.
I cannot believe health insurance premiums continue to rise as they have been. We have individual (i.e. family) coverage, and the rates for our family of 5 have increased over 33% in each of the last 2 years. And I am not counting a change in our age group. That will be coming next year as I turn 30. This rate of cost increases cannot continue. What’s going to happen to people who make less than we do? (And are typically younger, and who typically make less money.) They will start to drop off of the lists of those who have insurance. And the cycle will continue. Does the recent health care reform change any of this? For us it’s only a matter of time before I either have to drop off the roles of the insured, or change my lifestyle completely by selling my house, or worse. Maybe we’ll have to move to Europe, where coverage is mandatory.