Originally Posted By John Dessauer On September 30, 2016
It’s not difficult for an entrepreneur to find good health insurance but it’s not so easy to obtain a policy at an affordable price. Many factors can affect the price of health insurance, such as your current state of health, your age, your occupation, and even where you live.
When an entrepreneur leaves a job that provides insurance and other valuable benefits to start their own business, one of the first obstacles encountered can be how to obtain adequate and affordable healthcare coverage. When you are your own employer, health insurance coverage can be notoriously expensive and seriously eat into your budget. Also, insurance companies can cancel or reduce your health care benefits at any time, especially if you experience a serious illness or catastrophic accident.
If you are planning to become an entrepreneur or already have taken the step and you have a spouse with a traditional job, your partner’s insurance can provide the health coverage that you need. It makes a lot of financial sense to utilize this option, because although the price of a family policy will be higher, it will still be significantly cheaper than buying individual insurance for the self-employed. There is usually a designated time for open enrollment, depending on the insurance company, so keep this date in mind during the planning stage of opening your own business.
Some companies offer a COBRA insurance plan for 18 months after a person leaves their job. This window can provide the new entrepreneur dental and health care coverage after their job exit date. Not only is this not a long term solution, but COBRA plans can be very expensive. If you are planning to leave your job, start your own business, and need to budget your resources, consider switching to a low-cost policy before you leave. That maneuver will make your COBRA plan less expensive. However, you will have less health and dental benefits then you did before. At best, the window that COBRA provides will allow you the time to find more affordable insurance coverage.
Perhaps the best option for the entrepreneur to find affordable coverage for their health or car insurance is to investigate the possibility of buying group insurance with trade associations or unions. These are particular types of organizations that offer their members cheaper rates on insurance by utilizing the buying power of the large numbers of people within their ranks. Certain unions and other professional groups, even colleges and other similar institutions offer group insurance rates that are significantly better than individual policy rates. Some of these groups charge a membership fee to join.
The National Small Business United or NSBU is one association that offers discount rates to its members by spreading the risk among the many people within the group.
The AARP can help older entrepreneurs get a reduced rate on health coverage and car insurance. With group insurance, you will have a much lower chance of being turned down for coverage due to a pre-existing condition and you will have smaller deductibles to pay overall, not to mention you will also enjoy better health benefits.
It is interesting to note that some states allow a small business with only two employees to be considered eligible for group insurance status.