It’s not a sexy topic, but it needs to be discussed: healthcare for entrepreneurs.
Healthcare: Try not to lose
Here’s the problem with healthcare… you can never really win, you can only hope not to lose.
– If you pay a lot of money for premiums and have a bad accident and everything gets paid for, well, you had an accident: Lose
– If you pay a lot of money and never get in an accident, well, you paid a lot of money for nothing: Lose
– If you get a really cheap plan (or have no insurance at all) and have a bad accident, well, now you had an accident and are broke: Really lose
The only way to win is to take an incredible gamble and not have insurance, live life to its fullest, and yet somehow never get in an accident. If you can pull that off – and not be incredibly stressed along the way – then you’re one of the lucky ones.
For most of us, the answer lies somewhere in between.
(At the end of this column, I’ll show you specific recommendations)
Health Insurance for entrepreneurs: What to consider
First off, the big disclaimer: I am not a doctor or a lawyer or have any more knowledge about the insurance industry than you probably do. I’m just a guy that loves doing research when I can’t find good answers on the web, and this is such a situation. You need to make your own decision based on your specific family situation, medical situation, tolerance for risk, and where you live.
That being said, here was my thought process, in hopes that it helps you.
Do I need to get health insurance?
In my mind, absolutely yes, at least some kind.
However, it was shocking to me that during my research, THREE different solopreneur friends of mine told me that they do not have insurance right now.
These are people regularly traveling the world internationally, living with significant others, and braving a city that gets hit by epic hurricanes, and where your main form of transportation is getting into a car with a stranger from another land and not wearing a seatbelt (ie, taxis).
I consider myself extremely healthy… I eat right, don’t smoke, get a physical every year, work out 4-5 times a week, and rarely get sick. So if anyone should take a risk on not paying for insurance, it should be me right?
Wrong. Because sometimes this happens while mountain biking:
Where do I get health insurance?
Because paying for insurance yourself can be so expensive, you want to try and do everything you can to get a company-sponsored health care plan.
5 places you can look:
1) Spouse. If you decide to start your own business and have a spouse working full time, the easiest way is to get on a family plan.
2) Cobra. If you’ve been laid off from your current job as you start your business, most companies offer you Cobra, the option to extend your health care. In my case, I went with Cobra for 18 months before having to find my own plan.
3) Hidden jobs. I tried to find a loophole within the companies I had worked for in the past 18 months.
– Since I had taught at NYU each fall for 5 years, I was hoping I could sneak into their plan. Turns out I teach 14 hours, and the minimum needs is 40.
– Then I tried Mediabistro. They changed over from paying their teachers as freelancers to designating them more like “employees,” but they told me I didn’t qualify.
– I’ve heard of others taking unrelated jobs in order to get benefits. For example, I believe Home Depot offers medical to part time employees.
4) Organizations. There might be groups within your niche or network that you can join that offer health insurance.
– One friend told me about PEN, the oldest human rights and literary organization in the world, but it wasn’t right for me.
– I researched the Manhattan Chamber of Commerce and National Association of Colleges and Employers but no luck there
– The main option for individual employees in New York City is the Freelancers Union, so that was definitely on my radar
5) Individual plans. You can buy individual plans directly through health insurance companies.
What do I need to consider?
Again, each person’s situation is different, but here are the things you’ll want to look into.
a) Premium. How much you’ll pay each month
b) Deductible. How much you pay before the benefits kick in
c) Copay. How much you pay each time you go to the doctor.
d) Prescriptions. Are you on regular medication or not? Many plans offer options with and without prescription services.
e) Primary care physician. Do you want to stick with your current doctor or not?
f) Timing. When does your new plan begin?
Case Study: Me
OK, so lets get to a case study… me… a single, healthy dude in New York City.
1) After my job was eliminated, I went on Cobra, which was $450 a month. Things were hectic, I was starting a business, trying to get my ducks in a row, so when faced with an intensive search for health care, the easiest thing for me to do was just roll with my former plan on Cobra, which meant I didn’t have to think about it for 18 months.
In retrospect, when you look at my final decision and that I never had any health issues, that might have been a $4,800 mistake (since I eventually signed up for a plan with a $270/mo savings x 18 months). But “I don’t have to think about my health care for a year and a half” was a pretty strong urge.
2) Since I couldn’t convince anyone to marry me in the 10 days between my Cobra ran out and I needed a new plan, NYU and Mediabistro didn’t qualify, and none of the government or other agencies had plans. I was looking for an individual solution.
3) I researched the Freelancers Union, (available in New York only) which offered 5 plans ranging from $225 – $603. Despite my research and a pretty well designed comparison chart of healthcare plan options, I still found it difficult to compare plans.
Sure, you can deductible differences between $3,500 and $6,000 and $10,000, but it’s so hard to put this into perspective. There is no one that can really tell you “THIS is what makes the most sense for you.”
Anyway, I had generally heard good things, so they were the ones to beat.
4) I started Googling to find plans for entrepreneurs, and there wasn’t a lot of good information out there. A few people pointed to ehealthinsurance.com, and suddenly things started to feel a bit creepy.
There were a lot of sites like this, and it reminded me of finding a mortgage. With all the ads on Google and elsewhere, I started to see how this stuff worked.
There is a ton of competition, agents probably earn a commission, so these aggregator sites are dying for you to enter all your information and try and spit out the best option for you, usually directing you to sales agent. I tried to stay away from this as I’m always of the opinion that YOU should your control your destiny when researching things like a mortgage or a credit card, not let offers come to you.
Thus, let’s move on to the contenders:
Individual health plans for freelancers
– United Health Care: Called them, they took all of my information and said an agent would call me back (one never did)
– Emblem Health Care: Called them, they took all of my information and said an agent would call me back. I ended up speaking with someone and it broke down as follows:
– They had two Alliance Value programs, but since they were $755 and $1000, they were out of the running
– They had two “Health NY” plans, $244 per month without prescriptions, $302 with prescriptions. This was a unique situation where you had to earn a certain amount as a freelancer, yet have reportable income from your Schedule C below a certain amount. I might have qualified based on last year, but would have had to FedEx an application and my tax forms overnight to meet their deadline. It seemed like a lot of work.
– Empire Health: They offered an emergency only plan for $180 a month called Traditional PLUS, which was interesting. If you have an emergency, they cover everything, as long as the doctor is employed by the hospital.
In other words, if you break an arm and go to the emergency room, they knock you out, they fix the bone, they keep you there, etc… it’s all covered. However, if the surgeon bills separately or you go to a different one, you have to cover that.
They are part of Blue Cross/Blue Shield and my current doctor is in their network. They cover preventative doctor visits like an annual checkup. For what it’s worth, Men’s Health ranked this #1 for single guys.
– Someone said look into Humana, but they don’t cover New York.
– Someone said look into Atlantis Health Plan, but they seemed to be part of Easy Choice now, and I couldn’t find information there.
– Freelancers Union. I actually went to an event where their president, Sara Horowitz was speaking about her book, and while the employees there weren’t familiar with the plans, I spoke to a few people that had their coverage and they thought it was fine and reasonably priced. They did say that there was an approval process to go through, where you needed to prove you were an entrepreneur, join the union, then apply for benefits, etc. I had procrastinated so was hoping to get this done in less than 3 weeks.
In the end, I ended up choosing Empire Health Traditional PLUS. While I did do a bunch of research and had a pretty nice Google Doc going with all my questions and options, I’m pretty proud at how fast I made the decision once I realized time was running out and I got someone on the phone. To summarize:
– I am healthy, so I was ok with an emergency-only plan
– I am happy that I get to keep my own doctor
– They were the least expensive plan by far, at only $180 per month
– They were able to get me applied within 20 minutes, and have the insurance ready by June 1 when my Cobra ran out
– They said I could switch plans at any time, and could go to a different plan on the first of the next month
– The plan works for internationally – they cover 80%
– This might be a short-term solution until a national health care plan comes out in 2014
– The main issue is I have to make sure of exactly who is taking care of me in the event of an emergency.
— Note… Obviously I just signed up for this, so I actually don’t have experience yet USING the program, so again, proceed at your own pace.
I love doing deep-dive research, and while this wasn’t as fun as new website templates or comparing the latest GPS models, I still got some satisfaction from it.
Additionally, I know how frustrated I was with the lack of finding a human being trying to explain this stuff in terms of how people might actually make a real-world decision, so if you came across this in Google, I hope it helps. Please spread the word to others and say hi on Twitter.
Wish you had a little more money in your pocket to pay for those doctor visits? Check out my free online salary negotiation course, “How to Negotiate Salary: The Negotiation Mindset.”
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