How to handle health insurance as an independent contractor is a common question for many individuals. The decision to become an independent contractor can open up a lot of exciting and unique opportunities most professions do not have. But before you sign the contract, and take care of your transportation and lodging needs, one of the biggest questions you may ask yourself is:
What should I do about my personal health care? Should I take the company coverage, or should I look into a personal plan?
One of the biggest concerns for independent contractors is trying to figure out what was the best option for health coverage. As a licensed agent, I take pride in what I do and help individuals and small businesses with their health coverage.
Company Offered vs. Private Health Insurance
There are pros and cons to be considered when looking into personal vs. company coverage.
Benefits to private insurance for individual contractors
When choosing private coverage over company coverage, the pros will likely outweigh the cons. One of the biggest pros when choosing a private plan that can offer nationwide coverage. And not just varying from state to state or certain groups. No matter where you decide to go, your policy follows you with the same level of care you would receive when you are home.
Health insurance between independent contractors
No lapse in coverage. If you wanted to take a month or two off after an assignment to hike the Rockies or go surfing at the Outer Banks, you wouldn’t have to worry about your finances if you had to make an unexpected visit to the ER. Your policy would be right there, offering the same level of care you would get as if you injured yourself at home. And you wouldn’t have to worry about COBRA draining all of the extra money you put aside.
With some plans, there is little to no annual deductible. Yes, you read that right. Little to no annual deductible. There is nothing more discouraging than paying thousands of dollars out of pocket before your insurance plan kicks in.
Picking the best health insurance as an independent contractor
You can build a policy that fits your needs and works for you, not against you. Choose the essentials like dental and vision, as well as other vital products specific to you and your family’s needs. Benefits such as life insurance or accident protection to help if you suffered a catastrophic event. There are even plans that provide income protection, which is similar to short term disability. These come in handy if you become injured and unable to work, while the company provided insurance would stop covering you after a certain time off of work.
Through a company, you could opt to pay much higher rates for COBRA, or anything available through your state’s marketplace. Most private plans base how much you pay, depending on your health and age, not on your income.
Save money on health insurance and negotiate for higher contract pay: By choosing a private plan (or opting out of the company insurance), it can allow you to negotiate for higher pay. Because of your decision to opt-out, the company isn’t having to pay for the additional employee policy. They’re now spending less to employ you and may choose to share those savings by paying you more.
Limitations to private insurance for independent contractors
While there are several great reasons to choose a private health plan over the company provided coverage, there are also a few drawbacks. Some private plans are lacking when it comes to your annual wellness benefits. Some private plans do not provide good coverage for mental health. And without a caring and dedicated agent working with you, it might be too late to find out something like bariatric surgery, (covered by most marketplace plans) may not be an option with your private plan. So, it all depends on your needs.
Also important to note, you are charged on a monthly basis instead of weekly. If you are used to paying a certain amount out of check instead of a larger lump sum, it could take some budgeting to get used to.
Navigating private insurance options
There are a lot of companies that claim to offer “insurance” or accident payouts that are not accredited insurance companies. They make bold promises but bury all the stipulations in the fine print. A good agent will help you navigate through bad apples. A few examples would be cost-sharing “programs” that aren’t real policies. They are a pool that all premiums go into, and all bills must be submitted for approval. If they aren’t approved, you are 100% responsible for all costs.
Another situation to be cautious of are short-term plans. These plans usually have to be renewed every 3-6 months. If you are diagnosed with something, the next time you have to renew your policy, they will consider that diagnosis as a pre-existing condition and won’t cover it anymore. Most of these plans also have 36 months (and sometimes longer) exclusions for pre-existing conditions.
Example: I spoke to an individual who had a short-term plan. About four months into the policy, she was diagnosed with hypertension. When she renewed her policy at six months, she was told this was considered a pre-existing condition and was not covered. But it got worse; two months after her renewal, she had a heart attack at 52 years old. The company told her nothing was covered at all because the heart attack was due to the “pre-existing” hypertension.
She had to take out a second mortgage on her home, and after two more large loans later, she still owes $16,000! I felt horrible and have heard too many stories like this. I had to add some information and caution to you regarding these plans. Usually, if you need it for just what it states, short-term, like a week or two between contracts, it’s good, but otherwise, please be careful!
Taking the next step in weighing your insurance options
If you’ve made it this far, congratulations!! You have picked a rewarding and exciting job as an independent contractor. And while there are probably a few more pros and cons when comparing health coverage, these are the biggest points I have in discussions with clients. Above all, make sure you do your research and find a quality insurance agent who can help you with all of your needs.
If you have a genuinely good agent, they’ll help you navigate your plan, and remind you of your benefits and how they work. I give a lot of my clients my personal cell phone number, along with my business line and email. I encourage them to please call me.
I can look up the best urgent care, ERs, and even doctors in the area to make sure they accept their plan. That way, instead of worrying about what would happen if you sprain your ankle in Jacksonville when your primary doctor is in Reno, you can spend that time finding out who makes the best turkey club, or nearest thrift shops in the town you’ll be calling home during your assignment!
If you would like to connect and go over options. I can be reached via email at jamespuszertins@gmail.com or call/text me at 1-716-430-5782. My direct office line is 1-614-382-8860. You can also reach out to me on LinkedIn or Facebook.