The Self-Employed: Group Health Insurance or Individual Coverage?

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Remember when you worked for a larger company and they provided your health insurance for you? It was probably a group health insurance plan, open to all employees and their dependents. Though costs have gone up over the years, a lot of employees like their group health insurance plans and enjoy the relatively rich benefits they offer.

Now that you’re on your own you may be wondering if that sort of health insurance plan is available to you. There are two primary categories of health insurance for self-employed persons and small business owners to choose from: 1) Individual & family or 2) small business/group health insurance.

Depending on the regulations in your state and whether you have any employees, you may qualify for either one. In some states, however, self-employed persons without any additional employees may only be eligible to apply for individual and family coverage.

Individual and Family Plans

Like the name implies, these are health insurance plans purchased by individuals to cover themselves or their families. Anyone can apply for an individual and family plan. Self-employed persons often purchase these kinds of plans, though some may also qualify for small business plans. Small business owners who can’t afford group coverage may purchase individual and family plans for themselves or their families.

Now that you’re on your own you may be wondering what sort of health insurance plan is available to you.

Until federal health insurance reforms take full effect in 2014, it will still be possible (in some states) to be declined for individual or family coverage based on a pre-existing medical condition. Self-employed persons who purchase their own health insurance may be able to deduct the cost of their monthly premiums in some cases.

Small Business / Group Plans

Sometimes referred to as “small business plans” or “group health insurance,” this is employer-sponsored health coverage. Costs are typically shared between the employer and the employee, and coverage may also be extended to dependents. In certain states, self-employed persons without other employees may also qualify for small business/group plans. There are special tax incentives available to businesses providing group coverage to employees, and no one in a group can be turned down due to a pre-existing medical condition.

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