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Hi all!

The subject of this post should strike TERROR in the hearts of all the self-employed. Health insurance is a basic need of all people, and yet something difficult to obtain if you are not employed by a "company."

How have you handled this situation?

In the next few years, the self-employed will be allowed a higher percentage deduction for their insurance. But that's only half the problem. What companies offer individual policies that are comprehensive and affordable?

Barbara Eisner Bayer
TMF Venus
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<What companies offer individual policies that are comprehensive and affordable?Barbara Eisner Bayer
TMF Venus >

TMFVenus,
I am now covered by my husband's insurance, but when I was self-employed & single, the last health insurance plan I had was with Time insurance. It was not cheap, but cheaper than some. I think it excluded pre-existing conditions that had been treated within several years of application. Hard to remember now.

p.s. I saw a famous tennis player on a magazine cover recently, named Venus, with sister Serena, and at first I thought maybe that was you, with Selena, whose name I confused! meowiz
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Venus,

A timely topic. I'm a computer contractor, and so am not technically self-employed, but generally face similar issues. Right now I get Cigna health insurance through my agency. The problem is that I want to scale back my hours to 30 a week - and my agency has informed me that they'll cancel my health insurance if I do this.

I knew relying on the agency was dumb - since I usually change contracts (and therefore agencies) once or twice a year - but it seemed like a good deal at the time since I didn't have any insurance at all last summer.

So I'm considering calling up BlueCross/BlueShield. I used them about 3 years ago and was happy. $84/mo for 90/10 coverage (can't remember the deductible). We'll see. I could just continue the coverage with COBRA, but I'm not sure how much that runs. Anybody know?

Thanks,
Scott
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Venus wrote:

What companies offer individual policies that are
comprehensive and affordable?


In my experience, individual policies are quite expense. Group plans can (but not always) offer better rates. Individuals can purchase through group plans offered by associations. Places to look include trade associations, chambers of commerce, extension services, not-for-profit associations designed to service employers, etc. As a Christmas Tree farmer, I have insurance offered through Farm Bureau (a trade association example).

Scott wrote:

I could just continue the coverage with COBRA, but I'm not sure how much that runs. Anybody know?

Exactly what it costs your present employer (agency). You continue on their policy at their group rate but with you paying 100%.

Be prepared for sticker shock with health insurance policies though. Remember, health insurance costs have continued to skyrocket while inflation in general has been tamed. All these fancy new medical procedures and medicines are expensive.

JustAndy
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Venus...
The easiest way to find the health insurance
companies is check your yellow pages.
Select the major insurance companies.
Call asking them to send you policy and cost
information.
It is costly. Kindof like buying a new car.
First the basic insurance...then the additional
bells and whistles which runs up the cost.
It is absolutely necessary. Seems like you are
tossing good money into the crapper until you
need the insurance. Then you feel very wise.
My brother inlaw operates a seagoing catamaran
charter service out of the Virgin Islands. (2 cats)
Robust, very active...don't think he ever had a sick day in his adult life.
Just
recently he was diagnosed with colon cancer.
He and his wife came to Miami. Last week he
had the operation. Soon he will begin an extensive
chemo protocol.
You can imagine how glad he and his wife are to have been foresighted enough to carry
private health insurance. Without it, he would
probably have had to sell one or both of the cats.
I believe in the studies in Congress of the Medicare system they are trying to come up with a program to create a "National Health Insuance Plan" available to those without insurance. Perhaps the self-employed will get some relief sometime in the future.
Don

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I just wanted to add a thought to health insurance -- this is not an area to skimp on. You must have at least some basic health coverage, or it could be devestating.

Back in my self-employed days I took unnecessary risks for years by not having any coverage. Finally I broke down and got some very basic Blue Cross coverage. It was expensive, but it sure came in handy when I found I had three very expensive days in the hospital to pay for. I'd have been very much deeper in debt if it weren't for having that card to flash when I entered the ER.

Insurance is part of your overall financial planning. It's something to consider as seriously as you would study any stock before purchasing it. Don't overlook it merely because you want to be your own boss. This is one corner you do not want to cut.

The deepest irony? Had my hospital stay come three months later, I woulda been a Fool employee with much better coverage. Missed it by that much. ;-)

Cheeze
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This probably wouldn't work for everyone, but the way I have been handling health insurance has been to buy a private major medical policy with a very high deductible. Mine is $5,000. The policy also has preventive health care benefits not subject to the deductible. That means I have been paying for all minor and intermediate health care expenses. I keep the money in reserve as part of my emerency fund. There are a number of reasons I like this method:

1. Even though they are not paying the bill, the insurance company limits the amounts that the doctor can charge, so I get a break on bills.
2. Less hassle--if i meet the deductible, they pay 100%.
3. I can earn some interest on the money I put back for real emergencies--rather than pay it out as premiums.
4. It's cheap--less than $200 a month for a family policy.

The gummint has had a pilot Medical Savings Account proram for self-employed people for a while now. There's info on the www for those interested. You bank a certain percentage of your deductible every year. You earn a little interest, but the whole amount is tax deductible whether you spend it on medical expenses or just keep it in the bank. You can invest your deductible after you've banked a certain amount. When you turn 65, your investment is treated just like any other IRA.
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Check with trade assoc., chamber of commerce and other small business groups to see what policies are available through them. They usually get a group rate with no qualifying or pre-existing condition clause. Good Luck
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JustAndy,

I just got off the phone with my broker (not a stockbroker, but the agency that finds computer contracts for me) and she informed that my COBRA would cost 102% of what they pay - $139.94/mo. She stressed that the extra 2% was allowable by law for administration expenses. Which sounds reasonable to me.

Just wanted to add a data point.

Scott

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>>COBRA would cost 102% of what they pay - $139.94/mo<<

boy, is that sticker price shock - I just looked into major medical through Mutual of Omaha which was just under $80 which included copay for prescriptions and doctor visits and I thought that was steep. it is through an independent agent so perhaps the previous post that said something about independent agents being a bit cheaper is right.
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This probably wouldn't work for everyone, but the way I have been handling health insurance has been to buy a private major medical policy with a very high deductible. Mine is $5,000.

This is exactly the approach I've taken. I think these are the criteria you should evaluate in deciding if you can take this route:

1. Could you pay the deductible (even for a couple of years running) without causing yourself a financial crisis? No one wants to fork over $5000 unexpectedly, but could you do it from your emergency cash fund in any given year and still have something left over? Could you do it for two years in a row?

2. Are you (and your family) in relatively good health? (knock on wood ...)

3. How much would the difference in premium costs allow you to funnel into your emergency cash fund? (example: high-deductible premium = $200/month. low-deductible premium = $450/month. $450 - $200 = $250/month.) 12 mo. x $250 = $3000/year. Would it be possible for you "pay yourself" this money every month and add it to your emergency cash reserve?

If you can pay yourself the premium difference, and keep it up for 2-3 years, pretty soon the risks of the high-deductible are no worse than the low-deductible ... and you can even stop funneling the premium difference into your emergency fund (buy stock with it instead!).

4. Do you have the self-discipline to follow through on this approach?

This approach has worked well for me and my family. And get this: I'm not even self-employed. My employer offers health insurance, but I don't use it. I pay a few dollars more per month than I would pay for low-deductible, employer-sponsored insurance, but it gives me a great sense of freedom to know that I can move onto a new phase in life (self-employment or some other job) without even considering health insurance as part of the decision. I'm not dependent on an employer or anyone else for this important need.

BTW, my policy has $20 doctor visits; $20 maximum payment for prescriptions ($10 max for generics); $75 maximum payment for emergency room visits. (max payment means the maximum I would pay). It's BC/BS.

Someone once told me this is an approach relatively high-income, self-employed professionals often take (doctors, lawyers, etc). My annual income isn't even close to those professions, but the key is that I have a solid emergency cash fund, built up over several years.

As the previous poster said, this may not be for everyone, but hope it helps some of you decide.

Alan
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Alan and all others thanks for your helpful advice. I especially appreciate the detailed analysis of a private major medical policy.
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You might also try contacting an independant insurance agent. Many of them can get you into a local group or one that is just forming. They aren't as inexpensive as big companies but you stand a better chance of getting coverage. Hope this helps. It is what we had to do because my husband has pre existing conditions and no one would insure him. They would accept myself and our daughter but not him. It can get expensive but look at the cost of a hospital stay.
Good Luck
Ireneone
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>>COBRA would cost 102% of what they pay - $139.94/mo<<

purslane responded:
<<boy, is that sticker price shock>>

My wife's prior employer's provider wanted ___$800___ per month. She called and asked someone else, we thought it was a typo. Obviously, there is some leeway in how these things get accounted.

<<it is through an independent agent so perhaps the previous post that said something about independent agents being a bit cheaper is right.>>

I would always go with an independent agent. They have more flexibility in what they put you in. While they might still steer you towards the best commission generator, they at least have the _option_ of steering you towards something more appropriate.

Later,
shess
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Hey-o!

Out here in San Francisco, this video/film editor (and
former Workers' Comp Insurance Administrator [don't ask: I was new in town and needed the money]), chooses the Blue Shield Access + HMO. For his young, yet still professionally experienced 28 years, it's only $101.00/month, all the best doctors are on its preferred list, prescription drugs and office visits are at a flat rate ($10 for office visit and $15 for one month supply) and I've never had any hassles with claims getting paid. AND I can choose to see a Specialist without my Primary Care Physician's prior approval for a mere $20 so long as they are in the same facility. I've chosen a best-of-breed major hospital/medical group -- Brown and Toland -- so this is no burden. But Blue Shield and Blue Cross plans and service vary by region, so YMMV.

And my disability insurance? Why Provident Life and
Accident, of course! Why do you ask? Probably because
almost none of my freelancing friends have been able
to get Disability Insurance. Any hint of home office
and the Insurance Companies get scared. Well, I was
able to find an agent who went to bat for me, argued
that I had to do most of my work on-site and therefore
there would be a clear way of establishing my total
disability from working. The cost? $80/month for $2000/month of coverage with all the trimmings until I am 65, adjusted each year for cost of living. Their
policy covers all the bases including "Your Occupation" definition of disability and Residual Disability benefits. People may argue back and forth whether us freelancers really need Disability Insurance, but as I am single and fully responsible for my own continued existence, I think it's worth it. If any of you Fools live in Northern Cal and want the name of this agent -- drop me a line.

Great board, BTW. :-)

Abdiel
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>>I could just continue the coverage with COBRA, but >>I'm not sure how much that runs. Anybody know?

>Exactly what it costs your present employer (agency). >You continue on their policy at their group rate but >with you paying 100%.

I think they actually can charge you 101% of the cost. (Big diff, I know. :-) I was on Cobra for six months. Blue Shield Cobra, in fact. Imagine my surprise when I discovered I could get the same policy for $50/month cheaper by getting it as an Individual plan. So, my advice is, Cobra is a heck of a lot better than nothing (particularly because the new laws will offer you some protection re: pre-existing conditions if you are insured when switching the a different Insurer), but don't delay in checking out those individual policies.

Abdiel
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In my experience, individual policies are quite expense. Group plans can (but not always) offer better rates. Individuals can purchase through group plans offered by associations. Places to look include trade associations, ...

Exactly. When I wanted to become a computer consultant, a consultant co-worker of mine suggested "Alliance for Affordable Health Care." I called, signed up, and have been with them for almost 4 years now. Alliance is one of those groups that offers group rates. They have a very self-employed focus.

If you're a computer consultant going through agencies as W2, you can still benefit from Alliance if you switch agencies frequently.

The plan I'm in covers major things, so I have to pay for doctors office visits and prescriptions. It also have a dental plan which is good.

I have a $1,000 deductible annually. I'm 27, and living in NY City. My monthly premium is about $144. (It was less 2 years ago when I lived in the Philadelphia area.)

Alliance can be reached at 800-733-2242. I like it, and definitely recommend people check it out.

Tom
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I don't want to burst anyones bubble, but actualy being in the industry (insuance, I have a licence in NJ and NH) In volumes of research and years of selling the stuff to people and small businesses, this is what I have come up with. Health Insurance is overpriced and very few people can afford it. What a revalation (you may be saying sarcasticly) Here is the skinny. First of all, if you are healthy and under the age of say um 90 you would probably do a lot better buying only a major or catastrophic medical policy. Remember, your car insurance covers major medical too( check yours to see how much) Your major medical covers the big stuff and depending on the policy can cover from the start of treatment for things like cancer. And a major medical policy (just like term life insurance over any other kind) will cost you pennies on the dollar vs the "traditional" forms. Be Foolish here. Spend $500 or even $$700 a year on major medical. A family of four and self employed you will pay at least $300 a month. For What?? Take that money, invest it Foolishly and self insure yourself for doctor visits and prescriptions and minor emergency room visits. Work out the numbers, you will be suprised that what you pay for and what you get is more like buing Universal Life Insurance over Term. Yuk!! Stop making guys like me rich by buying the wrong policies. (by the way, I no longer sell life and health insurance. I could't remain a jackle my entire life ya know)

rec
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Any recommendations as to where I'd look for such a policy?

Joe Varga
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If you want a major medical plan there are a lot out there. Check with your local insuranse agent first. Depending on where you live you may want Mutual of Omaha, I believe Travelers also has one. Get all the info you can. Don't rush into this. I am amazed at how people choose banks and health insuranse. They might as well throw darts on the wall to choose. (they would do better) I don't know your family needs or history so it is very difficult for me to suggest a plan for you. Check them out very carfuly. Have your life isurance agent help you sort them out. If he is any good he won't suggest that HE sell you one but actualy help you with the right coverage for you. Make sure you look at the medical rider on your auto insurance plan. See how much, what, when and where you are covered and consider that too. But also make sure you "self" insure yourself for the "Johnny has a fever" trips to the doctor. Set up an account that is strictly for "everyday" medical needs and prescriptions. Note: if someone in your family is already sick with a recuring illness, STAY WITH YOUR CURRENT HEALTH INSURANCE!! If you tell me what state you live in I may be able to direct you to some reputable companies. Good luck. I use a Christian (yes that's in Jesus) major medical type of plan and I have a self insurance plan for everything else. Funny thing, I have saved a LOT of money and I don't go to the doctor hardly ever. Don't need to. I do have two boys and they are active. I can say that in less than a year I will have enough in our self insurance account to cover a broken bone or two or a late night emergency roon with a few test. Best of all, it is another avenue of savings and wealth building. I get to keep what I don't use. I think that is very Foolish.

rec
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rec wrote:

<<But also make sure you "self" insure yourself for the "Johnny has a fever" trips to the doctor. Set up an account that is strictly for "everyday" medical needs and prescriptions. Note: if someone in your family is already sick with a recuring illness, STAY WITH YOUR CURRENT HEALTH INSURANCE!!>>

I like the applicability of your advice for singles or families whose children have all reached, say, school age. Would you give the same advice to a family that is still having babies and going through all of the pre-natal, natal (i.e., the actual birth and its related expenses) and post-natal medical adventures?

Brian
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i suppose the question i should have asked is "Exactly what does major medical plan not cover as compared to a standard medical plan?" For instance I get the impression that major medical only covers hospital stays and doctor bills while in hospital. That's OK, but I have a co-worker who recently had a problem that took $70,000 to diagnose. Now he's scheduled to go into the hospital and have surgery to fix the problem. i'm not sure I'd want to risk $70,000. That's a lot of self insurance.

Joe Varga
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Brian
You raise a good point. For most couples that are young and starting a family, this would NOT be the best way to go concidering it cost between $2000 and $4000 to have a normal delivery baby and $3000 to $5000 and up for a "C" section baby. If you have other problems the sky is the limit. I would suggest getting coverage of the NORMAL kind if you are in your family building year. After you have the kids, I would then begin to ween yourself off the HMO and others and self insure and get major medical. Hope that helps.

Joe
There are a variety of major medical plans, you can also get additional riders in some cases. The $70,000 you speak of is unfortunat and rare. If you are healthy and choose the proper major medical plan, one that kicks in after a certain amount of out of pocket cost, say 10k then you would be fine.

rec
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RECCLES4 wrote:
<<First of all, if you are healthy
and under the age of say um 90 you would probably do a lot better buying only a major or
catastrophic medical policy.>>

Would anyone mind sharing the particulars of their medical insurance? Just wondering if we are doing ok or maybe we could do better? Our insurance (bought individually, live in the Boston area):

Family of 4, $3000 deductible, max out of pocket $5500/yr, use an MSA of $2250/yr, premium = $227/month.

Thanks in advance.

Ted
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yours seems in line with mine (as i remember it).

Family of 5, Connecticut residence, Catastrophic Major Medical through Golden Rule, 7,500/yr out-of-pocket, $1,000,000 lifetime cap/individual. monthy cost=about $225
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We have two individual policies: one with Blue Cross, $2250 per year deductible for each of us, covers most everything. $192/mo for 2 adults. We live in Bay Area. This deductible policy was about 1/2 the rate as a $25 copay one.

Second is reg health ins. with Blue Shield for our 17yo daughter. $15 copay per visit. Its about $90 per quarter.

Sally
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Don't know if this helps. I am single insured. No deductible. No kids. $10 doctor visits, $5 for generic prescriptions. Small business policy (7 employees) we are on Pacificare HMO. I pay $135/month. No lifetime cap. Those kinda scare me. You could easily go through 1 million dollars with a small accident if they insist on charging you $5 per aspirin in the hospital!
(I'm in Colorado)

Janet
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<<(I'm in Colorado)

Janet >>

In case you are interested, I posted about a possible Fool gathering in Colorado on the Folly in Colorado board.

Jacki
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Sounds like a good policy except, how oftern do you go to the doctor. Once a year maby at $80 to $100. Sounds to me like you should look into a major medical policy. (If you are healthy, single and avoid doctors like the black death, cosider looking into a major medical and if it makes econamic sence, invest your savings)

rec
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yeah, BUT don't you see a lot of Road Rage in your area? People are being way too crazy driving around these days. I think having good health insurance helps me sleep well at night. So, that's how I see it. Everyone is different. (Car insurance only pays so much!)

Janet
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To each his/her own. Personaly, I have never seen road rage in action. Only heard about it happening twice in the 6 years I've been here. And most major medical policies would cover a major road rage induced accident. Besides, what price is security, to parphrase a quote. If you feel safe paying say, umm, $300 a month for insurance, would't you feel twice as safe paying $600?? I realize self insurance is not for every one at this point in time, but I am convinced that every one at some point in their life would be better off having self insurance backed up with major medical and even something called an umbrella insurance policy. (Insurance agents hate these because you can get a million bucks in coverage for pennies. That means little commission for them) I say, put your feeling aside for now and seriously review your entire insurance portfolio with an open and clear mind. You will find some areas you can do better and others you are comfortable with and some areas you are lacking. It is a very Foolish move to review your entire insurance needs on an annual basis, first without your agent, then after you see everything in its true light, bring in your agent(s) to get questions answered and senarios viewed.

rec
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