When health care reform passed, all Americans were required to carry health insurance. In theory, the move makes sense. In practice, it is one of the largest expenses and most financially painful aspects of consulting. This post is not making any political statements. In fact, having worked with health care systems for years, I have seen travesties caused by very ill people who simply could not afford the care they needed and frankly, deserved. However, the affordable health care act created wonderful opportunities for the poor. But the middle class is now shouldering an unsustainable burden.
I have spoken to three consultant friends who have decided to pay the yearly fine rather than buy insurance plans. Not because they want to. Because they cannot afford to carry the insurance they fearfully are neglecting to purchase. For my family of five, I am paying the lowest cost I can find for the best coverage for our health realities. The cost: $1,800/month. A consulting colleague in the same family situation shared that her health care is more than her mortgage, and her husband recently became ill so she is discovering that the self insured version of her coverage provides much less than her plan at her former workplace. She is adding another $1,200/month in out-of-pocket expenses now that treatments have started for her spouse. $3,000 a month for her health care - $36,000 per year.
I have written about expenses related to taxes and start-up costs, but I confess that this expense was the biggest shock of my entire short consulting life span. I had conducted only limited research before I opened my LLC and in hindsight and in my counsel to readers, this was a mistake. There are many sites that offer you guidance on self employed insurance options. A good overview guide is at HealthCare.gov. I used eHealthInsurance to start, but there are many, and I have found them all to be consistent. Individual plans offered by Blue Cross/Blue Shield, Kaiser, etc. are also helpful, but limited to only the plans they offer. It is an interesting exercise. I started out looking at an HMO and actually found that it was more expensive than a higher level PPO. Reading every detail is important. Do you want to pay high copays or higher percentages of your care and gamble on good health? Are you risk averse and want to pay more upfront for the guarantee of better coverage? Are you somewhere in between? The tools on these sites are very helpful in assessing both what you can afford and what coverage you really need.
The biggest disappointment I have heard from my freelancing friends is that only the most disadvantaged really qualified for the new reform state plans. Each state varies, but household income less than $50,000 is the highest threshold I have found. In California, you qualify if your yearly income is between $16,000 and $47,000. I celebrate this for providing more access to all socioeconomic levels, but I am shock at how this comes at the expense of other households.
It is what it is… for now. I thought the post was important simply because if you have to manage health care on your own as a consultant, being prepared is critical. Good luck shopping for the best plan for you and your loved ones.
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