As an entrepreneur who is also working a 9 to 5, I am constantly thinking about what I would need to become a full-time entrepreneur with health benefits. One advantage I have is that my husband also works, and he has access to his employer’s health care plan. So if I left my job tomorrow, my family could easily transfer to my husband’s health insurance.
Truth is, not everyone is so lucky. This article will help entrepreneurs who are debating the big jump or small business owners with a few employees figure out their health insurance options. Use this as a guide to make sure you can go into business for yourself but not sacrifice your health or your access to healthcare in the process.
Health Insurance for the Self-Employed
If you are working independently as a solo entrepreneur, for example, as a freelancer, consultant or independent contractor and have no employees, you are self-employed. As a self-employed entrepreneur you can access health care through the federal government’s Health Insurance Marketplace. There you can compare health care plans, and select the best one for your budget and medical needs. Open season is November 1 through December 15.
Once you pick a plan you must complete a Marketplace application. Depending on your estimated income for that year and household size, you could qualify for premium tax credits. The tax credits can be paid directly to your insurance company. As a result, the amount you pay for insurance each month is lowered.
It’s important to remember the tax credits are based on your estimated net income for the year you’re getting coverage, not last year’s income. Tax credits can change from year to year if your family size or income changes. Here are some tips to help you estimate your income.
Depending on your income and family size you may also qualify for health care from your state’s Medicaid and CHIP programs.
Health Insurance for Small Businesses & Entrepreneurs
Once you hire your first employee you are no longer a self-employed entrepreneur but rather a small business. As a small business with at least one employee, you qualify to use the SHOP Marketplace for small businesses. Here you can select health insurance coverage for you and your employees.
As a small business owner you can offer your employees three options for health care: group health insurance, a health insurance stipend or personalized health benefits. Although the law does not require businesses with fewer than 50 full-time employees to provide health insurance to their employees, you can get tax credit if you do provide coverage. In some cases, the tax credit could be up to 50 percent of the amount the employer contributes towards the employee insurance premiums. Once your business has 50 or more full-time employees you must provide affordable health insurance or pay a tax penalty.
Group health insurance tends to be the most expensive option and requires the employer to contribute to each employee’s insurance premiums. Depending on your business’ income, this may not be affordable for you. Health insurance stipends provide you an opportunity to help your employees cover medical expenses, but this income is received just like wages and could be taxable for you and your employee. It’s also up to employees to decide if they want to use the money for medical care or another expense. You have no control over how the money is used. Under a personalized health benefits plan employees are given a monthly amount they can spend on health costs. Then after they receive medical care, employees seek reimbursement by showing receipts for medical services.
Perks of Membership Organizations
When you are in business for yourself, membership organizations may be essential to your success to generate leads and help navigate being an entrepreneur. So when you are trying to navigate entrepreneurship don’t forget to ask people in your membership circles.
For example, the National Association for the Self-Employed offers software discounts, life insurance and health insurance at affordable rates to its members. But you have to pay the membership fee plus the cost of insurance to get covered, so do the math and see if it’s worth it for you.
The Shared Healthcare Industry
To meet the needs of entrepreneurs, many companies have started to make the healthcare search and application process easier and less costly by spreading health costs over the group. What has become known as shared healthcare is helping freelancers, ministries and more get covered faster and more affordably. Some companies to consider include Stride, Liberty Healthshare and kNEW Health, which will have a healthcare cost-sharing program starting in January 2019.
A lot of people pick jobs based on salary and benefits. If you plan to grow your business of one to a business of many, spend some time considering what benefits you can offer, especially when it comes to healthcare. It may take some time before you find the best, affordable fit, but it’s worth the work — your employees will love you for it.
Share with our community your suggested healthcare options for entrepreneurs or small businesses.
We would love to hear how you made the big jump from a traditional job to full-time entrepreneurship without sacrificing your access to affordable medical care.
Acquania Escarne is the creator of The Purpose of Money, a community of women building generational wealth for their families one dollar at a time. As an entrepreneur, real estate investor, and licensed insurance agent, Acquania has always been passionate about financial literacy. On her website, Acquania blogs about ways to help you improve your money habits, create wealth, and invest in real estate. Follow Acquania on social media for daily tips.