There are different types of health insurance options for freelancers. There are advantages and disadvantages to all of them, including a cheaper copay and restrictions on which doctors you can visit for care. Here are 5 options:
1. Group PPO Plan
Various associations offer group health insurance rates to freelancers who work from home. One type of insurance that you can buy is a PPO plan. Preferred provider organizations (PPOs) are a type of managed health care system that allows you to pick a general or specialist doctor without the need to get a referral from a primary physician first. You're also not required to choose a doctor that's in your network, but you pay an additional copay if you choose an outside provider. There's also a copay for office visits, prescriptions and emergency care. A PPO can be expensive because of deductibles for individuals or families. Be sure to plan for the deductible in your budget.
2. Group HMO Plan
Another type of health insurance that you can buy is a HMO plan. Health maintenance organizations (HMOs) allow you to choose only a primary care physician from participating doctors. Unlike a PPO, you have to see the primary care doctor first before you can get a referral to a specialist. That specialist must be a participating doctor. Although there are lots of restrictions, this option does eliminate deductibles for individuals and families. The copays are typically cheaper than what you'd pay with a PPO.
3. Individual Health Insurance
You can buy individual health insurance as a freelancer directly from an insurance agent. Expect to pay much higher fees than group rates. If the costs prove to be too much, consider forming your own group. Some states will allow just you to be a "group" if you can prove that you run a business.
4. Health Savings Account
You can save towards your deductibles and qualified medical expenses by contributing to a health savings account (HSA). This is an alternative to buying health insurance and paying for health care. You can pay for both current and future health expenses tax free using your HSA. There is one catch: You must buy a High Deductible Health Plan (HDHP) before you can open an HSA. An HDHP is health insurance that requires a high deductible because it will not pay for the first several thousands of dollars of health care expenses. The United States Deparment of the Treasury requires a minimum deductible each year for your HDHP in order to open a health savings account.
More About HDHPs
Although a health savings account may sound appealing, there are some drawbacks. You won't qualify to buy a HDHP if you have a pre-exisiting health condition. Also, if you do qualify, you can expect to pay deductibles starting at $5,000. Finally, your HDHP won't pay for routine doctor visits, or prescription drugs. The deductibles and costs to pay for expenses not covered may be too much for many freelancers, so plan carefully if you are considering this option.
There are many health insurance options available for freelancers, but it's important to remain informed about health care reform. New laws will either eliminate or otherwise impact these options.
Daphne Mallory, Esq. is the co-owner of Mallory Writing Services and has written more than 100 articles helping home based business owners and entrepreneurs start and market their business. You can learn more about her here.