Being an independent consultant has taught you to handle employment-related things on your own. Even if you have just recently decided to cut ties with the corporate world, you must be prepared for the challenges of being self-employed. You have to take care of your business growth, financial stability, taxes, and even retirement plan. And it might seem like a redundant expense to you right now, but you should also find the right health insurance plan for yourself.
Having to handle so many things on your own can indeed be frustrating, but many reports indicate that self-employed people feel happy and less stressed than they used to when they were employed. However, they tend to get a bit more stressed over finances, and health insurance for consultants is one of the costs they worry about, primarily because of sometimes unsteady monthly income.
When you don’t have a health insurance plan from an employer, it doesn’t mean that the one you can get as an independent consultant has to be too big of a burden on your finances. Let’s look into your options and why you should strongly consider finding the right health insurance plan.
Benefits of Having a Health Insurance Plan
You are bound to need medical help at some point, no matter how healthy you are at this moment or how convinced you are that nothing can happen to you. Spoiler alert: accidents and health scares can occur when you least expect them, and you can end up with a hefty medical bill you can’t pay on your own.
A consulting job might not carry as much risk as, for example, a construction contractor faces in their everyday work, but it’s not without its perils. Long hours in front of a computer could cause severe back issues or even carpal tunnel, and those conditions are expensive to treat.
For a monthly fee, you can get a health insurance plan covering a significant part of any covered medical check-ups and prescription drugs you might need. When you know that a routine surgery, such as an appendectomy, costs around $18,000 on average with all the accompanying costs, you can’t help but wonder how much a more complicated procedure that requires days in the hospital would cost.
That’s where health insurance comes in handy. And that’s not the only benefit of having a health insurance plan in place. Here are the main advantages you should consider:
- Financial protection: If you need medical care, health insurance can help you pay for it. Even with a higher deductible, you still wouldn’t have to cover the entire amount on your own. Insurance can protect you from high out-of-pocket costs and help you get the care you need to recover from an illness or injury.
- Access to preventive care: Health insurance plans must cover a range of preventive services, like immunizations and screenings, at no cost to you. These services can help you stay healthy and catch health problems early when they’re easier to treat.
- Peace of mind: Having health insurance can give you peace of mind knowing that it covers any health care needs that may arise.
Having health insurance means that you would pay less out of your pocket, but it should also encourage you to schedule preventative check-ups and mental health screenings, if necessary. The most significant benefits of having a health insurance plan are actually to your health.
Health Insurance for Consultants: What to Choose?
Working as an independent consultant means that you don’t have a health insurance plan through an employer, but you still have a few available options you can look into before choosing the one that best suits your needs.
- Health Savings Accounts (HSAs): HSAs are tax-advantaged accounts you can use to save for medical expenses. They’re often paired with high-deductible health plans and can be a good option for healthy people who don’t anticipate needing much medical care.
- Professional Association Health Plans (PAHPs): PAHPs are health insurance plans offered by professional associations. They may be an option if you’re a member of a relevant association.
- Short-Term Health Insurance: Short-term health insurance plans can provide coverage for a limited period of time (usually up to 12 months). These plans are suitable for people between jobs or waiting for coverage to begin.
- Consolidated Omnibus Budget Reconciliation Act – COBRA: If you lose your health insurance coverage, you may be eligible for continuation coverage through COBRA. COBRA allows you to stay on the former employer-sponsored group plan for up to 18 months, so this could be a good option if you have just left your previous position and are starting an independent consulting career.
- Individual and Family Health Plans: Individual and family health plans are health insurance plans that you can purchase directly from an insurance company. They can be a good option for people who don’t have access to employer-sponsored health insurance but are potentially a bit pricey.
- Partner’s (Spouse’s) Plan: If you’re married or live with your partner, you may be able to get health insurance through your partner’s employer-sponsored health plan. This can be a good solution if you need coverage but don’t want to purchase an individual health insurance plan.
- Group Health Insurance Plans: Many small businesses offer health insurance to their employees through group health insurance plans. If you’re a consultant who works with a small business, you may be able to get health insurance through their group plan.
- Affordable Care Act Individual and Family Health Insurance Plan: The Affordable Care Act (ACA) created a new type of health insurance plan called the Marketplace plan for people who don’t have access to employer-sponsored health insurance. These plans are available through the federal or state marketplace, and they can be a good option for people who need coverage but don’t have much money to spend on premiums.
- Federal Programs for Qualifying Applicants: These federal health insurance programs may be an option if you meet specific eligibility requirements. These include Medicaid, the Children’s Health Insurance Program (CHIP), and Medicare. You can find more information on the Healthcare.gov website and the instructions on enrolling in a health insurance plan through the Marketplace.
As you can see, you have a few options to choose from when looking for the best plan for yourself. Now you need to decide which health insurance for consultants plan is the best for you.
How to Find the Best Health Insurance for Consultants Plan
Choosing the right health insurance plan is not a simple endeavor, and you should do thorough research before picking the best option. There are quite a few things to consider before making your final decision, so you will need to weigh your options carefully.
You might not be able to afford some of these plans, especially if you have just started your independent consulting career. Also, some programs might not have what you consider a suitable network or coverage, which could be a dealbreaker for you.
To choose the health insurance that’s right for you, consider your:
- Coverage needs: Make sure the plan you choose covers the health care services you need or anticipate you could need in the near future.
- Budget: Compare premiums, deductibles, and copays to find a plan you can afford.
- Network: The preferred plan should include the doctors and hospitals you want to use. If you already have your chosen doctors, look for an option that includes the hospitals where they work.
- Health: Consider your health and health history when choosing a plan. You may need a plan with lower out-of-pocket costs if you have health problems.
No matter which health insurance plan you choose, you should make sure you understand the coverage it provides. This will help you stay healthy and avoid costly medical bills.
When it comes to costs the plans cover and their deductibles, they fall into five tiers based on their coverage and premium cost:
- Platinum: pays 90% of health care expenses, leaving the patient with a 10% copay.
- Gold: pays 80% of health care expenses, leaving the patient with a 20% copay.
- Silver: pays 70% of health care expenses, leaving the patient with a 30% copay.
- Bronze: pays 60% of health care expenses, leaving the patient with a 40% copay.
- Catastrophic: pays for three primary care visits and preventative services per year but requires the patient to pay all health care costs above that. This plan typically has a low monthly premium but a high deductible.
Selecting one of these so-called metal tiers will determine how much you would have to pay out of your pocket when using covered healthcare services. The catastrophic plan is best suitable for those with low income who don’t have enough money to pay for any of the above solutions, and you can typically get it through the Marketplace.
The general advice is to take time when looking into health insurance plans for independent consultants. Review the health care services each health insurance plan covers to understand the coverage they offer before enrolling. You should also consider the monthly premium, deductible, and copay costs of each health insurance plan to ensure you pick the best solution.
How Much Does Health Insurance Cost for Independent Consultants?
A few factors influence your health insurance premium, starting with your chosen plan. If your deductible is higher, the premium will be lower. Also, your age, location, overall health, and lifestyle (whether you are a smoker, skip preventive check-ups, etc.) play a significant role when the insurer calculates your premium.
According to the information from the Kaiser Family Foundation, the average marketplace premium in 2022 is $438 a month for a 40-year-old person, including premiums for non-essential health benefits. However, there are ways to lower your monthly premium that you can implement if you qualify for them.
For example, you can qualify for a “premium tax credit” when applying for coverage in the Health Insurance Marketplace. The amount of credit you will receive depends on the income you calculate your household will have in 2022, so make sure you give the best estimate on your Marketplace application.
Another way to save on health insurance costs is to participate in a health savings account (HSA) that we mentioned earlier. An HSA allows you to set aside money for health care expenses tax-free. Using this money to cover deductibles, copayments, coinsurance, and other fees may help you save on overall health care costs. Note that you can participate in an HSA only if you have a High Deductible Health Plan (HDHP) that typically only pays for preventive care.
Whatever the cost of your health insurance premium, it is probably still lower than the cost of any major health procedure that you might need. That’s why you shouldn’t have any doubts when thinking about whether you should get health insurance or not. If you would like to learn more about what other insurance policies independent consultants need, you can read our business insurance guide for consultants.
*The information contained herein is subject to Embroker’s Terms, is based upon Embroker’s experience as an insurance broker, available information, current insurance information, and marketplace, or may be of a general nature. Nothing in the content provided should be construed as tax, accounting, legal or actuarial advice. While we provide comments and recommendations related to the types and terms of insurance coverage, the decision to act or not act is ultimately the insurance purchaser’s alone.