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Couples in Business

Health Insurance for Self Employed Couples

Starting a business with your spouse is everything they say it is: exciting, stupid, exotic, toxic, and then some.  It all starts with an idea, then you start writing things down, then you start talking to other people about it, and before you know it the two of you are on your way to becoming the next Sara Blakely or Andrew Yang.  

At what point do you think, “Hmm, before we fulfill our wildest dreams we should really get a firm grasp on our health insurance options.”

Never?  Yeah, us too.

We are still trying to figure it out!  It’s complicated and messy.  My goal for this blog is to simplify the self employed health insurance world for you and your partner to help you evaluate what’s best for you.  We will review some of the options available to you, when to enroll, and additional resources to consider.  

OPTIONS FOR SELF EMPLOYED COUPLES

If you both cut your ties with an employer at the same time, like we did, at some point you’ll get off the ‘Gram and start researching ‘health insurance for self employed.’  From there, you’ll get a bunch of listing of various health insurance quote generators.  STOP RIGHT THERE.  Please, please, paalleeeasseee don’t make the mistake we did.  I entered my information thinking, “Knowledge is POWER!  I’m going to get some quotes and make an informed decision!  Yay, go me!  I’m in control!”  Little did I know what would happen next….I started getting 50, that’s five - zero, calls a day.  It was extremely stressful and overwhelming.  We eventually found a free and valuable resource that guided us through the options below that I will highlight for you now.  

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to keep your health insurance plan through your employer (that you just said ‘adios’ to).  Smaller employers may not offer COBRA, so if you work for a business with fewer than 20 employees, check to see if this offering is available to you.  

The cost for this coverage may actually be the easiest one to figure out on your own.  Simply take the total amount of your premium (that both you AND your employer pay) and multiply it by 1.02 (102%).  For example, our TOTAL health insurance premium was paid entirely by my employer while I was employed (those were the days…).  It was about $900 for the two of us.  Therefore, I knew our COBRA premium would be $900 x 1.2 = $918/month.

  • FINANCIAL PLANNING HACK:  you can use your Health Savings Account dollars to pay your COBRA premiums.  You generally cannot do this with any other health insurance premiums!  

Short Term or Catastrophic Insurance

These types of insurances help bridge the gap between a longer term solution.  The biggest draw for these types of plans is the smaller monthly premiums.  Dan and I elected this option and our monthly premium was about $150/month.  However, it exposes you to greater risk should anything happen.  The deductible can be as large as $10,000 (like ours was).  Therefore, if you don’t have the reserves somewhere should anything happen, you should NOT elect this type of coverage.  This is a C.Y.A. plan in case something large an unexpected happens costing thousands upon thousands of dollars.

Other aspects of this plan worth noting:

  • Short term insurance plans are not compliant with the Affordable Care Act.  Therefore, some states don’t sell these types of policies (those states include: California, Colorado, Hawaii, Massachusetts, New York, New Jersey, Rhode Island, Vermont, Connecticut, and New Mexico).
  • The initial term for short term insurance policy can be no longer than 364 days.
  • They do not have the cover essential health benefits (which is why they are not ACA compliant).  
  • Generally you do not have coverage for pre-existing conditions with this policy.

Health Insurance Marketplace

This plan is the one operated by the Federal Government that all the political debates reference.  The marketplace allows self employed individuals (or couples!) to receive ACA-compliant plans that vary between the bronze, silver, gold, and platinum categories.  The bronze plan has the lowest monthly premium and the highest costs when you need care.  The platinum plan has the highest monthly premium but the lowest costs when you need care, and silver and gold are somewhere in between those.  If you are in the following states, you will apply for this insurance using the state specific website (instead of healthcare.gov): California, Colorado, Connecticut, District of Columbia, Idaho, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, Vermont, and Washington.

When you apply for this coverage, the two of you will see if you qualify for premium tax credits and other savings on the health plan.  You will also discover if you qualify for Medicaid and CHIP (children’s health insurance program) programs in your state.  You can qualify for Medicaid based on income, household size, disability, family status, and other factors.  

  • FINANCIAL HACK:  When you start a business, a lot of times you make $00,000.00 to start!  All of your expenses (both personal and business) may be funded through savings.  Therefore, your income may be extremely low.  Medicaid may be an option for you as you get up and running!  Check out this website to see if you qualify:  https://www.healthcare.gov/lower-costs/ 

Health Insurance Ministries

This is another lower cost alternative to traditional insurance plans.  As the cost of those traditional plans increase, so do individuals seeking lower cost options like Health Insurance Ministry plans.  

Healthcare sharing ministries are faith-based non-profit organizations that pool members’ money to share medical expenses. These organizations generally require members to make a promise to adhere to certain biblical values and to participate regularly in worship or prayers.  There are no protections to the consumer from the state of federal insurance departments.  Most insurance arrangements have a contract of indemnity, which essentially means the insurance company promises to pay the premium payer should a loss occur.  NO SUCH AGREEMENT EXISTS with Health Insurance Ministry plans.  But again, the allure of this option is the significantly cheaper premium.  

Professional Networks and Associations

Depending on your line of work, you may be eligible for health insurance through a professional association or network.  Examples include the Affiliated Workers AssociationAssociation for Computing Machinery, Writers Guild of America West, and the Freelancers Union.  Details on who each serves is below:

  • Affiliated Workers Association: entrepreneurs, self-employed professionals, small business owners and independent contractors, age 18 and over
  • Association for Computing Machinery: computer professionals, such as coders, developers, computational theorists, and database engineers.
  • Writers Guild of America West: professional writers and producers in the film, television, and new media industries
  • Freelancers Union:  freelancers in all fields from across the U.S. It has formed partnerships with a couple of different health insurers to offer health care plans in California, New Jersey, New York, and certain parts of Texas

WHEN CAN WE ENROLL?

The following plans can be enrolled after your W2 employment ends:

  • COBRA (but you only have 60 days to enroll!)
  • Short Term Health Insurance
  • Health Insurance Ministries
  • Various Professional Network and Association plans

The marketplace has a window for enrollment.  Open enrollment for 2020 coverage was November 1st through December 15, 2019.  

Life happens, which is why ‘Special Enrollment’ exists within the marketplace.  Special events that allow you to enroll outside of the open enrollment include losing health coverage, moving, getting married, having a baby, or adopting a child.

ADDITIONAL RESOURCES

Utilize the hyperlinks within this article!  For instance, if you want to see if your state offers short term insurance, click here: https://www.healthinsurance.org/short-term-health-insurance/.

Consider reviewing what your cash flow will look like as you get up and running.  Your reported income may be quite low, qualifying you for social programs like Medicaid.  Check out this website to see if you would qualify: https://www.healthcare.gov/lower-costs/.

We connected with an organization that offers FREE guidance on insurance selection.  It’s likely your state has something similar.  For our Minnesota followers, we utilized Health Access.  There is literally a big button on their homepage that says, “Get Free Help,” so we did.  

And lastly, ask around.  If there is one trait that all entrepreneurs have in common, it’s that they want to help each other out.  Find someone who is in your industry or line of work that made the plunge before you.  I’m sure they would be happy to share in their experience.  

If you’d like to speak more specifically about your health insurance options and strategies, schedule a time with us today!  Our mission is to help as many couples as possible.  We’d love to be a part of your journey in entrepreneurship and help in any way we can.  We are a fee-only financial planning firm based in Rochester, MN and providing virtual services to couples across the country.

- Natalie

Disclaimer:  This article is for informational purposes only and is not a recommendation of Fyooz Financial Planning, Natalie Slagle CFP®, or Daniel Slagle CFP®. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment or financial planning strategy. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.

Natalie Slagle
Founder, Fyooz Financial
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