Those setting out to start their own businesses and becoming self-employed face a huge challenge where it comes to finding health insurance. Finding health insurance for self-employed people is even more difficult if they have a family that has relied on their health insurance before, probably from former employment. Starting a small business can be difficult and expensive enough, without the added expense of health insurance. Those who have left a job and have looked into extending their health benefits using COBRA for 18 months have probably been shocked at the cost, which is prohibitive in many cases. COBRA costs are 100% of insurance coverage, of which a previous employer may have paid up to 80%, it can be a nasty surprise when you see the total monthly premium costs.

The alternative for health insurance for self-employed people is to look on the open market for coverage for an individually underwritten policy. If you and your family all have a clean bill of health then you may be able to find something more affordable than the COBRA option.

It is essential to find a policy that has sufficient benefits to cover your family and your assets as many bankruptcies in the US are brought about by inadequate protection when a medical emergency arises. As the self-employed person's business grows, those assets actually become more valuable, so without adequate health insurance coverage he is actually in more danger of losing everything - his home and his business, in the case of a catastrophic medical emergency.

Health insurance for self-employed folks gets a lot more complicated if there is a pre existing medical condition. COBRA cannot deny him coverage for those 18 months should he choose to keep that coverage, but when it comes time to look on the open market for another policy, a pre-existing condition can cause premiums to skyrocket.

Each state is different when it comes to health insurance for self-employed, when it comes to the period just before the end of the 18 month COBRA coverage. Some states allow people to move to an individual market insurance plan without prejudice, i.e. you cannot be denied if you have a pre-existing condition. Other states have no such provisions.

If you want to become self-employed and your spouse is working and can get a plan through his or her employer, getting coverage through that policy can often cost much less than finding a plan on the open market. One big advantage of this coverage is when your spouse adds you (and possibly others in the family) to his or her policy, the additional coverage cannot normally be denied, or premiums jacked up because of a pre-existing condition.


By Jim Monk and J W Byrd

Jim and J.W. owners of Tritus Insurance Group are owners of several consumer insurance websites providing the fastest online quotes for auto insurance, life insurance, health insurance for the self-employed, home insurance, etc.