Affordable Health Insurance for the Self Employed

My partner, Nate, recently made the transition from a career in software sales to a career as a real estate agent.  Though the potential advantages resulting from this transition far outweighed the potential disadvantages, one disadvantage nonetheless weighed heavily on both our minds – the absence of an employer sponsored health insurance plan.  Very few (if any) real estate brokerages offer benefits packages, leaving agents to identify and purchase individual health insurance plans on their own.  A similar scenario plays out for anyone that is self-employed or works for a start-up business.

While some may be inclined to accept the risks associated with an absence of health insurance coverage in exchange for the monthly cost savings it affords, we’re a bit disinclined after all that happened last year.  For those that weren’t previously aware, last year I was attacked and stabbed multiple times outside our home in San Diego, resulting in an ambulance ride to the hospital, emergency surgery, a stay in the ICU and later the recovery unit, and numerous doctors’ visits and prescriptions.  In all, I accumulated a mass of medical bills totaling in excess of $100K!  Thankfully, I was covered by my employer sponsored health insurance plan, leaving me responsible for paying only a few minimal co-pays.

Granted, the likelihood of a similar scenario playing out for you is slim, but believe me when I say that Murphy’s Law isn’t so farfetched.  Thus, we come to our point – make sure you’re covered in case of a medical emergency.  Had I not been covered by my employer sponsored health insurance plan, I would have been responsible for paying a $100K medical bill from my own pocket.  You no doubt see the importance of obtaining health insurance coverage, but are likely left with an important question – where do I find affordable quality health insurance coverage?

This blog will commence with a discussion of some health insurance plan characteristics to avoid when researching potential plans.  It will move on to detail some little known health insurance options, alternatives and substitutes that may be available to you.  The blog will conclude with a list of insurance plans that I identified through my research of various comparative insurance websites.

HEALTH INSURANCE PLAN CHARACTERISTICS TO AVOID

Through my research of multiple health insurance plans, I spotted two characteristics that could be financially detrimental to the unsuspecting person.  I’m sure there are a few more, but these are merely two examples that hit home for me:

Hospital Stay Co-Pay

When researching health insurance plans, be sure to take a close look at the plan’s hospital stay co-pay policy.  Upon review of several Kaiser-Permanente plans available through e-Health Insurance, I noticed that most of them include a $500/day hospital stay co-pay even after the deductible has been paid.  What this effectively means is that, even though you have paid your deductible in full and would otherwise expect to have all other medical expenses covered by insurance, you will continue racking up $500/day for every day you spend in the hospital.

The concept of a hospital stay co-pay becomes especially distressing when I relate it to the situation that my friend Justin found himself in before losing his battle with Non-Hodgkin’s Lymphoma in October of 2009.  Justin spent the last year of his life in-and-out of hospitals.  Had his insurance plan included a hospital stay co-pay of $500/day, he would have incurred well over $100K in medical bills that he would have otherwise been personally liable for paying.  My point in bringing this up is that, no matter how hard you try, you will never be able to avoid the potential for a medical emergency.  In the event you one day find yourself faced with a life-threatening illness, take precautions now to ensure that your medical emergency doesn’t turn into a financial emergency.

Co-Insurance

I would personally try to avoid health plans that required co-insurance.  For those not familiar with co-insurance, it is the amount that you are obligated to pay for covered medical services after you’ve satisfied any co-payment or deductible required by your health insurance plan.  Coinsurance is typically expressed as a percentage of the charge or allowable charge for a service rendered by a healthcare provider. For example, if your insurance company covers 80% of the allowable charge for a specific service, you may be required to cover the remaining 20% as coinsurance.  Had I settled on a health insurance plan that required 20% co-insurance, I would have been responsible for paying over $20K of my approximate $100K hospital bill out of pocket.

POTENTIAL HEALTH INSURANCE COVERAGE OPTIONS AND ALTERNATIVES

This section will detail a few of the health coverage options and alternatives that may be available to some of you:

Opt-In to Your Spouse’s or Partner’s Health Insurance Plan

This one is pretty obvious, but if you’re eligible and haven’t yet considered it, then you may want to go ahead and opt-in to your spouse’s or partner’s health insurance plan.  Unfortunately, because the federal Government does not provide for domestic partner benefits, this is not an option for Nate and me.

Check Relevant Professional Organizations for Benefits

Many professional organizations will partner with health insurance providers to offer discount health insurance policies for their members.  Most organizations provide details on these types of partnerships in the ‘Member Benefits’ section of their website.  Nate is a member of the San Diego Associate of Realtors (SDAR), which provides discounted insurance policies to its members through its partnership with Anthem Blue Cross and Kaiser Permanente.  What’s more, SDAR even provides vision and dental coverage options for their members.  If you aren’t yet a member of a relevant professional organization, it may help you ‘kill two birds with one stone’; one bird representing your need to socialize with peers as a means to gain recognition in your profession, the second bird representing your need to affordable quality health insurance coverage.

Enroll in a Community College Course to Obtain Access to Student Health Services

Most colleges, universities, and community colleges offer enrolled students access to student health services.  Student health services provide students access to health care for a variety of mild-to-moderate medical treatments.  As a student at California State University Long Beach, and later San Diego State University, I would make use of student health services whenever I caught a cold, required an immunization, or when any other mild-to-moderate medical issue arose.

The benefit to enrolling in a community college course is potentially three-fold.  First, the availability of courses ranging in subject from ‘Investing for Beginners’ to ‘Weight Lifting’ to ‘Ancient History’ means that you are likely to find a course that suits your personal interests.  Second, involvement in a community college course will offer the opportunity to socialize with potential clients that you may not have otherwise had access to.  Third, you will have access to student health services for little more than the cost of enrollment (often around $50-$100/course-unit).

INSURANCE PLANS IDENTIFIED THROUGH MY RESEARCH

One of the better comparative insurance websites I’ve come across through my internet research is e-Health Insurance.  The site allows you to research different insurance plans, providing estimated pricing based on your age and smoking habits.  The plans detailed below are just a few of the more noteworthy plans that e-Health Insurance identified while researching health insurance for Nate; or a 27 year old non-smoker.

Insurance Company: Blue Shield

Plan Name: Shield Savings Plan 4000

Annual Deductible: $4,000

Price: $89/month

This plan is actually a health savings plan, vice a traditional health insurance plan.  Whereas a health insurance plan generally provides doctor visits, hospitalization, and prescription services for the cost of a co-pay, a health savings plan provides no financial coverage until the annual deductible has been met.  Thus, if you’re one that visits the doctor multiple times during the year, this plan will not work well for you because all those doctor visits will be paid out of pocket until the deductible is met.  After the deductible has been met, most medical expenses are covered.  I view this plan as being meant for those individuals that rarely go to the doctor and are primarily concerned with having medical and financial coverage in the event of a medical emergency.

Insurance Company: Blue Shield

Plan Name: Essential Plan 4500

Annual Deductible: $4,500

Price: $149/month

This plan more resembles a hybrid of the health savings plan and the traditional health insurance plan.  It waives the deductible for up to three doctor/specialist visits per year, instead charging a $40 co-pay/visit.  After the three doctor/specialist visits, the patient is responsible for all medical expenses until reaching the annual deductible, after which most medical expenses are covered.  The plan also includes generic prescription coverage for a $10 co-pay (no name brand coverage).  I view this plan as being meant for those individuals that want the option to visit the doctor/specialist a few times per year, but that don’t require repetitive medical treatment (e.g. psychology/psychiatry).  In the event of a medical emergency, the individual would be responsible for $4,500 in medical expenses, after which insurance would kick-in and cover any remaining expenses.

Insurance Company: Celtic Insurance Company

Plan Name: CeltiCare Preferred Select PPO 100/0 Plan

Annual Deductible: $5,000

Price: $157/month

Like the last plan detailed in this section, this plan also resembles a health savings plan / traditional health insurance plan hybrid.  It waives the deductible for up to two doctor/specialist visits per year, instead charging a $15 co-pay/visit.  After the two doctor/specialist visits, the patient is responsible for all medical expenses until reaching the annual deductible, after which most medical expenses are covered.  It includes more extensive prescription coverage than the last plan, offering a separate deductible ($500) for prescriptions, which after meeting offers individuals generic prescriptions for a $20 co-pay, brand name prescriptions for a $40 co-pay, and formulary prescriptions for a $75 co-pay.

NOTE:  I am not a health insurance specialist, but merely an individual researching the subject of health insurance options and alternatives for his partner.  The information contained in this blog should be used for informative purposes only and should not be relied upon as the sole factor in making health insurance plan selection.  It is imperative that any person seeking information on health insurance plans perform their own due-diligence as it pertains to their specific situation.

2 Comments for this entry

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  Derek Sopp

  January 17th, 2011 on 9:25 AM

  Thanks for the comment and sharing the link Aisha. My blog was primarily focused on the individual, while the information contained under your link focuses on family health coverage. Much appreciated!
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  Alex Ahumada

  January 25th, 2011 on 6:08 AM

  Fantastic blog, Derek. It dawned on me how important it is to review all the charges associated with healthcare plans when I saw how expensive my dad’s cancer treatment/surery bills racked up (>$200k).