The world of health insurance has changed significantly over the last two years… especially for those of us who are fortunate enough to spend our days working in the craft we love. Whether you’re full time self-employed or contemplating it, one big area to understand is health insurance.
How you buy insurance depends on where you live. If you live in the USA, you’ll need to be aware of some important dates and the penalties for missing them.
Affordable Care Act
The Affordable Care Act was passed to ensure that all Americans have health insurance coverage. While some may want to focus on the politics of the Act, we’ll focus on complying with it. Effective financial planning means looking at the law right now and not what might or might not happen in Washington!
Unfortunately, if you’re reading this and don’t have health insurance now, you already paid a tax penalty. If your penalty didn’t hurt your pocketbook (the minimum penalty is at least $95… if you earned $50k or more it’s at least a $400 bite… so it should have!), you’ll see a much larger penalty next year. That’s why you want to get health insurance today if you live in the United States.
And while it is important to avoid penalties, lets also look at this from a different angle: you really need health insurance. Most bankruptcies are health related. Beyond the expensive costs of treatments and doctor visits you’ll have to shoulder without a minimum level of coverage, you’ll also find yourself avoiding medical care because you can’t afford it… and that road leads nowhere good.
Avoiding The Penalty
To avoid getting hit with a penalty this coming tax year, you have until April 30 to get coverage OR you can enroll again in November. While some people I’ve met may read that they can wait and decide to do so, I recommend focusing on getting coverage now. According to this USA Today piece, you’ll only owe fees based on the time you were without coverage during the year… so not only will you have health insurance coverage, but you’ll also avoid additional penalties.
How Do I Get Health Insurance?
Getting coverage is a big question mark that you’ll need to find help with outside of Abundance Bound (sorry!). Some states have set up exchanges that individuals and families visit online to purchase insurance. 37 states haven’t set up exchanges, so people living in those states can either then use the federal government site or one of the many national firms which work with individuals to help them comply with the law.
If You Live In A State With An Exchange…
…you may receive a lower cost for insurance using the exchange than if you go outside of the exchange. Because individuals receive a tax credit for health insurance, exchanges often build the credit into your premium payments. People going outside of the exchange will still be eligible for the credit but won’t receive that money until filing their tax forms next year.
How Do You Know You’re Working With A Good Firm To Buy Insurance?
If you live in a state without an exchange, I prefer using brokers instead of going to individual companies to buy health insurance. Why? Brokers can look at a variety of companies and you can one-stop shop. Instead of making a ton of calls, you can save time and energy for your craft by getting this done more quickly.
Broker prices on insurance policies should be exactly the same price you’d pay if you went directly to the insurance company. You’ll know you have a broker who’s competitive if there are no additional fees for their service above those for the insurance.
About Health Insurance Choices…
There’s still a TON to consider when it comes to health insurance. Whether you buy a basic policy with high deductibles, an HMO, a PPO, or other type of insurance policy is a difficult decision. Often a policy that is cheaper up front can turn out to be very costly when you need to use the coverage, so think about a few factors:
– How healthy are you now? If you’ve struggled, you may need more comprehensive coverages?
– How funded is your emergency account? If it’s well-funded, you may be able to increase your deductibles. If not, you should keep deductibles low to make sure you don’t have big money problems AND health concerns at the same time.
– What changes are coming for you and your family? If you’re contemplating working for a company some time this year, your main goal may be to avoid penalties and costs. However, if you’re going to work more on your craft and less for others, you may want a plan that’ll be durable enough to last a long time.
The One Thing We Know About The Affordable Care Act
Because this legislation is such a political lightning rod, we’ve seen a ton of changes already, and we know there’ll be more coming in the future. Check in often with your health insurance professionals to ensure you have the most up-to-date information on how you need to comply with the law. Your pocket book depends on it!