With health insurance in the news nearly every day, you might be getting worried about what to do to cover yourself and your employees. After all, securing health insurance as a freelancer or small business owner is daunting enough; having it all be up in the air and constantly changing on the federal level doesn’t help.
But don’t get too worried, at least for now. Any changes to the health care system as it currently stands won’t take effect for a couple more years, and since nothing is set in stone as far as changes to the Affordable Care Act, your best bet is to set yourself up for coverage now and follow any changes as they happen – and if they happen.
As you start your search for the best health care option, one thing to brace yourself for, says Laura D. Adams, host of the Money Girl podcast and author of Money Girl’s Smart Moves to Grow Rich, is that it will be a very different process than if you’ve gotten health insurance through an employer in the past.
“If you are used to getting a group health insurance through an employer, you’re going to find that it is more work and more expensive to get it on your own,” she says.
One option is to go directly to a health insurance company, like Aetna, Anthem Blue Cross, or other names you’re probably already familiar with. You can either research those programs online or get a health insurance agent who can help you sift through the options and pick the right plan for your business.
Brave the Marketplace
A good place to start if you’re going to try to do some research yourself is Insurancequotes.com, which can provide you with quotes for various plans. Since some insurance companies have been pulling out of the Affordable Care Act marketplace, it’s worth taking a look around at what they offer. However, keep in mind that those plans are not required to cover people with pre-existing conditions, so they may be more difficult to acquire.
Most experts we talked to, though, agreed that, despite its politically fraught moment, the best option is the Affordable Care Act. The marketplaces vary by state, with some states, like California and Idaho, having created their own health insurance marketplaces, and others defaulting to the model provided by the federal government. But you can find out what your state offers.
If You’re a Sole Proprietor
If you’re a sole proprietor, you’ll be looking at purchasing an individual plan. Start by going to Healthcare.gov and selecting your state. Plans are then broken down into price levels, which are labeled using different types of metals (bronze, silver, gold etc.), and decide which level you want based on what you can afford and the type of coverage that’s important to you. Depending on your household income, you may also qualify for a subsidy. Healthcare.gov offers a calculator to see if that applies to you.
If You’re Incorporated
If you’re incorporated and have employees, you’ll want to check out the Affordable Care Act’s SHOP website, which offers group plans for businesses with 50 employees or fewer (several states offer plans for businesses with 100 employees or fewer; check your state’s site for specifics). You may be eligible for a tax credit if you meet certain requirements, including having fewer than 25 full-time employees, each with an average salary of $50,000 or less.
“The prices of the plans are going to vary depending on your situation,” says Adams, “your income, your family size, the insurance in general.”
Or Just Pay Your Employees More
A third option, says David Worrell, a managing member of Fuse Financial Partners and author of The Entrepreneur’s Guide to Financial Statements, if you’d prefer to keep things a little cleaner and more separate, is to skip these plans altogether and increase your employees’ salaries, thereby letting employees venture into the marketplace solo for individual coverage.
“I’ve tried 10 ways to provide company health insurance, and every option sucks,” he says. “We’ve resorted to paying higher wages so our folks can go out on the Obamacare insurance markets and buy their own. Believe it or not, that is the simplest and best way to do it.”
Worrell adds that the difference for employees winds up being minimal; essentially, whether the premiums are pre-tax or post-tax. Since there’s no guarantee that every employee will even take you up on the plan, he argues, “You can waste a lot of time (and fees) setting up complicated health care plans that nobody will use.”
“For my money, I’m going to pay real money to my people,” Worrell adds, “and let them get exactly what they want, rather than spend a lot of time fighting the bureaucracy.”
