In the United States, approximately 16 million workers identify as being self-employed. Self-employment can offer many benefits, including greater flexibility and being your own boss. It also provides an entryway to entrepreneurship and small business ownership.
While being self-employed can bring many benefits, it also brings greater financial responsibility. This can include managing your taxes and ensuring you’re adequately covered for your healthcare. Many people in North Carolina and the US rely on their employer-sponsored health care plans to meet their health insurance needs. However, as more people move into self-employment avenues, individual health care plans are becoming more necessary.
If you’re considering becoming self-employed, it’s essential to understand the financial impacts and stresses of managing your own business.
Many people who run their own businesses worry they won’t be able to save money and maintain a consistent income level to manage their financial commitments. This includes not saving enough to fund a comfortable lifestyle in retirement.
In a recent survey, over 70% of people working for themselves said their biggest concern was being able to access affordable health care. With so many people in North Carolina and across the US relying on their employers for health insurance coverage, finding coverage at an affordable price point is a legitimate concern for many self-employed people.
If you’re just starting out working for yourself, it can be challenging to fund the total tax bill from your income if you’ve typically worked for an employer. Setting your services at the right price can help ensure you can still earn a profit and manage your expenses.
Several options are available to support you if you’re self-employed and looking for affordable health insurance. Talking to a local health insurance agent specializing in North Carolina can be helpful, as many health plans differ from state to state.
When you finish working for your employer that provides a group insurance plan, there’s a limited time where you can opt-in for COBRA. This continuation of coverage means you can maintain health coverage for you and your family through your previous employer. To qualify, you need to have been part of your company’s group health insurance plan. Regardless of why you left your job, it’s possible to get COBRA coverage.You’ll need to arrange a letter from your employer or the insurance company outlining your right to continue insurance coverage under the employer’s plan. There’s about a two-month window to decide whether to continue your coverage under COBRA. There can be some limitations on this. For example, suppose you worked for a business with less than 20 employees or a religious organization. In that case, you cannot obtain COBRA coverage as both of these business types are exempt from COBRA requirements.
The cost of your COBRA plan depends on what insurance you had via your previous employer. Given your former employer will have covered the majority of the premium for your insurance, it may come as a shock how much the COBRA plan costs. In addition to covering the total cost of your insurance plan, you may also need to pay up to 2% extra for administrative fees.You can likely use a COBRA plan for around 18 to 36 months. However, it’s essential to know that you’re no longer eligible for COBRA coverage under an employer’s plan if they go out of business. You’ll also cease coverage if you can’t make premium payments or if you become eligible for Medicare. Enrolling in a new group health care plan will also stop your COBRA plan.While COBRA coverage is a short-term solution, it can offer you the best option to avoid periods of disruption in your health care coverage.
With the Affordable Care Act (ACA) initiation, you can now compare and buy individual health insurance plans on the Insurance Marketplace. You can purchase insurance annually during the open enrollment period between November 1 and December 15. However, check the dates as this year’s open enrollment period was extended to January 15.The only way to purchase outside this period is if you meet a ‘qualifying event.’ These can include losing health care coverage via your employer or Medicaid, Medicare, CHIP, losing coverage through your partner’s insurance, divorce, death, new family members, or if you move. Other qualifying events include getting US citizenship, release from jail, joining or leaving the AmeriCorps, a change in income impacting insurance coverage, or if you were accepted into a recognized tribe.
If you’re self-employed or considering becoming self-employed, understanding some health insurance basics can make choosing the right plan for you a lot easier. Here are a few options to consider when you’re searching for self employed health insurance plans in North Carolina:
Health Maintenance Organization (HMO): requires you to choose a primary care provider (PCP) who will refer you to other providers when necessary. Unless you need OB/GYN care or experience an emergency, your PCP will need to refer you to other providers if you need to see a specialist. These plans offer no out-of-network coverage and are a good choice if you don’t travel a lot and can maintain the same doctor for your care.
Preferred Provider Organization (PPO): this plan doesn’t require you to choose a PCP or require referrals to medical specialists. It offers coverage for out-of-network providers and is suitable for people who regularly travel. These plans are a good choice if you have uncomplicated health care needs.
Health Savings Account (HSA): these plans allow you to use your Health Saving Account to pay for health care expenses and COBRA premiums. These plans are noted on the Marketplace and typically have higher premium costs.
In North Carolina, there are three basic levels of health insurance plans. Typically, the cost of your premium increases as your plan moves up levels. The lower health insurance levels, also known as tiers, have higher deductibles than the more expensive plans.
Bronze plans: the cheapest coverage that offers 60% coverage of your health care costs.
Silver plans: medium coverage offering you 70% coverage.
Gold plans: offers 80% coverage.
If you live outside North Carolina, some states also offer a Platinum plan which provides 90% coverage. Aside from the basic tiers, there are also ‘catastrophic health plans.’ These are a cost-efficient way for healthy people to get coverage for unforeseen illnesses and accidents. These are typically only available if you’re under 30 years old or qualify for a hardship exemption.
It’s essential to consider more than just the cost of monthly premiums when finding the right NC self employed health insurance. In addition to premiums, consider your plan’s deductible, which can significantly impact your budget. Your deductible refers to the out-of-pocket expenses you need to meet before your insurance plan begins covering your medical costs. Once met, you are responsible for a coinsurance % until you meet an annual out of pocket maximum. Researching different health care plans for self employed people is vital to make sure you’re adequately budgeting for your insurance. Your deductible can be in the thousands for low-tiered plans, so buying a low-tier option may not actually be the best option for you, despite having lower premiums.Also, consider your copay and coinsurance %, which is the portion of medical care you need to pay yourself outside of the deductible. First, take a look at the fine print of your NC self-employed health insurance to work out what percentage you’re required to pay for different services. Then, investigate service costs in your area to work out if you’re comfortable paying higher copays and coinsurance. You may prefer paying a higher premium to better anticipate your medical expenses.
You may be eligible for tax credits via the Marketplace if you’re self-employed, which can lower your premium cost. Tax credits are based on the income estimates for the coming year. If you make between 100 and 400% of the federal poverty level, you automatically qualify for a tax credit in any state in the US, including North Carolina.It’s also worthwhile checking if you qualify for a ‘Cost Sharing Reduction (CSR).’ On the Marketplace, they’re referred to as ‘extra savings.’ They are a discount you can take advantage of to lower your coinsurance payment, deductible, and copayment requirements. If you qualify, which you can establish by answering questions during the application, you must enroll in a Silver-tier plan. It can mean a lower out-of-pocket maximum limit, so you won’t have to pay as much before your insurance plan covers your medical costs.Use any tax credits you qualify for, but be mindful that you may need to pay back the difference between your income estimate and what you earned at the end of the year. This can also mean getting money back if you estimated less than you earned. To qualify for these cost-saving options, you need to purchase your health insurance using the Marketplace. Our knowledgeable NC health insurance agents can help with this.
In addition to private health insurance for self employed NC, there are some other options to consider:
Medicaid: depending on where you live, there may be options for accessing extended Medicaid coverage.
Joining a family member’s health insurance plan: If you are younger than 26 or have a spouse with employer health care coverage, you can consider asking a family member to add you to their plan.
If you’re out of the country: If you spend a considerable amount of time outside the US, you may wish to consider arranging either travel insurance or International Health Insurance Coverage.
If you need help accessing the best self employed health insurance in North Carolina, it’s worth getting guidance from an experienced and licensed health insurance agent. Our agents help people in North Carolina with their insurance. They can answer any questions you have about self employed health insurance plans in North Carolina. So get in touch with us today to find out your options or compare plans.
Health Plans of NC Staff
Health Plans of NC, Kelly Quinn