Health Insurance for Freelancers
By Sherril Steele-Carlin
For some freelancers, health insurance isn't a worry, because they're covered by their spouse's insurance. Some may even have COBRA benefits for a while after they leave their employers. They're the lucky ones.
When many freelancers leave full-time jobs to strike out on their own, health insurance is one of their biggest worries, and one of their biggest reoccurring expenses.
Risky Business
Because of the cost, and the perceived difficulty of obtaining insurance, some freelancers take the risk of not carrying any insurance. WorkingToday.com says that about 30% of freelancers in New York City don't have health insurance. That's a dangerous gamble. If you are the only source of income for you and your family, getting sick or injured may not be just an inconvenience; it could cost you your business or your home. Of course, carrying your own health insurance can be costly, and you may not get as much coverage as you did when you had insurance through your employer.
Congress has enacted new legislation that allows freelancers to deduct 100% of their health insurance premiums, but you may not actually be saving that much money, as Eva Rosenberg points out in an article, "The Myth of the Self-Employed Health Insurance Deduction." She writes, "Even in 2002, when you will be able to deduct 100% of your self-employed health insurance (see the amendments to the Tax R.E.L.I.E.F. Act link below) that will only mean less than $1,000 saved. So, even then, expect that your insurance will be costing you close to $70 for every $100 you spend. Plus, you'll still always be paying the 15.3% self-employment tax on that money, because Congress doesn't permit you to deduct the insurance costs from your business profit."
Some Good News
Thankfully, there's also good news for freelancers who need health insurance. As more people branch out on their own or open small businesses, more affordable health insurance becomes available. It's mostly a matter of figuring out your health care needs, and then finding out what type of coverage you can get in your area of the country. Many membership organizations offer health care options to their members. For example, if you're a member of the National Writers Union (NWU), you can sign up for a managed care plan, covering you, or your entire family. Special rates are offered to NWU members by Aetna Insurance. They also offer "media peril" insurance which covers lawsuits and libel issues that freelancers might face.
Many other member organizations also offer health insurance for their members, and some carry special plans specifically geared to small business, like the National Association for the Self-Employed. You can also go directly to an insurance company for coverage. Often, buying insurance through a membership organization can be actually more expensive, if they add on any type of administrative fee.
There's also a type of insurance called "key person" insurance, which covers a crucial employee who is injured or dies, and the business is affected. If your loved ones depend upon your income, this form of life insurance will protect them if something happens to you. Don't gamble with your livelihood and your business. Health insurance is an important part of your growing business.
