Editor’s Note: Today’s blog post comes from Yolander Prinzel, one of the freelancers we profiled in our new book. The recently passed healthcare legislation in the U.S. will likely change (or add to) some of the options listed below. But if you’re planning on going solo (or if you’re already on your own and are looking for healthcare solutions), don’t wait for Washington. Start doing your homework today!
When it comes to health insurance, there are a lot of issues freelancers could bring up. Some freelancers think health insurance is too expensive, others hate the restrictions on doctors you can see, and others… well, others would be happy with just about any policy if only they could get one.
Unfortunately, the last group—those freelancers who can’t get health insurance—is usually filled with exactly the kind of freelancers who desperately need health insurance… those who are sick and have pre-existing medical conditions like heart disease, diabetes, muscular dystrophy and others. And when an insurance company sees these cost-prohibitive conditions on an individual’s application for insurance, they decline them.
But all is not lost. If you are a freelancer with a pre-existing condition who needs health insurance but doesn’t know where to turn, here are some ideas for you.
• State High-Risk Pools: Many states have subsidized pools for uninsured individuals. These pools are for individuals who have been declined individual coverage and don’t have access to group insurance. Not every state has a high-risk pool and some states have pools that are closed to new applicants. You can see if your state has a high-risk pool here http://www.cobrahealth.com/statehighriskpools.html.
• COBRA: If you have recently left your job to freelance fulltime then you may be able to elect a continuation of your former employer’s group coverage through COBRA, albeit at a higher premium. With COBRA you can keep the policy for 18 months (36 in the event of divorce). If you didn’t leave your former employer voluntarily and were laid off or fired (for anything other than gross misconduct) there are many measures in place now that will allow you to get tax credits and subsidies for your COBRA premiums. The United States Department of Labor answers your questions about COBRA here http://www.dol.gov/dol/topic/health-plans/cobra.htm.
• HIPAA: Once COBRA coverage ends, if you are unable to get a group policy and are denied an individual insurance policy, HIPAA (the Health Insurance Portability and Accountability Act of 1986) will give you special enrollment opportunities that allow you to keep insurance coverage. Unfortunately, there are no guarantees as to the benefits and cost of these opportunities. You can find out more about HIPAA here: http://www.dol.gov/ebsa/faqs/faq_consumer_hipaa.html. In order to qualify for HIPAA special enrollment options you must not end the COBRA coverage voluntarily before your 18 months are over.
• Group Insurance through Unions: Group insurance is not underwritten on an individual basis so an uninsurable person can get coverage and will pay the same rates as others in the group. Many freelancing unions offer group health insurance coverage to members who are residents of New York. Residents of other states will find that the majority of unions do not offer group coverage in their state unless their union is associated with The Entertainment Industry Group Insurance Trust (TEIGIT) which gives access to group insurance for residents of eight states. To find out if your union is associated and if your state is eligible, check their website http://www.teigit.com/associations.cfm. Remember: In order to avoid a pre-existing condition exclusion in most group insurance policies you must have had no breaks in creditable coverage longer than 63 days (per HIPAA). If you have had a break in coverage that exceeds 63 days the group insurance carrier may exclude your pre-existing condition up to 12 months.
• Small Business Group Policies: Some states allow group insurance coverage for really small, 2-50 employee businesses. If you have incorporated your freelancing business and have a spouse to add to the corporation, you should meet with an insurance agent to find out if group insurance is a viable option. Keep in mind that while the initial policy won’t be experience-rated based on your own claims experience (instead it will be rated based on the experience of similar groups), after the first year has passed your groups individual claims experience will be analyzed. Since you have such a small group, there aren’t many healthy people to help absorb some of the average claims experience and rate increases so rates could be raised substantially.
• Limited Benefit Plans: Limited benefit plans are something many uninsurable people turn to in order to get some sort of coverage. These plans are not insurance policies. They are medical plans that offer limited reimbursement and benefits. The problem is they have very low benefit caps. Some of them cover just $5,000 worth of hospital costs over the entire life of the policy. You might consider combining them with a major medical policy (if you can get approved), but if you need a lot of monthly prescription medications, doctor’s visits and expensive tests, these won’t give too much protection. In addition these plans may not qualify as creditable coverage under HIPAA and could leave you at risk for having a break in coverage. Of all the choices facing uninsurable freelancers, limited benefit plans may be the worst.
If you have any questions or concerns about the insurance option you are considering, search your area for health insurance advocates. Many attorneys and non-profit groups exist to help you wade through the fine print and figure out the best solution for you.
Image: jscreationzs / FreeDigitalPhotos.net
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Yolander Prinzel is a finance and insurance writer as well as a FINRA series 7, 66 and 2-15 licensed financial representative. Her e-book, “You’ve Found Your Specialty—Now What? Tips and tricks to finding and scoring clients while making a living writing what you know” is available on her website.
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I’m always surprised by how many options there are for health insurance for freelancers. Many people make it out to be a situation where there simply aren’t any options — the real truth of the situation is that there are plenty of options, but they just cost more than freelancers feel that they can afford to pay.
Well, in the case of an uninsurable freelancer or spouse of a freelancer, it can be cost-prohibitive. I’ll use my situation as an example. My hubby had a heart attack, has heart disease, has stents every few years, is on a lot of medication and is uninsurable. Right now we pay $718 per month in COBRA premiums. In October when COBRA runs out, we are looking at a $1,700 premium through the union. Our state’s high risk pool has been closed since the 90’s and I don’t want to use HIPAA coverage because there is no guarantee that we will get coverage we need and can afford. On top of the $1,700 premium we need to pay we also have the copays for the medications each month (which will go up under the new plan) as well as doctor’s visits, cardiac rehab and stress tests to pay for under the deductible. With people who are sick, it’s not just that monthly premium you have to consider. And even if it was–$1,700 a month is pretty intimidating just for health insurance on 2 people. By 2014 the new health insurance exchange may be a help to us–but that’s 4 years away.
But there are options and compromises. Personally, I’d rather try to afford that premium along with all the other expenses than get a job with benefits.
I thank god everyday for the fact that I haven’t born in USA.
You health care doesn’t care about your health, just about your money, wake up
This is invaluable information, Yolander. Thanks for sharing it with the freelance & solo community!
Federico – I respect your opinion, but I thank God every day that I’m an American. And the fact that tens of thousands of people still risk their lives (and the lives of their children) every year to come to this country… well, that says a lot. Also, to say that all the healthcare system in this country cares about is money is overly simplistic. There’s much more to this issue than just money.
I’m not saying we’re perfect in this country. Far from it. In fact, I’m very critical of the way we address some of our challenges. But I’m critical because I know we can do better. One of the areas where I’m very disappointed with (again, because I know we can do better as a country) is health insurance.
Rather than addressing this complex problem at the core, we choose to take an overly simplistic approach that fails to address the underlying causes of our healthcare challenges. It’s like driving a car that continues to have mechanical problems. But rather than taking the time to come up with viable solutions, you tell yourself that the only options are to either get rid of the car and walk to work (50 miles round trip)… or buy a brand-new $90,000 BMW.
As Thursday Bram points out above, there are LOTS of options out there for solo professionals. But few people fail to look. They don’t want to do their homework. Or they don’t want to pay more than $50/month for coverage. (But they’re totally cool splurging on their $800/month Mercedes payment. Interesting.)
What we desperately need to address are the special cases — those such as Yolander’s, where a family has few (if any) options. And we need to address is in more ways than just finding viable coverage options. We also need to address the whole cost-of-delivery issue, which, if you know anything about how hospitals and doctors’ offices are run, is a HUGE area of opportunity.