Freelancers and independent contractors—where do you buy your health insurance?

In My Humble Opinion
1

Other than participating in your spouses’/partner’s plan, where do people with no company-provided health benefits buy their health insurance?

We buy ours through Freelancers Union. The policy ends within a month or so, and we’re thinking about shopping around. When we did last year, it was utterly fruitless (private plans were more expensive and covered less). Worth it to do so again this year? If it’s not available in your area, what do you use? Do you like it?

[aside]Shouldn’t it be Freelancers’ Union?[/aside]

2

I’ve used Cobra, Individual Health, and am moving onto a Spouse’s coverage. Individual health insurance is going to be rated based on your age and health - if you are in poor health and older it will be more expensive than group, if younger or better health less expensive. One thing I noticed is that individual health at many companies is setup in “groups” just like group health insurance - so being on a plan that is favored by people who are younger and/or have fewer medical expenses is cheaper than one favored by people with more expenses.
That sounds self explanatory, but what it really means is that you should often look to very high deductible HSA compatible plans, regardless of your health, and do the math -yearly premium + deductible for HSA and compare to yearly premium + deductible for non-HSA - I found that the yearly premium + deductible for HSA was cheaper than for a traditional plan, and that’s excluding the possibility that you under spend your deductible and end up with money left in the HSA that is yours to keep.
IE it was like $14k/year for family coverage + $1k deductible vs like $7.5k/year + $5k HSA compatible deductible. HSA compatible is key though - the deductible on high deductible plans that aren’t HSA compatible isn’t tax deductible but an HSA is, so it ends up being apples to apples vs traditional coverage. Without an HSA the $14k would all be tax deductible but only the 7.5k on a high deductible plan would be, and the rest would be post-tax money.

3

(Without the apostrophe, “Freelancers” can be considered an attributive noun, no apostrophe needed.)

When hubby was essentially out of work, we went to our local independent insurance agent, and he set us up with something we could live with. Should have done that first; we had tried shopping around online :smack: and got an HDHP with MSA that was kind of a mess to deal with. Good thing we didn’t have any serious health issues while we were on that; we rarely had more than the bare minimum in the account to cover expected expenses (you know, with him being underemployed and all). But the agent got us into a PPO or something like that through BCBS. It served us fairly well until hubby got a job that seemed like he might be there a while, and we felt comfortable taking the employer’s insurance.

I had al$o checked into profe$$ional a$$ociation$ in my field, but for the mo$t part tho$e $eemed fairly expen$ive.

4

Where in the country are you? I might be able to get you some quotes for a couple of plans if you are in my area.

5

The spreadsheet I use to compare policies basically adds the annual premium with the deductible and co-insurance (it’s slightly more nuanced than that, e.g. it accounts for the deductible in calculating the co-insurance amount, and incorporates the plans’ max out-of-pocket amounts). There are smaller amounts that don’t get factored in (e.g. co-pays), but those are small enough to look at if two plans come close.

The way we’ve looked at it in past years, the lowest plan was actually the most economically rational. In looking at ‘which plan would we wish we were on’ scenarios, it didn’t make sense to move to the higher/costlier plans until we were incurring fifty to a hundred thousand dollars of covered expenses. And even then, the difference was (IIRC) only about four thousand dollars over the year—if it came to that.

Right now, the high deductible plan is actually looking to be the least costly option (though I still have a few questions for them about coverage), particularly in light of an upcoming procedure.

But it’s still hard to fathom that other than work insurance, this is the only nominally affordable insurance out there for people who can’t buy it though their employers.
ETA: Hudson Valley, NY. The full plan pricing and coverage is available at the linked Web site if that makes a difference.

6

Unfortunately Hudson Valley is a bit beyond our reach and the rates on the plans through the union appear to be about the same as the plans we would offer to a sole prop/independent contractor (though ours have slightly lower deductibles.)

All in all the rates for those plans aren’t bad and I think you would be very hard pressed to find better rates on an individual policy. If you want really, really excellent coverage at a much lower rate you would need to have a large group policy by working for a company with hundreds of employees or a government position or something.

7

Thanks. We’ve had them for a couple years now, and have yet to see anything come close. But as I mentioned, it’s counter-intuitive (to me) that there is not a competative market for people to buy their own insurance. (Note I’m trying not to pass any judgment on that here; wrong forum).

Anyway, being in the insurance industry, do you think you could check my reasoning and rationale for comparing the policies?

Among core assumption is that small things like differences in co-pay will only amount to a few hundred dollars over a year, and can be disregarded for the time being. The Big Core Assumption is that the policy premium, deductible, co-insurance, and out-of-pocket-maximum form the basis for the comparison. When looking at the policy documents and summaries, I’m not seeing any difference in coverage scope or anything else.

I got the total to be spent on medical care per plan by adding its annual premium, its deductible and its co-insurance amount. The formula accounts for the deductible before calculating the co-insurance, and checks whether the out of pocket maximum has been reached.
If it helps Excel-wise, here’s the formula I used (with apologies if it’s cumbersome; I’m not an Excel guru): IF(B$4+(($A7-B$4)*B$5)<B$6,B$3+(B$4+($A7-B$4)*B$5),B$3+B$6)

Row 3 has the premium, 4 has the deductible, 5 has the co-insurance percent, 6 has the out of pocket max, and rows 7 on have increasing covered expenses. I have two columns for each plan, one for individual- and one for the family-level deductible and out of pocket maximum.

If that is correct, then it seems as if the High Deductible 5,000 plan makes the most sense—particularly because the premium difference between it and the HD 10K plan is just about $5,000.

Aside from cash flow issues, are there major differences between HD plans and PPOs?

8

When I was self-employed I joined the local Chamber of Commerce and bought my health coverage through them.

9

The one thing you are missing (particularly if you don’t meet the deductible every year), is how aggressive are the insurance companies discounts for your providers ? This information is hard to find but is really important especially for a high deductible plan - for example my old insurance paid the Primary care physician $75 for a visit while the newest one pays $110 - and on a HDHP that comes out of your pocket for a long time.

10

Shoot, just checked three chambers of commerce Web sites, and neither the two county (we’re on the line) or the state-wide organization offers insurance.

The insurer behind the plan is Blue Cross/Shield. It’s a wholly unfounded assumption that the rates they negotiate are generally the same across the board (and a secondary assumption that if they negotiate different rates for mega-corp participants, at least the rates between the PPO and the HD plans are similar).

Nonetheless, there is an upcoming (covered) procedure in the works. I sat with the practice’s financial folk, and their best estimate is in the 13 to 15 thousand dollar range. So no matter which plan I go with, I’m likely to hit its deductible right off the bat.

So, once the HD plan’s deductible has been met, I’m unlikely to see any difference (other than not receiving a bill) in services between it and a PPO plan? I’m going through the certificate of coverage and I’m not seeing a difference there.

11

I’m in Spain so it doesn’t quite apply, but some of the possible sources for private medical insurance here include already-mentioned professional colleges.

12

Last time I got laid off my COBRA was like ~$2300 a month for my family of four, so I went with Empire BC/BS Tradition Plus hospital plan and paid cash for everything else. I’m in NY. It basically covers hospitalization and some associated expenses and not much else. I think it was $425 a month or thereabouts. It was a security blanket until the next job kicked in, anyway (never used it).

13

The differences in copays and such do make a very small difference, often only a couple hundred dollars a year, but the benefit to the company isn’t that they save the $350 annually or anything. The benefit is that the more you are responsible for financially the more you are going to really think about it before you go to the doctor. If you have a copay or a deductible and will have to pay something out of pocket you are far less likely to go to the doctor for every sniffle and will probably take some time to let a cold pass on its own or do a little research before you go to the doctor for a random pain or twinge. It saves them money on how much they pay out to doctors instead of earning them more in premium on the front end.

As far as the differences between the HD plans and the PPO plans, a PPO is going to offer in and out of network coverage so you can see a doctor that doesn’t participate in their plan and still have at least some coverage for that. The HD plans are more than likely HMO or EPO type plans, meaning that you can only use that coverage within their network of doctors and you may or may not require a referral to see a specialist. The PPO plans are more expensive because they offer the extra out of network benefits. There may be other differences between the plans as well but I would have to sit down with those plan summaries to really go over them with you.

Really you probably won’t notice a ton of difference unless you end up needing to see an out of network doctor. For lots of people they don’t care which doctors they see, but for many they may want to know that if they find out they have cancer they would be covered if they wanted to go to Johns Hopkins or Sloan Kettering even though they don’t participate in the network of BC/BS. If you tend to be pretty healthy and you don’t run into any major problems an HMO or EPO is an excellent way to keep your monthly cost a little lower. If you do run into problems on those plans you will almost certainly have a doctor available who can help you but they may not be the best in their field or the doctor you feel most comfortable with as a patient.

14

When I had to convert my COBRA I had already formalized a little business with two very different sources of income. I called Blue Cross Blue Shield about continuing their coverage as an employer (though I didn’t have any employees except myself, and don’t expect to).

They would not consider me for a business policy at first because of the part of my income that I get as a self-employed 1099 contractor. But when I mentioned the other side of my company, where I get paid directly by individuals and not by other businesses, because I had a business checking account and a city business license, I qualified to have my own company plan. I had to send them copies of checking account statements and the license to prove it.

The additional financial benefit is that I can deduct all the premiums. It’s still more expensive than being in a bigger group and I do have a large deductible, but it’s definitely a better deal than having an individual plan.

15

I used eHealthinsurance.com to compare plans, and I bought a Blue Cross Blue Shield HSA plan. It wasn’t that hard to do, and it wasn’t terribly costly for me (under $200/month). I’ve been on this plan (or my original United Healthcare plan, which I changed to the Blue Cross plan after comparing rates) for about 8 years now. I’ve been pretty happy with the plan, but I haven’t used it too much. I’m also 36, and in good health with no pre-existing conditions, so I’m lucky to find reasonably priced health insurance.

16

As an consultant, Blue Cross/Blue Shield was the best I could find in MN for a reasonable price. I am now employed but my small firm also uses a BCBS plan. They pay a flat portion of everyone’s premium and we pick up the rest. Due to age, it’s now about the same amount I was paying myself a few years ago - the rate has doubled.

17

I get my insurance through a state program for people who can’t get insurance anywhere else. I thank god we got on it when we did - there have been times the number of people on the waiting list to get in the program have exceeded the number of people on the program.

If we didn’t have it we’d be screwed - my spouse has a birth defect and several additional problems like diabetes. No way could we get an individual policy, and a high-deductible policy would be useless for us.

But you have to live in Indiana to get the insurance.

18

Obamacare. I can’t get private insurance due to pre-existing conditions (obesity, hypertension, mood problems) so as part of the health reform act there were state high risk pools set up for people until 2014, when insurance is supposed to start accepting people with pre-existing conditions (who knows if the law will still be standing in 2014, so many people nowadays seem to abhor the idea of regulating insurance companies for some reason. Lets see how libertarian those people are when their spouse gets cancer and the insurance company drops them on a technicality if the law is overturned and insurance companies are able to do that again). Indiana already has a high risk pook but it costs more and covers less than the federal risk pool. Plus the federal risk pool can be transferred across state lines, so if I find a job in another state it will be easier to keep insurance.

When the federal pool started it was about $340/month for high ded insurance, which I couldn’t afford. Then they lowered it to $251, then $185. When it went to $185 I could afford it, despite the 2k deductible meaning I’m not going to use the insurance for much.

19

We’re going through the process of finding a new company this month (family of four). I’ll let you know what we find.

20

I recently switched to a HSA + high deductible plan through Humana. I used to have a plan through Blue Cross Blue Shield of Illinois. Despite me going to the doctor exactly one time in 5 years for a routine checkup, they raised my premiums ~120%. I could type a long post about my frustrations with BCBS as provider of individual health insurance, but that would just get me fired up before bed. It’s safe to say that BCBS is #1 on my shit list of companies I’ve dealt with (yes, even higher than cable, credit card, and TBTF banks). I have no complaints about Humana thus far.