Health Insurance for the Self EmployedAmerica is built on small businesses. It is a simple fact. You would think health insurance for the self employed would be a simple subject, but it is not. Health Insurance for the Self Employed Health insurance has become a major expense as medical costs have risen. Many employees who have had little worry about this expense thanks to the contributions of their employers are now finding their share of the cost rising each year. For the self employed worker, this problem has approached near crisis. There are an estimated 24 million self employed workers and their families who have no health insurance at all because of its prohibitive cost. Get California Health Insurance Plan Quotes The Consolidated Omnibus Budget Reconciliation Act (COBRA) mandated that employers were obligated to make their group health insurance plans available to departing employees. Many workers who left a position to open their own business or be self employed were able to take advantage of this law to keep their group insurance in force. However, they soon realized the extent of their employer’s contribution to the plan. The cost of the COBRA insurance could sometimes reach $200 a month for an individual and $500 for a family. The tax laws were revised in 2003 to help provide health insurance for the self employed. The change allowed consultants, freelance workers, and other self employed workers to deduct 100% of the cost of health insurance from their income tax obligation. The deduction was a line item deduction and could even be taken by workers who did not otherwise itemize deductions. This tax benefit helped to reduce the cost for self employed workers. Get California Health Insurance Plan Quotes There was still a need to pay some of the medical expenses out of pocket. Most plans still have deductibles and co-payments. The benefit of a tax deduction would not be available until the next year. It is possible to take an early withdrawal from an IRA to cover emergency medical expenses without having to pay the early withdrawal penalty. The withdrawal is still taxed, however. There is another way that can benefit self employed workers. If they transfer their IRA into a self employed 401K plan, they can take out a loan to cover emergency out of pocket expenses. The loan would not be subject to either early withdrawal penalties or taxes as long as it was eventually repaid. Health insurance for self employed workers remains a problem for many people. Although there are ways to reduce the cost, it remains a serious expense especially for people who are just starting a new business or trying to become established in a new career. The rising costs of medical treatment and the uncertainty of health make it quite a gamble to ignore it. It needs to be a part of the overall financial planning of the self employed worker. << Back to Health Insurance Information
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