Recalibrating for self-employment: health insurance

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Recalibrating for self-employment: health insurance

This post is by staff writer Holly Johnson.

When I left my full-time job in April, I lost several of the valuable perks that come from working for someone else. Included in the casualties were my company-sponsored retirement plan (and 4 percent match) and my company-paid smartphone.

Those two losses were somewhat easy to accept since they both had a fairly easy fix. Since I lost my 401K match, I needed to save more for retirement. Done. And since I lost my company-sponsored phone, I looked for a low-cost option that would fit into my budget. Once all of that was squared away, I focused on my single biggest hurdle when it came to self-employment; finding health insurance. (Joanna Lahey, an associate professor of economics at the George H.W. Bush School of Government and Public Service at Texas A&M University and the National Bureau of Economic Research (NBER) wrote about health insurance options for the self-employed at GRS last year. You can read that post here.)

Initially, we were still under my husband’s work-sponsored plan. However, after I left the job where we both worked, my former employer was only covering about 30 percent of our family’s monthly health insurance costs. So, for almost $600 per month (and his employer paying an additional $250), we had a catastrophic plan with a $5,000 deductible, and no dental or vision coverage. It wasn’t great, but I was happy that my husband’s job provided some sort of group coverage for my family.

That was, until we decided that my husband would make a career change that would leave us without any sort of health insurance at all. And, to be honest, I was scared. We hadn’t bought insurance on the open market for at least 5 years and the last time we did proved to be a challenge to say the least.

Our frustrating past experience with private health insurance

Almost seven years ago, my husband and I started working for a small family-owned mortuary. And since they only had 6 full-time employees, they didn’t offer a health insurance plan at the time. So, instead, they gave full-time employees $325 per month to shop around and buy their own. At first, I didn’t realize that there would be a problem. However, I would soon find out that buying health insurance with maternity coverage would be much more difficult than we ever could imagine.

When we first started looking, we found that very few plans even offered maternity coverage on the open market to begin with. And, it seemed like the ones who did made it prohibitively expensive. I applied for a few different plans and got denied repeatedly due to the fact that I had back surgery almost 5 years prior.

(According to healthcare.gov, health insurance plans can’t refuse to cover you or charge you more just because you have a pre-existing health condition starting in 2014.)

However, after a year of trying to get coverage, I finally got accepted to a health insurance plan that offered maternity. The only caveat was that there was a 12-month waiting period to get pregnant. Twelve months!

Since I was already 27 years old by then, I was frustrated that I had to wait another 12 months to have my first child. Unfortunately, I didn’t have much of a choice. Because of a back surgery I had in my early 20′s, having a home birth wasn’t going to be an option for me. I could, of course, go without maternity coverage and choose to pay for my child’s delivery out of pocket. But, what if something went wrong? From my point of view, going without maternity coverage would expose us to the exact kind of financial risk that we were trying to avoid by getting coverage in the first place. So, I went with the plan. I waited…and waited some more until I was finally “allowed” to get pregnant. And, at the age of 29, I was finally able to experience the best thing that has ever happened to me: motherhood.

Starting in 2014, a woman cannot be denied coverage because of a pre-existing or current health condition, like if she’s had breast cancer, depression, or is pregnant. A woman will no longer be charged more for the same coverage as a man just because she’s a woman, meaning that being a woman will no longer be a pre-existing condition. More women will also have access to maternity coverage and care for their newborns. In fact, current estimates show that at least 8.7 million women will gain maternity coverage because of the health care law.

whitehouse.gov

My daughter was the most beautiful thing I had ever seen and sooooo worth the wait. However, the whole ordeal left a bad taste in my mouth when it came to buying insurance on the open market. It seemed complicated, difficult, and like a giant pain in the butt. I wasn’t sure what was in store for my family this time around, but I hoped that our search for coverage would prove to be less painful than the last.

A second try on the open market

And, it should be easier this time, I thought. First of all, we have two kids now, and we don’t want anymore, so there was no need for a maternity rider on our plan. Secondly, we’re all healthy. Aside from an annual well visit for each of us, we haven’t gone to the doctor for the last few years at all. So, I started my search for health insurance on the internet for convenience, and that’s when I stumbled upon ehealthinsurance.com

Ehealthinsurance.com is somewhat of a “one-stop shop” for individual and family health insurance plans. I started by entering basic information for all four members of our family — age, birthdate, and whether or not we used tobacco products — and ehealthinsurance.com provided us with a variety of plans to compare with one another. After searching through what seemed like a million health insurance plans and options, I narrowed our search down to four different plans that appeared to offer the best value:

• Anthem Premier Plus 20 percent 1000 with a $1,000 family deductible, has $30 office copay and provided 80 percent coverage after the deductible was met: $1186.39 per month
• Lumenos HSA Plus with a $5,000 family deductible, provided 100 percent coverage after deductible was met: $630.08 per month
• Lumenos HSA Plus with an $11,000 family deductible, provided 100 percent coverage after the deductible was met: $377 per month
• Humana Monogram Total/7500 Plus RX with a $7500 individual deductible and $15,000 family deductible, provided 100 percent coverage after an individual family member met their deductible and full family coverage after two family members met their deductible: $277 per month

I kind of felt like Goldilocks at this point. I didn’t want a deductible that was too high in case one of us got really sick. However, I didn’t want a low deductible plan because I didn’t want to pay an absurd monthly premium. After batting some ideas around, we decided that the Lumenos plan with an $11,000 family deductible and HSA was the best choice for our family. It wasn’t so high that we would be in trouble if one of us were to get sick or hurt, but it was still low enough that we had a fairly reasonable monthly premium. And when we factored in our extremely low health care costs over the past several years, we decided that the higher deductible plan made sense.

So, for now, we’re settling into our new health insurance plan and hoping that everyone stays well. Health insurance isn’t cheap, but I’m glad to have it. And after all of that mess, I hope that I don’t have to shop for it again anytime soon.

During my search, I also found out a lot more about all of the new changes that are coming when most of the Affordable Care act takes hold in 2014. If you want to read about how the Affordable Care Act may affect you, check out healthcare.gov for more information.

Have you ever bought health insurance on the open market? If so, did you find it a challenge? And, what kind of plan did you purchase?