Now that I’ll be leaving my corporate job and leaving behind the benefits a salaried position afforded me, I need to begin looking at alternative options for those benefits. One of the first concerns on my list is health insurance. Inside the company, our annual benefits enrollment period was completed only a few weeks ago, so the cost of insurance is fresh in my mind.
If I had chosen to remain employed by my company, I would pay a total premium of just over $1,000 next year for the national HMO plan administered by Aetna. I have the option of choosing to COBRA coverage for a period of time following my resignation, but I haven’t yet received information about the cost. I expect it to cost from $2,500 to $3,000 for the year, as the company will no longer subsidize the majority of the expense to the insurer.
COBRA will not last forever. The latest rules indicate COBRA will be available to me for 18 months. If I like the plan I have, I should take advantage of this; buying an individual Aetna HMO plan directly from the insurer would cost $6,400 next year, and that would only be if I had made the November 30 deadline to apply for these rates, which I hadn’t.
It pays to shop around.
Shopping amongst plans offered in my state of New Jersey gets quite complicated with different insurers offering different options. You can model your prospective health costs and usage to help you choose the plan with the best coverage you’ll actually use for the least cost, but these predictions are often inaccurate. Just looking at the New Jersey rate table [pdf] is enough to make you want to forget about insurance altogether.
There are two other paths I can choose. If I were to hire employees for my business, I could qualify for a group insurance plan. Having employees introduces other headaches, and I am not interested in going down this road at the present time. The other path is to marry someone who can include me under spousal coverage within their employer-sponsored plan.
For the near future, the best option is to continue my current coverage through COBRA. Although my employer is subsidizing part of the full premium now, once I leave the company, they will send me a bill once each month for the full premium. This would be much less money than shopping the market for individual health insurance, at least until healthcare reform takes effect.
I’d love to hear from any other self-employed individuals who have sought health insurance coverage. What has worked for you?