Life After Salary: Individual Health Insurance
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 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?
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I agree with the HSA. I left a job where we had an HSA and because my family didn’t go to the doctor much, we ended up with several thousand in the HSA. That money continued to grow and has been funding my hustand’s health issues for the past 2+ years. I’m currently investigating an HSA for our family again (right now have an individual plan that I don’t feel is worth the cost).
You are a better person than I am. Thought about going it on my own and the endless agonies of these type of things are endless agonies
Many insurance companies nowadays will cover a domestic partner just the same as a spouse. Our insurance plan at my work is with Cigna. I was able to include my long-time girlfriend. The only documents needed were an affidavit, a statement from a checking joint account, and of course you must have the same home address.
As Beth mentioned you cna try some professional associations of even your alma mater. Freelancerunion.org has some decent plans and are targeted to people like you. Take a look at it.
When I was paying for my own health insurance I did some research right off the bat and found that that my COBRA payments would be more than if I just got the same plan on my own. So I just went with that for awhile until I got a full time job with benefits. However, I really do wish I would have shopped around more.
That was my point from the beginning. If you are fairly healthy and your state allows insurance rates to float based on risk, private insurance for a young person should always be cheaper than group insurance via COBRA.
When I went freelance I tootled around on eHealthInsurance.com and ended up with a plan offered by Aetna for $425+ a month. When Aetna decided to pull out of Texas I lost my coverage. I’ve been without health insurance for a couple of years but now I’m shopping again. Oh joy. I’ll be curious to see what you come up with.
Definitely sounds like you should propose to your long time girl friend at last!
Let me be the first to tell you congratulations on the engagement! 🙂
I paid for Blue Cross after my divorce-related COBRA ran out. Now I’m in Group Health, an HMO, and I pay $338 a month. Annual exams and minor illnesses require only a $20 co-pay. The mammograms are covered, too.
No machine runs for more than 50 years with some maintenance issues, so insurance is not something I’m willing to do without.
Kyle beat me to it. A HDHP with a HSA might be a good route for you to go.
High deductible plans tend to rub me the wrong way. It’s true that I don’t use a lot of the benefits offered by a health plan, but I want to feel confident that I can be covered for anything, relatively anywhere (even if out of network).
Many high deductible plans are basically just crappy insurance. But some high deductible plans are great insurance that just have a high deductible. My insurance is high deductible but it covers everything in our out of network and I can go to any doctor, etc. I just have to pay a high deductible.
Interesting replies Flexo and Jim. I’ve read so many articles advising HDHP with HSA that it almost seemed good by default. Must remember to do the research.
You should look into a high-deductible plan coupled with a Health Savings Account. There are plenty of good options under $100 per month. Of course, you’ll have to pay a lot more out of pocket when you visit the doctor but unless you are a regular hospital visitor, you should save a lot of money most years.
ehealthinsurance.com is a nice site to do comparison shopping for health insurance. Make sure to read ALL the fine print on any plan so you don’t overlook the a clause that limits your coverage.
I had the same thought as Apex that $2500 to $3000 is awfully low price. But it may be right. That could be the price if its a high deductible plan with HSA coverage for just 1 person. My companies COBRA premiums are in the $2500 to $5500 range for a single person with the $2500 being high deductible HSA plan. To cover a family of 5 is much more expensive and then the plans COBRA start arund $10k and hit as high as $22k a year.
I retired at sixty. That would not have been possible without Retiree Health Care from the USAF. After looking at the rate tables you have I once again realize how lucky I am. Every time I came to the reenlistment decision I had a good reason to stay in the AF. The wife was pregnant, we really wanted that tour in Germany, or Jimmy Carter was president. Never once did I consider Health Care all that important – Wow – what a difference 35 years can make. I can’t help you with your decision but I would advise against risking everything by going without it.
“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.”
Are you sure about that? Have you looked into it? That sounds low to me.
“This would be much less money than shopping the market for individual health insurance, at least until healthcare reform takes effect.”
Are you sure about that? Have you looked into it? If you are healthy without any chronic or pre-existing conditions, a private plan should be cheaper than group insurance because you are not in a pool with less healthy people than you. If you are not healthy or in higher risk classes like over-weight, smoker, etc, then that changes everything obviously.
I had looked into it myself about 6 years ago for a business I was considering and that was definitely true. I could buy private insurance cheaper than the COBRA payment for the group insurance at my company. I live in MN so it could be different in different states but it makes sense. There is nothing special about group versus private insurance. Group pools risk and private you take it all yourself. If you are a better risk private should be cheaper, if you are a worse risk it should be more expensive or even unavailable to you if you are too high of a risk.
So did you actually price it and have hard numbers or is this based what you expect to be true?
The only thing I’m unsure about right now is the full COBRA price for my current insurance. I’ve priced the individual plans, and there is a wide range from $300 to $1,000 per month. The lower cost plans have limited benefits. The goal isn’t to fond the cheapest plan, that’s easy. The goal is to find a plan that is best for me taking benefits and price into consideration.
So the price you quoted here of $6400 seems kind of high for an good quality individual plan (and $3000 seems kind of low). Was that for a plan that was identical to the one you have now that you would be getting through COBRA? Obviously the best test is to compare two identical plans and the only way to do that for you is to compare an individual plan that has the exact same coverage as your current employer provided plan. If that is cheaper through COBRA than as a private plan and you are in good health and not a high risk category then I must admit to being surprised, but facts are facts and if that is the case then clearly you should choose COBRA.
Yes, the $6,400 is the Aetna HMO plan with a deductible and coinsurance, the same plan I would have with my (soon to be former) employer in 2011. What’s interesting is that my employer is switching to this plan from the Aetna HMO $15 coinsurance plan. As an employee, the 2010 plan would cost just a little less than the 2011 would, but the private annual premium for that plan is $24,000! It looks like my employer would be charging more for a plan that costs 73% less on the open market. Take a look at the rate chart I linked to in the post.
Once I hear what I will have to pay for COBRA, I’ll update the information.
So I am a little confused about a few things.
First of all these rates are listed as state wide rates that do not vary based on health status. Is this a NJ law that prevents this? If it does then effectively NJ has basically mandated state wide group coverage. Not that bad of a thing as it puts everyone in the same boat. However if that is the case then I do not see why an individual policy and a group policy from a company would not be exactly the same price. If the group policy is lower in price because the company has been able to negotiate a better deal than the individual policy then the state mandated rules regarding equal rates for everyone in private plans is screwing people over cause clearly the group rates can be cheaper. I assure you this is not the case in MN. If the group policy is the same as the individual policy then I would expect your COBRA rates would be equal to the rates on this chart. But again, I don’t fully understand what this chart applies to.
I also don’t know if health care is generally much more expensive in NJ but I assure you there is no way you could buy an insurance plan in MN for a single person that cost anywhere near 24K. 4-5K should be pretty standard and a cadillac plan should still be under 10K for a single person. Heck in the Obama health reform bill there was talk of taxing cadillac plans more and that talk was somewhere around 17K for a family and I think that got raise to 25K and then phased in over 6 years or something. If 17K was being considered for a cadillac extra tax plan for a family plan what the heck is a 24K single person health insurance plan? Do they give you a manicure while you are getting your checkup? I honestly cannot get my head around those numbers.
I have the chance to be married to someone who has a very nice health insurance plan. So, not a big matter for me. Also, I live in Quebec, so health insurance is not the same issue over here…
Some people marry for love, some people for money, others for health insurance!
Good luck, this is the biggest priority for anyone who is working independently because you never know what can happen to your health on any given day. I just had a friend whose been unemployed for a while now and he slipped and fell and hurt his knees pretty bad. But since he has no health insurance he is just telling himself to “walk it off” for now… You can’t walk it off if you have a heart attack or something else that is very serious. Good luck Flexo!
I’m not sure if this helps as I’m in a different country, but here I know there are certain insurance companies that pair with professional associations. For instance, Ingle offers insurance packages for members of the Professional Writers Association. (Yes, Canadians need supplementary health coverage too!) It might be worth a look to see if something similar exists where you are.