So, I’m now in the ranks of the self-employed, and I need health insurance. When I left my job a few weeks ago, I signed up for COBRA and it’s around $350 a month, which is totally unreasonable. So I’m switching to something else as soon as possible.
Unfortunately, the landscape is bleak when you’re not covered by a cushy employee plan. There are actually only a handful of companies that even bother to sell insurance here, because the state laws are so strongly in favor of the patient. Massachusetts and Maine are the only two states with guaranteed health insurance, for example. This means that you cannot be denied coverage by an insurance company if you already have coverage. If you are on a rinky-dink health plan, and you develop some major illness, you can switch over to a better plan and the insurance companies can’t say no. Of course, there are exclusions here—for example, there might be a 1 year waiting period before you can get prescription drugs on the newer plan.
Anyway, a little background. I am 28, a Massachusetts resident, a non-smoker, and self-employed, so I want to pay as little as possible. I don’t want dental or vision coverage—I just want major catastrophes to be covered, and I don’t mind paying for my office visits out of pocket. I rarely go to the doctor.
So, I looked around. Some other self-employed folks I know pointed me to “catastrophic” plans, which are the cheapest non-Medicare health plans that I could find. There are a few companies that provide these in MA: Mega Insurance/NASE, Mid-West, etc. The plans are around $150 a month and are either “accident-only” (no illness coverage) or high-deductible. You pay the first $5,000 of health costs per year, and after that is supposed to be covered. But there’s a lot of bad news about these companies, and the biggest problem for me is, there’s a maximum that they’ll cover! So if you get into a catastrophic accident with one of these “catastrophic” plans, and the bill is $75,000, you may end up paying $20,000, not $5,000. The coverage caps are what get you. Unfortunately, they don’t tell you this in the sales pitch. What you have to ask about is the “maximum out of pocket” for a given plan, which isn’t necessarily the deductible.
Anyway, now that I know way too much about this, I’ve decided that the only plan worth getting is a low-end Tufts HMO plan called “Advantage 2000” that costs around $250 a month, and is available to business owners through SBSB. I’m having to register my business with city hall ($50) and join SBSB ($85/year) in order to get this plan. But it looks good: it has a $20 co-pay, a $2,000 deductible, and $100 for an ER visit. No prescription coverage. My understanding is that because it is a “100% coverage” plan, the maximum out of pocket is the same as the deductible ($2,000). HMOs only work inside their network of doctors, so you can’t really pick and choose your doctor, surgeon, etc. So, for outpatient services, most HMOs require you to be inside Massachusetts, because that’s where the network is. Worldwide outside of MA, you are only covered for ER visits.
While on the topic of health insurance, here’s some other stuff you should be aware of:
- Many of these “high-deductible” plans can be combined with a health savings account (HSA), a Federal program introduced in 2003, which lets you save pre-tax money for health care in an investment account. It is very similar to an IRA. Not bad for the entrepreneurs and self-employeds of this country. Check hsainsider.com to see if a plan you’re evaluating supports an HSA.
- Insurance Partnership can cover some of your premium, up to 50% in fact, if you make less than $20k per year.
- But whatever you do, avoid healthplans.com!