For independent consultants, cutting ties with some of the constraints of a corporate workplace can also mean losing some of the perks – including the health benefits offered by many employers. According to our 2nd annual State of Independence in America report, 37% of independent workers report the lack of employer benefits to be a challenge they face. The fact that this number is down from 45% in 2011 is encouraging, but the results still mean that nearly 4 in 10 independent consultants cite this as a concern.
Clients may occasionally provide benefits to contracted consultants, but more often, independent consultants are on their own when it comes to providing their own health coverage. While this may sound daunting, there are a number of options available to independent consultants; the right one for you will depend on your individual needs and circumstances. Below we discuss a few of the more common and popular options so that you can be more informed when deciding the right choice for your health coverage.
For new independent consultants who are preparing to leave full-time employment, COBRA coverage may be a temporary option. COBRA provisions allow individuals and their employees to continue to receive health benefits from their former employer for up to 18 months after termination, whether voluntary or involuntary, as long as the termination isn’t due to “gross misconduct.” Though the 18-month limit and the high premiums make COBRA a short-term solution, it can help transitioning independent consultants maintain continuous coverage while finding an alternate solution. More information about COBRA eligibility is available at the U.S. Department of Labor website.
If your significant other has insurance through their employer, it may be possible to be added to their plan. While this option was once almost exclusively limited to legal spouses, coverage for domestic partners is now mandated in some states and voluntarily offered by a growing number of companies. This means that many unmarried couples, whether same-sex or heterosexual, can now be added to their partner’s employer-provided insurance plans as long as they meet the state or company’s requirements of “domestic partner.”
Individual health insurance coverage allows the uninsured to purchase coverage directly from insurance providers. These plans are highly customizable, offering a wide range of options regarding deductibles, copayments, and options such as prescription coverage. The monthly premium will vary greatly depending on options and personal health history, but the cost is generally higher than an employer-provided plan and cheaper than COBRA coverage. Keep in mind that individual plans may be expensive or difficult to obtain for those with pre-existing conditions; although the Affordable Care Act includes policies that protect those with pre-existing conditions, those provisions will not go into effect until January 2014. You can learn about the individual insurance options available to you at HealthCare.gov.
Small Business Plan
If your consultancy has another employee – whether it’s a partner, a part-time assistant, or even your spouse –a small business group insurance plan may be an option. Unlike current law allows with individual plans, with a small business plan you cannot be denied coverage based on pre-existing conditions. Some states allow independent consultants and other self employed professionals to purchase business plans even without other employees. To find out the regulations regarding small business group plan qualification in your state, visit National Association of Insurance Commissioners website.
Group or Association Plan
Though often overlooked, joining various groups or associations could provide another potential health insurance option for independent consultants who don’t qualify for a small business plan. Group plans are generally cheaper than COBRA and are limited in the restrictions they can place on pre-existing conditions. Associations such as AARP often offer plans to their members, as do more specialized business groups or even city chambers of commerce. MBO Partners also offers group medical, dental and life insurance to independent consultants who run their business through us.
What health insurance options have you found best suited for independent consultants? Tell us in the comments.