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Whether you are contemplating making the leap to independence or are new to the independent workforce, you have likely grappled with how you will manage benefits without traditional employment. Health, life and disability insurance are among the perks of a corporate career.
The insurance marketplace is full of individually underwritten insurance options that are generally available through a state licensed broker and issued by widely known insurance companies. For example, medical and dental insurance plans are sold to individuals by United Healthcare and life and disability insurance plans are provided by companies like MetLife, Mutual of Omaha, and State Farm.
As a traditional employee, your benefits were through a group plan. Group plans provide coverage to a select group of people, such as an employer or association under a master policy. The group is the insurer, and benefits are extended to its members. All members of the group are offered the same benefits. Because risk is spread across the entire group, these plans tend to cost less than individual plans. In traditional employment, your employer pays a share of the cost of your coverage, further reducing your financial responsibility.
Group plans are another alternative for independent workers. You can access group plans by joining groups or associations. Industry associations, chambers of commerce and AARP offer plans to their members. MBO Partners also offers group medical, dental and life insurance to independent consultants who run their business through us.
Individual plans allow you to purchase coverage directly from the insurance provider. With individual plans, you have a wide range of options regarding type of coverage, deductibles and co-payments. For example, with individual health insurance you may opt for a plan that does not cover routine physician visits, or one that covers physician and hospital but does not have prescription benefits. Because the coverage is individualized, the monthly premiums will vary based on the options you choose and your personal health history. The cost of an individual plan is also generally higher than a group plan.
There are pros and cons to purchasing individual and group benefits. The best option for you depends on your situation.
Carol Baxter, HR Manager at MBO Partners says, "In working with our Associates, I've found individual health insurance is the hardest kind to buy for individuals - they have to dig in and roll up their sleeves to understand what they're purchasing. There is no relying on the expertise of an employer or association to screen out bad plans."
The list below provides a broad overview of the pros and cons of individual and group coverage.
When it comes to life insurance plans, individual plans can be a benefit. Group plans often offer limited coverage. With an individual plan, you have complete control over the plan and benefits. This allows you to choose a plan that meets the needs of you and your family.
Independent workers can also purchase individual or group (if offered by group) short and long term disability plans. These plans provide "paycheck protection" in the event that you are injured and unable to work. When reviewing policies, you will have the opportunity to choose:
You can apply for individual benefits through a trusted state licensed insurance broker who has access to various plan options. Alternatively, you can start by identifying the insurance plan that best suits you and either purchasing from the insurance carrier directly or through a broker who has partnered to sell policies with the carrier you've chosen. eHealthInsurance is the leading online source of health insurance for individuals, families and small businesses. You can research options and receive quotes.
In all cases, be prepared for medical underwriting - an evaluation of your medical history from which your plan and premiums will be based.
When it comes to benefits, you get what you pay for, making it important to understand the plan's details. Be sure to consider what isn't in the policy. For example, does a health insurance plan discuss maternity benefits? Beginning in mid to late 2013, all insurance plans (except for Medicare plans) were required to provide a standard form, the "Summary of Benefits and Coverage," that set out critical plan details such as deductibles, co-insurance, and co-pays. If you have a choice of plans, use this form to compare them.
Insurance options will vary by state. You can visit Healthcare.gov, a federal government website managed by the U.S. Department of Health & Human Services to review your options. State exchanges are another option for solo workers. Enrollment for state exchanges began in October 2013 for coverage in January 2014. Other options for researching coverage options include:
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