I recently got a question from a reader, Holly. She asked:
“One thing many blogs and advice columns rarely approach- what if there is a need for medical insurance/medicine for a chronic illness? I worry that either will hold me back- or like finances is it more a safety blanket excuse? Thoughts?”
For most people, quitting a job also means quitting health insurance. If you have a spouse who remains at their job, then they can add you to their health insurance. You may need to wait until open enrollment.
If you cannot be added onto anyone else’s health insurance, you have the ability to purchase a health insurance plan yourself. While these plans used to be affordable prior to the “Affordable” Health Care Act becoming law, monthly premiums have soared in the past few years making health insurance anything but affordable now.
(Yes, you can probably detect a bit of bitterness in my quotations around the word “affordable”.)
The Cost Of Health Insurance Has Skyrocketed In Recent Years – Especially For People Who Purchase Their Own Coverage
Back in 2012, Tracy and I purchased a health insurance plan through ehealthinsurance.com. Our monthly premium was $270/month and covered both of us. This plan had a $5000 deductible (we chose a higher deductible to keep monthly premiums lower).
Then Obamacare became law. From 2012 to 2015, our monthly premium jumped from $270 to $849/mo (we did add a kid to our plan). Our deductible went from $5000 to $8000. I used to get two free visits with a primary care physician per year, and after that, the office visit co-pay was $40. Now, it costs $85 just to see my doctor.
The cost of health insurance in every state is different, but here are the numbers in Saratoga County, New York (where I currently reside) for 2017 plans:
The least expensive plan is through Fidelis:
Monthly premium for a family of 3 is $995. In 2015, this same plan cost $849, so it has gone up almost $150 in one year! On average, we saw our premiums rise by just under $100/mo each year, with 2017 being the biggest jump in price.
Deductible is $8,000 (50% coinsurance after deductible is met.)
Out-of-Pocket Maximum is $14,300.
That’s $1,000 per month so that we can pay $8,000 out of our own pocket before the insurance company will pay HALF of our medical bills up to the annual out-of-pocket maximum.
One catastrophic illness or accident could cost us $26,240 ($14,300 out-of-pocket maximum plus $11,940 in monthly premiums to maintain insurance coverage.
Your medical costs soar if a catastrophic health event occurs in November and you don’t meet your out-of-pocket maximum by the end of the plan year. – or if you require treatment for an illness over a longer period of time.
Subsidies can help if your income is low. In 2015, the income cut-off for qualifying for subsidies was around $75,000/year for a family of 3.
Even at $76,000 household income, paying up to $20,000/year for health care ($12,000/year in premiums plus $8,000 deductible) – or 1/3rd of your income on health costs per year like in the example I outlined above, is a massive burden. It’s not affordable.
Even if you make a cool $100,000+ per year as a self-employed person, paying $20,000+ per year on health insurance and healthcare may still become unaffordable on top of taxes, the ever-increasing cost of housing, food, utilities, and the cost of doing business.
Unlike our employed counterparts (who generally get much better health insurance rates through their employer), we pay an additional 7.5% in taxes (self-employment tax).
Because we run a business, there are myriad monthly business expenses that employees don’t have. Since 85% of my income comes from credit card transactions, I pay hundreds per month on merchant transaction fees. Hosting fees, domain fees, e-mail newsletters management fees, etc…they tear a huge chunk out of my monthly income.
In short, if you are self employed and make “too much money” to qualify for a subsidy, you may not be able to afford health insurance.
So You Might Find Yourself Faced With A Choice: Health Insurance Or Lifestyle Freedom
I did not have a chronic health condition when I left my job in 2008, so the cost of managing a health condition was not a factor for me.
I totally get that for many people, being able to afford essential medication and healthcare is literally life or death.
BUT, you cannot be denied health insurance if you have a pre-existing condition anymore. So quitting your job (and employer-provided health insurance) to become self employed doesn’t mean that you can’t get coverage. You can, if you can afford the premiums by either making sufficient income, or lowering your cost of living (or relocating to an area where the cost of health care and insurance is less expensive). Perhaps your income will fall within the qualifying range for subsidies.
For me, I would choose to be uninsured over having to remain at a day job that I didn’t like, or that didn’t fulfill me. I’ve been without health insurance for almost half of my adult life.
It’s not at all unlikely that many middle-class, self-employed people like ourselves will eventually be priced out of Obamacare plans. It is cheaper for my family to just self-play for medical and remain uninsured.
If you are managing a chronic health condition, however, you need to factor in the cost with and without insurance. It’s something you need to soul-search and do what’s right for you.
Alleviating the Risk and Cost of Being Uninsured
If self-employment leaves you without an affordable health insurance plan, there are a few things you can do. These tips can also help you if you have a very high deductible health insurance plan.
If you are uninsured, put aside money every month toward inevitable health care costs. If you can’t afford a $1,000/month premium, then put aside $800, or $600, or $400 every month into an interest-earning savings account that you can draw from if/when needed. Consider it a monthly premium for your own health care coverage.
You can generally negotiate a discount on healthcare services through hospitals and other providers. If you do not have health insurance, you are not tied to a specific network. So see a doctor out of state if it’s cheaper.
Instead of going to an expensive primary care physician for simple ailments, look for a retail-style healthcare option in your community such as Minute Clinic by CVS. This is often much less expensive than going to your doctor for simple things like strep throat.
Shop around and ask for prices. Don’t just accept where your doctor sends you as the only place to have a procedure done. This is especially true if you are uninsured, or have a high-deductible plan. Healthcare Bluebook provides a database of “fair price” listings for a wide variety of medical procedures, giving you a general idea of what a procedure costs. Knowing this information helps you determine if you can save money going elsewhere, or if you are getting the best price.
Order your own blood tests, if needed. I’ve used HealthOneLabs.com to order my own bloodwork before. You can order bloodwork for as little as $29. The same tests ordered by your doctor would cost hundreds! Just be careful about trying to play doctor and diagnosing your results! But if you doctor wants to order, say, a thyroid panel, order it yourself and save a few hundred dollars.
Beef up your medical coverage on your auto policy. One of the riskiest things you do is drive your car. I can guarantee that absolutely everybody reading this right now has either been injured, or knows somebody who has been injured in a auto accident. So if you have no health insurance, it makes sense to have some sort of medical coverage on your auto policy (don’t worry, it’s actually pretty cheap!).
In New York, it’s mandatory to have at least $50,000 of medical coverage. My auto policy has $125,000 in coverage and it covers both myself and my passengers if we get injured in an auto wreck – regardless of who’s at fault. My premium is low. I didn’t even know I had this much coverage until I called my agent to inquire about the cost of adding it to my policy (it was already on it!)
Get a dental/vision/prescription discount card. Instead of getting expensive dental and vision insurance, I opted to get a $99/yr Vital Savings card by Aetna. It is not insurance, but gives me significant discounts on eye exams, glasses, contact lenses, prescriptions, and dental cleanings and procedures. This card pays for itself with just one pair of glasses, or two dental visits. Unfortunately, it isn’t offered in all areas, but there are other providers who may service your area.
If you need a prescription, call around to different pharmacies and ask about pricing. I’ve seen investigative journal reports that have shown that different pharmacies charge different prices for the same prescription medications, so you could save money going somewhere else.
In extreme circumstances, getting medical treatment outside of the United States can be a big savings. While my wife and I lived in Mexico, we had a friend who received a hip replacement at a fraction of the cost she’d pay in the United States.
A trip to a dermatologist in an upscale doctor’s office cost less than $50 USD (500 pesos) without insurance. Seeing a dermatologist in my own town would cost almost $200 with insurance. (Of course, this option is most feasible if you relocated, or temporarily relocated.)
Now is not the time to slack off on taking care of yourself. You work long hours, and deal with all of the stresses that self employed people deal with. But it is critically important – now more than ever – to eat healthy, exercise, and mitigate stress as much as possible.
There has never been a better time to get healthy with green smoothies and a plant-based diet.
Don’t let stress and bad eating habits destroy your health when you don’t have insurance, or an expensive high-deductible plan.
And one more thing. You probably know about the penalties of being without Obamacare coverage. As of 2016, the penalty is 2.5% of your annual household income if you are uninsured for the entire year. However, according to this article by Forbes, there really isn’t any consequences for not paying the fine. Why pay because you can’t afford the outrageous cost of health insurance?
What you do about health insurance – keep it, opt out, whatever – is up to you. I’m not going to tell you that choosing to stay at your job because you need health insurance to manage a life-or-death chronic condition is clinging to “safety blanket excuses.”
But there are health insurance options for those who are self employed, and you may need to adjust your living expenses or expectations to afford the right plan for you.
And there are lots of options to ameliorate risk if you can’t afford health insurance, or choose not to have it because the cost isn’t worth the benefit.
Please feel free to leave a comment with your thoughts, or any tactics that you use to lower the cost of health care, or health insurance as a self-employed person.
About Davy & Tracy
Hey there! We're Davy & Tracy Russell, the husband-and-wife team behind this website. We help trailblazers break through barriers so they can turn their passion into their life's work through entrepreneurship. How can we help you?