One of the biggest obstacles for the self-employed is health insurance. Individual health insurance plans are very expensive and often impossible to get at any price if you or anyone in your family has medical issues. So if you are self-employed, a freelancer, or a sole proprietor, your options usually are: get coverage through your spouse (if you are lucky enough to be married to someone with a job that provides health insurance); pay a huge amount of money for a comprehensive individual plan (if you are healthy enough to qualify for one and can afford it); pay somewhat less for a crappy high-deductible or catastrophic individual plan (if you can qualify for one and can afford it); or go without insurance. This is why so many self-employed people–especially writers and artists–are uninsured. This is also why many people who want to quit their day jobs to work for themselves or start a new business can’t.
The fixes for this in the health care reform legislation (health insurance exchanges for individuals and small businesses, guaranteed coverage even if you have a pre-existing condition, etc.) unfortunately don’t take effect until 2014. That’s a very long time to wait if you don’t have, can’t get, or can’t afford health insurance.
However, there is some good news if you live in Washington state: if you are a sole proprietor or self-employed individual, you now may be able to qualify for group health insurance as a “group of one,” thanks to a new Washington state law (Senate Bill 6538) that took effect on October 1, 2010.
You can cover your family as dependents under a group plan. The best news is that unlike individual plans, group plans do not require applicants or dependents to pass a health screening, so you can get coverage even if you or someone in your family has a pre-existing condition. Group plans usually offer more options and better coverage at lower cost than individual plans.
It’s not easy to qualify for group health insurance, as you must meet strict guidelines, fill out a lot of complicated paperwork, and jump through a few hoops. For example, you must prove that you are a self-employed individual or sole proprietor, have been working for your business for more than a year, and at least 75% of your income comes from your business. You’ll have to submit copies of your Washington state business license and your most recent tax return (Form 1040 and Schedule C). You’ll need to do your research, request quotes, and carefully compare the different small group plans and their options for deductibles, annual coinsurance maximums, co-pays, prescription drug coverage, and premiums.
You can learn more about the new law by visiting the Washington State Insurance Commissioner’s website and calling the SHIBA (Statewide Health Insurance Benefits Advisors) helpline at 1-800-562-6900. To research and apply for small group health insurance, you can use an insurance broker or contact insurance companies directly and request quotes and detailed plan information.
Matt and I recently completed the process, and though it took some time and effort, it was worth it in the end.
I wrote this post because few people seem to know about this new law, so please spread the word to anyone who might benefit from it. If you don’t live in Washington, go to the website of your state Insurance Commissioner to research the laws in your state.
