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Business Basics: How Do I Get Health Insurance?

For self-employed people, getting health insurance can be tricky. Many small businesses don't have the minimum number of employees required to qualify for group insurance, which means their options are limited.

If you're in that boat, here are a few ideas for how to get health insurance as a small business owner.

 

1. COBRA

If you recently left a job that provided health benefits, you may be able to continue coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA1 allows workers to maintain their health coverage for themselves, their spouse, and any dependents for up to 18 months, with the possibility to extend coverage for spouses and/or dependents for up to 36 months2 under certain circumstances.

This option is simple for those who qualify: within 60 days of leaving your job, you will receive a letter explaining your rights and providing instructions for enrolling in COBRA benefits. However, your former employer won't subsidize your premiums. This sometimes means COBRA is a more expensive option. However, keeping your existing coverage may mean a lower deductible, better coverage, or broader provider network than you'll find with health insurance you purchase through other venues and the price difference may not be significant if your alternative is to buy through a state healthcare exchange and don't expect to qualify for Affordable Care Act subsidies.

 

2. Healthcare marketplace

HealthCare.gov allows individuals, families, and some small businesses to shop for qualified health coverage and potentially qualify for tax credits. Typically, you can only enroll in a plan through the Marketplace during the annual open enrollment period, which generally runs from November 1 through December 15. However, certain life events, such as marriage, divorce, or job loss, may allow you to qualify for a Special Enrollment Period.3

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The members of professional or trade associations may be able to buy into group plans with somewhat lower rates than those offered to individuals.

 

3. Agent or broker

An independent health insurance agent or broker can help you shop around for insurance options that aren't available through HealthCare.gov, compare them to your options on the Marketplace, and help you navigate any health insurance subsidies for which you're eligible.

An agent or broker can also help you enroll in short-term health insurance if you're outside of the open enrollment period for traditional plans and don't qualify for a special enrollment period.

You can find a list of agents and brokers near you using the Find Local Help4 tool available on HealthCare.gov.

 

4. Professional or trade associations

If you're a member of a professional association or trade organization, you may be able to buy health insurance through the organization. The members of some groups may be able to buy into group plans with somewhat lower rates than those offered to individuals, just like employees of a small business benefit from lower group rates offered to an employer. Some organizations that offer health insurance benefits include the Small Business Service Bureau5 and Freelancers Union.6

Before you join, consider the cost of membership and the value of the benefit you'll receive. Even if cheaper insurance is available to members, you'll need to make sure you save at least enough to offset the cost of any membership fees. And be aware buying an insurance plan off the exchange typically only makes sense if you don't expect to qualify for any premium subsidies through the ACA.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. DOL.gov, Continuation of Health Coverage COBRA," accessed March 3, 2020. Back
  2. DOL.gov, "FAQs on COBRA Continuation Health Coverage for Workers," accessed March 9, 2020. Back
  3. HealthCare.gov, Enroll in or change 2020 plans only with a Special Enrollment Period," accessed March 3, 2020. Back
  4. Healthcare.gov, Find Local Help," accessed March 3, 2020. Back
  5. Small Business Service Bureau, SBSB Member Benefits," accessed March 3, 2020. Back
  6. Freelancers Union, Hand-Picked Insurance Plans for Freelancers," accessed March 3, 2020. Back