Health Insurance. I would guess that one of the most cited reasons for not starting your own business (and getting out of the corporate world) is health insurance. I know that it was one of the big hairy monsters I was afraid of.
I have found, however, that it is very interesting to delve into the many different medical insurance options available to individuals. I have always been a believer in being a consumer of health care rather than a passive recipient. It amazes me when someone who would spend hours researching the best model of refrigerator to buy spends no time researching the medication their doctor prescribed for them. I never had the opportunity, though, to choose my health care coverage. It was always just provided for me by my employer.
What I have decided to do is to get a high-deductible health plan that is HSA compatible. This seems to be the best option for me and my son, as we are both healthy individuals with no chronic medical conditions. (knock on every piece of wood and fiberboard around). I am certainly not an expert on these matters and as yet have no practical experience using these products, but here is what I understand so far.
Step One: select a HDHP (high-deductible health plan). I have reviewed plans from Blue Cross, Aetna, and Kaiser. Basically, what you get is low monthly premiums (around $200 or less per month), but you must pay 100% of all medical expenses until you fulfill your annual deductible. The annual deductible on the plan I chose is $7000 for me and my son combined. Once that deductible is fulfilled, all coverage is at 100%. If I would have stayed on COBRA, my costs would be $578 per month for my medical plan. That amounts to $6936 a year--the same (less $64) as my deductible with the HDHP. My monthly costs in the HDHP will be about $2352 a year. That saves me $4584 in premium payments per year. If my son and I each go to the doctor once a year and have one prescription a year (antibiotics lets say), then my guess is I will pay an additional $300 or so for those office visits and prescriptions. Still, a savings of $4284. One of the reasons for this savings involves maternity coverage. If you want/need maternity coverage, your costs will be higher. This option may not be beneficial for you if you have or anticipate other high-cost medical procedures or care.
Step Two: open an HSA account. There are medical plans that have partnered with a bank or other financial agency to offer an HSA account in conjunction with the HDHP plan. This would certainly be an easy option and eliminate the step of researching where and how to open an HSA account. I have just finished researching this piece and have identified the following resources: HSA Bank USA, Sterling HSA, HSA Resources Bank. Major banks like Bank of America and Wells Fargo also have HSA options. With an HSA, you save money in the account up to the IRS limits and can use that money to pay the qualified medical expenses you have until you meet your deductible. Each of these resources offer a debit card and check writing options to use to pay your expenses, as well as online banking options. Some have fees to use these services, some offer them at no additional charge. Each offers a tiered interest plan that pays 1-4% on the account balance. Each also partners with a brokerage house which would then allow you to invest your account balance in stock & bonds, etc. as you wish. Your account with the brokerage is separate, with its own fees and charges for trades. You cannot, however, invest money into this account separately from your HSA. All monies for investment must pass through the HSA account and be transferred into the brokerage account. Conversely, any money made from investments sold must go into the HSA account.
As you can well imagine, there are IRS guidelines, restrictions and forms involved. So please, take the time to review those before you do anything else.
Starting your own business is mostly about freedom. Freedom to do something you want to do. Freedom (eventually) from working long hours for someone else's ultimate benefit. Freedom to spend your time and money in a way that gets you closer to where you really want to be. Look at the task of shopping for your own medical coverage as part of your newfound freedom and the big hairy monster will turn into a pussycat.
