The Challenges of Obtaining Health Insurance for the Self-Employed
According to a Pfizer (2008) report, 27 percent of self-employed individuals in the United States are uninsured. Many of the self-employed have insurance through their spouse’s employer-sponsor health plan, or they have opted for a high deductible health plan in order to save on the expense of premiums (Blumberg, Lucia, & Corlette, 2013). While having health coverage under another person’s employer-sponsored plan fulfills the requirements for the ACA individual mandate, health plans with high deductibles, or provide only catastrophic only coverage, so not meet the essential benefit requirements (Reyes, 2013).
The reason many of the self-employed do not have health insurance is due to the high cost of buying individual health insurance. Since employers pay as much as 80 percent of the cost of health insurance premiums for their employees, those who transition from working for others to self-employment are taken aback by the high cost of health insurance coverage. Another challenge faced by the self-employed when trying to secure health insurance coverage is that the insurance carriers deny coverage due to the individual having pre-existing health conditions. Even if the person resides in one of the 13 guarantee-issue states, there is often a waiting period of 12 to 24 months before the plans offer coverage and the premiums for the plans are cost prohibitive (Blumberg, Lucia, & Corlette, 2013).
The ACA eliminates these issues with the health insurance options offered with the online state health insurance market places. Health insurance companies that participate in the exchanges cannot deny or delay health coverage for pre-existing conditions or base rates on an applicant’s health history (U.S. Department of Health and Human Services, 2013).
Additionally, due to the competition on the health insurance exchanges, the cost of premiums are supposed to be significantly lower than they are now for individual health plans offering similar benefits to those on the exchanges. According to the Kaiser Family Foundation, the Congressional Budget Office project the average annual premium for an individual policy, which covers 60 percent of the cost of plan’s benefits, will be $4750 for an individual and $12,000 for a family). Self-employed persons whose household income is less than 400 percent will be eligible for tax credit subsides to offset the cost of premiums (Kaiser Family Foundation, n.d.).