The Affordable Care Act, or Obamacare, is designed in part to simplify the process of purchasing individual insurance. If you're pursuing self-employment and have a pre-existing condition, Obamacare couldn't have come at a better time. The affordability and accessibility of health insurance for the self-employed is contingent on a number of factors, including income, business size, and geographic location.
Self-employment can indicate a number of scenarios. You could be an independent contractor or the sole employee of a small business you own. You might run a large company that was required to provide employer health insurance before the Affordable Care Act even went into effect, or your company's workforce may number well below the threshold that mandates that business owners offer insurance. Unless you qualify for one of the many exemptions, you will need to prepare for the health insurance mandate, and if you can afford insurance and fail to purchase the minimum essential coverage, you'll be subject to a monetary penalty in 2015.
For those in self-employment who have no employees to worry about, purchasing insurance should be relatively simple. Depending on where you live, you can shop for insurance through a state- or federal-run exchange. Most importantly, you won't be rejected because of your medical history. The Affordable Care Act prevents insurance companies from denying applicants because of a pre-existing condition. This is good news for self-employed individuals who lack access to employer-sponsored insurance and have been subject to the extremely stringent requirements of private plans. Come 2014, the self-employed will be able to take advantage of health coverage that's priced according to age and location.
Cost considerations are important to the self-employed, who, in 2010, numbered 22.1 million and had an average annual income just over $43,000. Self-employment doesn't always bring in a big paycheck. Business owners whose income falls between 138 and 400 percent of the federal poverty line may qualify for subsidies and premium credits that help offset the cost of health-related insurance. But if you're at the higher end of the income spectrum, your tax credit won't be as great, and if the price of insurance in your area is particularly high, you might still have trouble affording the monthly premiums.
The Affordable Care Act also governs how self-employed business owners handle insurance coverage for employees. If you have less than fifty full-time employees on your payroll, you're exempt from the employer mandate. This applies to the vast majority of employers in the US. The 4 percent of business owners who boast more than fifty employees have until 2015 to arrange affordable insurance for their staff members, before owners face a hefty fine for noncompliance. In addition, businesses of all sizes were directed to inform employees about the new marketplaces by October 1.
Where legalities and paperwork are concerned, your self-employment status can be the source of a number of headaches. Fortunately, most self-employed individuals won't have to jump through too many hoops to purchase cost-effective insurance through the new marketplace. Eliminating burdensome clauses such as premiums based on health conditions should expand access, and extending the employer mandate deadline an extra year will give the owners of medium to large businesses enough time to figure out a concrete plan of action for their employee insurance. Under the Affordable Care Act, many individuals will find that self-employment no longer has to preclude healthcare coverage.
(Photo courtesy of freedigitalphotos.net)
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