Sunday, July 20, 2008

Follow up to my health insurance crisis

This post is intended as a follow-up to this one, where I asked if anyone could point me to some leads on group health insurance.

So closing in on the last part of July, for the first time in ten years, I am uninsured. It's only a temporary lapse, and once August 1st rolls around, I will be insured again. I just have to hope and pray that nothing happens until then. You think I'm kidding? Watch my appendix burst on July 31.

Recently, my job status changed from permanent employee to consultant. My job essentially remained the same, but the company for whom I work, for their own reasons, forced me to change my status. Since I was no longer an employee, I lost all my health benefits, but a very significant raise in salary was supposed to cover my paying for private insurance, and then some. The money was good enough incentive for me to remain in the job. Because the company has less than 20 full-time employees, I was not eligible for COBRA, so I really did have to go out there and get my own health coverage, which prompted me to put out feelers on this blog and elsewhere for leads on health insurance. Since I'm sure there are going to be others out there who are freelancing, consulting, sole-proprietors, etc. I'll share my information with you. Here were the options that emerged:

1. A fellow blogger sent me info on The Workmen's Circle. Interesting health plan, but it's not really Major Medical health insurance, which is what I was looking for. I think this sort of thing is ideal for people with families, where everyone is basically healthy, and just needs coverage for well-visits.

2. Freelancer's Union is a fascinating concept. Someone got the idea that if a bunch of freelancers came together under one umbrella, they could form a group that would be eligible for group health insurance rates. This is actually very innovative as they also do advocacy and seek retail discounts, etc. The membership is specific to certain industries, and they have strict eligibility requirements. Because I had just started freelancing, I didn't meet the income requirements to obtain health insurance under their plan. But now that a month has passed, I can meet their requirements. I need to decide whether to switch to their plan or stay on the EPO that I just bought (see below). Freelancer's Union offers Empire Blue Cross/Blue Shield, and for an individual, it's very reasonable...less than $400/month for a POS. I seriously might switch over to this plan. I like the idea of the advocacy that they offer as well, since consultants are vulnerable in so many areas of employment.

3. This is what I actually ended up going with, since I met their requirements almost immediately and the rate was very reasonable. I am getting Oxford Metro Liberty Plan for the self-employed. It's an EPO (which is basically a much small PPO) and it's a little over $400/month.

By the way, if I would not have been able to get on a group, individual insurance would have cost me around $1,200/month, roughly three times as much as a group rate, even though I am working and filing taxes as a legitimate sole-proprietorship, and all my income is 1099. New York State does not consider companies with one employee as a real business entity (except when it comes to, say, social security self-employment tax, of course. Bastards.).

4. I hesitate to put down this option, as it was sort of legally shaky. A friend of mine offered to put me on his payroll for six months so that we could both qualify for group insurance. He is actually doing this already with another friend. The deal is, he would pay me New York State minimum wage for the minimum number of hours for me to qualify as an employee, along with all the regular payroll requirements, such as social security, disability, unemployment, etc. I would reimburse him under the table, since I wasn't really working for him. Since my salary was on the books though, I would have to pay federal and state income tax on it. All this to prove to an insurance company that we were a group so that we could qualify for a group rate for health insurance. This option, including the income tax on money I wasn't actually earning, would have cost me about $600/month, but it was Aetna, which is excellent insurance, and included dental and vision. It also would have cost me sleep. I'm told this is done quite often, but honestly, I'm not cut out to do things that are illegal (even if they are not really immoral, and I don't think this is).

So that was about it for options. I'll breath a little easier once August 1st rolls around and I re-join the ranks of the insured.

A few other things to keep in mind if you are in this situation: while paying $5,000/year+ for health insurance is somewhat painful, your health insurance premiums are 100% tax deductible, if you are earning 1099 income. They are not considered part of health expenditures (which have to add up to a sizable chunk of your income before they become deductible). This makes total sense, since company employees always pay premiums out of their paychecks from pre-tax money....why shouldn't consultants have the same privilege?

Also, if you are thinking about going commando and not having health insurance because it is just too expensive, consider this: one accident, one incident, one surgery, one diagnosis, and you could be utterly wiped out financially. And not having health insurance limits your health choices tremendously. You will always get medical care in America, but free clinic care is not the same as insured medical care. When I graduated from college and started making my way in the world, my parents taught me this: no matter what, first thing you pay is the mortgage/rent, second thing you pay is your health insurance, and then you worry about putting food on the table.

I do think it's abominable that I have to jump through so many hoops to get a group rate on health insurance. I mean, why? Why is it cheaper to insure someone who is part of a "group" than it is to insure an individual? How can it be that an individual pays three times as much for coverage? I wonder if it's only New York State that has these difficult laws, and if insurance is just as costly in other places.

I do like the idea of individuals getting together under one umbrella to form a group, though I wonder what it takes to form one? Why can't I just get together with a few friends, appoint someone as the adminstrator and form a group? What would be wrong with that? I think that should be legal. I mean, some of these group requirements seem really arbitrary. Why not say, okay, get together five people who are in the same geographic region, in a similar age group, have similar salaries, and they can be a group and get group rates. Why not? Any presidential candidates listening?

Well, I'm grateful I found some workable options. I was getting panicky there for a while. Thanks to those of you who wrote in.

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