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Group Health Insurance Self Employed - Self Employed Group Health Insurance

what is group health insurance?

A benefit of working for an established company is having access to group health insurance. It is generally thought that being self-employed means paying high premiums for individual insurance coverage, but that has changed. There are several ways self-employed individuals can access group health insurance plans.

What is Group Health Insurance?

Group coverage means that a defined number of people are indemnified, or protected against loss, by an insurance company. Usually, the larger the group of people, the lower the risk is for the insurance company. It is assumed that if one person has a catastrophic illness, the cost of that illness is covered by the premiums from the whole group. So the larger the group in the insurance coverage pool, the less the risk will affect the insurer.

On the other hand, an individual is a high risk for the insurer since only his premiums go towards covering any major illness. Therefore, premiums for an individual are generally high to offset the risk to the insurer.
Most self employed people try to keep health insurance premiums low by either eliminating areas of coverage or increasing out of pocket costs such as annual deductibles. That can be risky, especially if there is a family covered under the insurance plan. Medical bills are the leading reason for bankruptcy filings.

Self Employed Group Health Insurance

Self employed group health insurance does exist; the key is finding the right group to join. No matter what type of business the self employed individual is involved in, there is usually a group of people doing the same type of business. There are many consultants, or contractors, or service companies. So there are usually groups and associations that represent those businesses. The associations pool all of its members and purchases health insurance policies for members of the “group” to join. This way, the risk of a catastrophic illness is again spread across a large pool of insured individuals.

Local Chambers of Commerce also pool its members for the purpose of offering reasonably priced group health insurance as a benefit of joining the Chamber. This way, no matter what the classification of the business, the self employed individual has access to group health insurance with favorable monthly premiums.

There are associations that have been formed just for the purpose of purchasing health insurance for self employed individuals who join. Their sole mission is to provide affordable self employed gorup health insurance. They exist only as a conduit for self employed individuals, or companies that only employ a few people, to purchase group health insurance for themselves and their families.

The larger the group that is formed, the more purchasing power the association will have with insurance companies. Self employed individuals accessing group health insurance through these associations will usually have two or three health insurance plan options from which to choose.

Though the choice of companies will be varied, the actual coverage levels are usually non-negotiable. Some plans will be full-coverage plans such as managed care options. There will also usually be major medical comprehensive plan options available. The variety of plans allow for levels of coverage options. But within each plan deductibles or co-insurance amounts will not change, nor will coverage levels be optional for the self employed individual. Rates will be set based on family size. For example, there will be one pre-determined rate for an individual, and then pre-determined rates for couples and/or families.

If the self employed individual employs more than five individuals, there may be small group plans available at reasonable costs. This option will probably be more expensive than joining an association for large group insurance, but the business owner will then be able to offer some level of health insurance coverage to her employees. Even if the full cost of the health insurance is covered by the employee, at least the coverage is available.

Health insurance should not be considered a luxury by business owners. There are options to purchase self employed group health insurance. It requires research to determine the right plan and the right price, but there are opportunities to get good group health insurance coverage for the self employed.

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