Key Health Insurance Questions Remain Unanswered For Self-Employed

Over the next few days, we’ll hear from  many healthcare experts about what the Supreme Court’s decision about Obamacare means.

I’m wondering how it will affect self-employed people. Presumably if citizens are required to buy healthcare or face a penalty, the plans offered through exchanges will be priced affordably. But how affordable will it actually be? That’s what we’re all waiting to find out.

My family gets health insurance through a major carrier. My husband and I are both self employed and buy it through a broker. We didn’t want to get bare bones insurance, because we have four small children, so we opted for a plan that’s close to what I received as a corporate worker, though more limited. There were only a few options in our state, New Jersey.

Each year when the premium has arrived, it’s been like a hard kick in the gut. When we started out buying our own insurance a few years ago, it cost about $1,600 a month. Then the premium went to about $1,900. Last year it jumped to over $2,400. It makes me almost physically ill when I think about the fact that we pay nearly $30,000 a year for health insurance. No one in the family is sick. Four members are eight and under. My broker thought it was because my husband had hit a milestone birthday. We’ve asked around among other self-employed people we know and they all pay similar rates. One self-employed couple I know dropped their insurance, because they could not find any option that they could afford. They earned close to a six figure income but were being crushed by the high cost of living in New Jersey.

Assuming that the change in the law will lower the price of insurance plans by half, purchasers will still pay a large amount of money over the course of a year.  The Congressional Budget Office has estimated that the lowest level of coverage will cost a family $12,000 to $12,500 a year. Families in high-cost states will owe more.

I used a calculator from the Kaiser Family Foundation to figure out what a family with $100,000 income in a state with high insurance will pay in 2014, and the amount was $17,094 for a “silver plan,” offering midrange coverage. (I based that on a 45-year-old policyholder.) That is almost one fifth of the family income. By 2016, families will face fines up to $2,085 if they do not buy health insurance. That’s a pretty big hit if, say, the family income is $90,000, given how much of it already goes to the tax man.

For a 45-year-old policyholder with $45,000 in annual income and no kids, a “silver” policy in a high cost state is estimated to cost $6,730. The penalty for not buying it by 2016 will be $695.

Families like mine could save some money on the premiums, especially if we opt to scrimp on insurance and pick the cheapest plan.  But I’m wondering how freelancers who fall just above the subsidy level ($43,320 for an individual and $88,200 for a family of four) will fare if they had opted out of buying insurance in the past, as several of my friends have done to stay afloat.

Many freelancers live in media capitals like the New York City and Washington, D.C. areas–where they shoulder huge rents and mortgages to keep a roof over their heads.  Salaries just above the subsidy level do not go very far, after taxes. How will they pay the premiums or penalties? And what will they opt out of buying instead? Will they rent instead of buying a home? Will they drive their cars for an extra five years? Switch to buying used clothes? The decisions they make in response to the law will have ripple effects throughout the economy.

Hopefully those involved in the fine details of the reform will consider the situation of the freelance crowd when they put it the law into action. So often, we’re forgotten, as we quietly tap away at our keyboards, trying to stay ahead of our bills.




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1 comment

  1. Some have said they’ve got more energy. I did not. My diet was the identical. I don’t over indulge and compensate after i use a heavier meal. However, I really do like my chocolate.