Savvy Strategies to Cut Health Insurance Costs When Self-Employed
Being your own boss is a double-edged sword. While it comes with flexibility and autonomy, it also brings challenges like grappling with health insurance costs. As a solopreneur, insurance premiums can take a significant bite out of your income. However, there are strategies to make these costs more manageable.
Go for a High Deductible Healthcare Plan
Health insurance policies operate on a simple principle: higher deductibles usually mean lower monthly premiums. If your health is generally good and you don’t often need medical care, a high deductible plan could save you money in the long run. Bear in mind, though, a high deductible could mean shelling out thousands of dollars before your insurance kicks in.
The silver lining? High deductible plans still cover routine and preventive care just like standard policies. You’ll usually get free routine check-ups, but you’ll have to foot the bill for any emergency or non-routine visits. After reaching your deductible, your insurance coverage will start sharing the costs. Before choosing this route, consider your monthly budget and potential out-of-pocket costs in case of an emergency.
Leverage Premium Tax Credits
When getting insurance through the Health Insurance Marketplace, don’t forget to apply for premium tax credits. Determine your eligibility by completing the questionnaire on the Healthcare.gov website. If you qualify, these tax credits can directly offset your monthly premiums, making your insurance more affordable. Conveniently, the Marketplace pays the insurance company directly, so you see the savings every month.
Shop Smart for Lower Health Insurance Costs
Like shopping for a car or a laptop, it’s wise to compare prices before settling on an insurance plan. Don’t limit your search to the Marketplace; explore options on your own as well. Also, don’t lock yourself into PPO plans; there are other varieties to consider.
However, remember to compare similar policies. For instance, comparing a plan with a $1,000 deductible to one with a $10,000 deductible can skew your perspective. The lower premiums of the $10,000 deductible plan may seem attractive, but if you need to use the insurance, meeting that high deductible could prove challenging. A side-by-side comparison of similar policies will help you make an informed and affordable choice.
Deduct Your Health Insurance Premiums
You might be able to deduct your health insurance premiums from your taxable income. This includes premiums paid for medical, dental, or long-term care insurance. The deduction is available even if you choose the standard deduction over itemizing. By reducing your taxable income, you’ll lower your overall tax liability.
While health insurance costs can feel burdensome for the self-employed, a strategic approach can make them more manageable. Just remember: being uninsured to save money can lead to hefty tax penalties and potential financial ruin due to unexpected medical costs. Always ensure you’re covered.