“I can’t quit my job to start my own business — I’d lose my health insurance!”
Have you ever heard this? Ever said it yourself? It’s a lament echoed by many SCORE clients, especially in these days of rapidly rising health care costs. But does your need for insurance have to keep you from realizing your dream of becoming an entrepreneur? To find out, let’s take a closer look at health insurance and some of its alternatives.
The Purpose of Health Insurance
Insurance gives us a way to handle large losses. By pooling groups of people together, an insurer can estimate the amount of losses that will occur in the group, as well as the amount of money it will take to pay the claims that arise from those losses. The insurer can then spread its projected costs over these groups — and over time. As insureds, we pay these costs as monthly premiums.
Generally, the larger the group insured, the lower the premium of each group member. Other factors that impact your premium rate are the number and type of benefits you receive, and the up-front costs like co-payments and deductibles.
Consider Some Options
Many people think that you can have group insurance coverage only if you work for a company with lots of employees (or have left such a company but been allowed to retain your group coverage by paying the entire premium out of your own pocket — as under COBRA). Not so! Many other organizations have enough members to be considered insurable “groups.” If you belong to a professional organization like the National Speakers Association, medical coverage may be available to you. If there are professional organizations associated with your new pursuit, don’t forget to ask them about this membership benefit.
New Types of Policies
Some insurance companies, recognizing the needs of a growing number of entrepreneurs and small business owners, have started to offer alternatives to large group policies. You may be able to obtain individual coverage, or coverage for a very small group (for example, a husband and wife team or partners in a small business) through major companies such as Aetna, BlueCross BlueShield, Cariten, UnitedHealthcare, or State Farm. Many agents will provide quotes from several companies, and help you to analyze the relative costs and features of each.
Alternatives to Insurance
Buying insurance isn’t your only option; there are a couple of alternatives you might want to consider to reduce your health care costs.
Medical Sharing Program: This is not insurance, but an arrangement under which individuals make monthly payments toward a portion of any medical costs incurred by any covered member and his or her dependents. Unlike insurance premiums (which are usually set for a given period),
the monthly payments under this program can change at any time. An annual deductible may also apply, and a membership fee may be required. The organization offering the sharing program generally doesn’t sell insurance, though the program may include stop-loss coverage to protect members against extremely expensive procedures and catastrophic costs.
One such program is the Christian Care Ministry Medi-share Program, offered by The Christian Care Ministry of the American Evangelistic Association. With monthly assessments based on the program selected and the number of people covered; and a deductible of $250 per incident for the first three incidents ($750 total); the cost for a family of three in May 2002 ranged from $183 to $297. The average increase in the monthly share under this program has been just 6% since the program started in 1993. For more information, contact Bruce Kezer at 865-207-9386.
Discount Membership Program: Another alternative is a plan like the FamilyPlan Healthcare program. It is similar to the medical sharing program in that it is not insurance, but it differs from the sharing plan in that only a one-time processing fee of $30 is required, and there are no deductible limits or restrictions on pre-existing conditions. Payments are $49.95 monthly.
This discount membership program provides access to a network of health care providers. Members are eligible for discounts on all standard products and services offered by the physicians in the network, including medical, dental, and vision care; surgery; chiropractic care; pediatric and child care; prescriptions; medical supplies, and physical therapy. Savings may also be available for hearing devices, nursing home care, and home health centers. For further information on this program, visit www.familyplanhealthcare.com.
Find Out More
One good way to find an insurer or alternate program is to ask your friends, relatives, and colleagues about their experiences. Most people will tell you about companies and plans they’ve been happy with — and those they haven’t.
Also, consult the “Insurance” section of your Yellow Pages for both insurance providers and brokers.
One user-friendly web site, www.eHealthInsurance.com, provides quotes for medical, dental, long-term care, and prescription drug coverage. The information is available by zip code for individuals, students, groups, and seniors. Their agents can give you free help by telephone: 1-800-977-8860 (toll free). Other web sites which offer health insurance, both individual and group are: www.humana.com,www.accuquote.com, www.quickquote.com, www.insweb.com, www.quotesmith.com, www.insure.com, and www.insurance.com.
Another possibility is The National Association for the Self-Employed (NASE), which can handle up to 5 employees as a sole proprietor business grows. Their telephone number is 1-800- 232-6273
This information is current as of the date noted on the top of this page. The Greater Knoxville SCORE Chapter does not endorse any of the companies, organizations, programs, policies, or information sources mentioned.