Fewer Healthcare Insurance Choices for Self-employed

Fewer than one-quarter of professional and small business associations still offer basic health care plans, long the choice of self-employed professionals, contractors and freelancers, according to the American Society of Association Executives, the Los Angeles Times reports. Many, including the American Bar Association, which dropped its health care benefit last year, say they would like to offer these plans and may resurrect them. The American Institute of Certified Public Accountants (AICPA) offers supplemental insurance such as catastrophic or long-term care insurance.

Associations that once used the health plans as membership recruiting tools began leaving the health care market about ten years ago because of costs related to mandates that they cover every member, regardless of pre-existing conditions. The Professional Golfers’ Association had extended coverage to 1,000 members until the plan was discontinued in 1996, as costs rose and younger members purchased more affordable insurance.

“If you can get cheaper coverage through the individual market, that’s what you do,” said Mila Kofman, an associate professor at Georgetown University’s Health Policy Institute, the Times reports.

Few affordable health care options remain in the individual market for the self-employed, making Health Savings Accounts (HSA’s), with some of their new features more attractive in 2007.

“I think HSAs are the greatest thing since sliced bread, said insurance broker Kevin Cooley of San Antonio Texas’ Integrated Health Plans, mysanantonio.com reports. Cooley says that the self-employed have a different view of money. They watch every dollar and look at co-payments and options more carefully than someone with company-sponsored health insurance.

Even with the high deductible that HSAs carry, putting money toward tax-free health savings “is still better than no coverage,” Cooley says.

While the limits on tax deductible contributions were increased by only a small amount last year, from $2,700 to $2,850 for an individual and $5,450 to $5,640 for a family, the entire contribution is now tax-deductible.

United Healthcare’s Golden Rule Insurance Co found that most of their HSA clients were self-employed or a husband and wife business, followed by part-time workers and farmers and ranchers. Ellen Laden, spokeswoman for Golden Rule, said that one-third of people signing up for HSA’s with high deductibles were previously uninsured, mysanantonio.com says.

Golden Rule will begin offering the option of a one-time-only transfer from an IRA to help fund an HSA. This helps early retirees who are no longer covered by company insurance and are not eligible for Medicare to fund their HSAs. Money can also be moved from a company-sponsored flexible spending account into an HSA, and long-term care insurance premiums can be paid out of HSAs this year.

Funding these health savings accounts when a family faces a big medical expense at the beginning of the year can be a problem, according to Bart Halling, vice president for consumer-driven health products at Fiserv. “My call to action on the consumers’ side is to have a little bit longer horizon on planning for health care expenses.” With HSAs, people need to plan for a health event he said, according to mysanantonio.com.

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