When you work for a big company, getting health insurance is a breeze. You sign up, and you’re covered. But if you’re self-employed, a part-time employee, or a small business owner, getting insurance is a difficult and expensive prospect. Why are these demographics so severely underserved by the insurance world?
Despite government efforts to ease the process for these segments of the population, small business owners are still struggling to provide benefits to employees. A 2014 survey by the National Small Business Association revealed that it costs companies more than $1,100 per employee each month for individual insurance plans and more than $2,000 per employee for family plans. And a vast majority (91 percent) of those polled do not expect things to get any easier or less expensive in the near future.
Because of the major financial burden, one-third of small business owners say that they’ve imposed a hiring freeze and 10 percent reported laying off employees in an attempt to save money. It seems as though the insurance world has all but abandoned small business owners and left them to fend for themselves.
Part-time workers are also experiencing the struggles of being underserved by the insurance industry. Some of these workers are young and employed on a seasonal basis; many are older people who have picked up a part-time job for financial reasons. In fact, with the lack of available full-time jobs that offer benefits, many people simply have to work multiple part-time jobs. Yet rarely does this demographic receive employer-sponsored health insurance.
What happened to the system?
Underserved populations are a result of insurance reforms that happened in the 1990s. At the time, many states reformed their health insurance regulations, creating a disjointed system of unique rules across America.
As a result of these changes, many insurance carriers jumped off the individual health insurance ship altogether and abandoned the self-employed and part-time folks in the U.S. workforce. Small business owners and self-employed and part-time workers have felt the squeeze ever since.
Even those who receive insurance via the Consolidated Omnibus Budget Reconciliation Act (COBRA) find it nearly impossible to be approved for an individual health insurance policy once their benefits run out. You would only be considered if you were young, healthy, and had no chronic medical issues.
The Affordable Care Act has worked toward revitalizing the individual health insurance market. The situation certainly has improved since the law was enacted, but there are still some major obstacles preventing the easy attainment of affordable health insurance coverage.
How can the Affordable Care Act help?
Since the Affordable Care Act (also termed the “ACA”) was enacted, insurance carriers have been required to offer individual health insurance in all states and coverage for small businesses. Advances in software and technology also have enabled insurance carriers to cater to more customers in general, opening the door to more underserved groups.
But it’s not all sunshine and rainbows. Unfortunately, new challenges have emerged since the ACA was enacted. Some businesses and industries are pushing back against the ACA’s requirements—a move that might make it harder for employees to receive insurance.
For example, the National Restaurant Association is endorsing legislation that would require employees to work 40 hours per week (instead of 30) in order to be considered full-time workers and thereby qualify for health insurance.
In an attempt to help employees, some restaurants are exploring the idea of adding a surcharge to orders to fund coverage. Some patrons who heard the idea pledged to never eat there again. Other companies are redefining “full time” by cutting employee hours in order to avoid providing insurance.
How to overcome the biggest obstacles
Even with the ACA, it’s still difficult for small businesses and self-employed and part-time workers to obtain affordable health insurance. Here are the three biggest obstacles these groups face and how you can overcome them:
1. Maintaining full-time status
The proposal that would raise the requirement for full-time status from 30 hours per week to 40 hours per week would leave many workers fending for themselves when it comes to getting insured. Not only would their salaries suffer, but they’d also miss out on important health insurance benefits.
Thankfully, employers are still legally required to offer at least some benefits to part-time employees. Make sure that you investigate every option available to you. Additionally, some part-time workers might be eligible for Medicare or Medicaid coverage based on how much money they make annually (and other factors).
2. Lack of guidance in choosing a policy
Traditionally, people have looked to their employers for advice on benefits. Now, self-employed or part-time workers without employer-sponsored coverage are left to their own devices.
There are some great guidance resources out there for the self-employed or part-time employee, though it unfortunately means you’ll be doing the time-consuming legwork of health insurance research and shopping.
Personal finance expert Kerry Hannon recommends that you shop for a high-deductible plan that works in combination with a health savings account. You can research these policies on websites such as eHealth, GoHealth, and NetQuote.
3. The cost of individual insurance policies
Individual insurance policies can cost up to $600 per month, which might come as a huge shock to those who are low-income, previously didn’t have health insurance, or are used to paying a fraction of that for employer-provided coverage.
If you are self-employed, it’s a good idea to discuss your policy options with a personal finance expert. For those who are looking for lower-cost alternatives, organizations such as Humana and eHealth have useful resources for individuals and families. One difficult truth is that with low-cost policies, the benefits will be more sparse.
In an ideal world (or Canada, or the U.K.,), everyone would have easy access to affordable health insurance. But in the United States, the healthcare system is very disjointed and hard to navigate. As a small business owner, self-employed worker or part-time employee, it is now your obligation to become an expert in finding affordable health insurance.
To have the best possible outcome of this situation, make sure you understand your legal rights, analyze your finances, and explore all potential subsidies.
Getting affordable insurance as a part-time worker or a small business owner is certainly doable. It just takes a lot of effort to make an informed decision. In the end, it will be worth the effort to know that you are covered and receiving every benefit you are entitled to.
Do you have any tips to add on finding affordable health insurance?