Group Medical Insurance For Contract Programmers?

metasim asks: "I'm in the process of starting my own business and working for myself as a consultant/contract programmer in the U.S. Ironically, my major stumbling block in getting this business started is not finding paying clients, but finding affordable health insurance. Is there a *group* medical insurance plan available to contract programmers, either through membership in some association or through some other affiliation? I have a 'pre-existing condition', that although minor, causes individual/family insurance providers to jack up the prices or to not consider me at all."

Comments

Consider a Medical Savings Account

[John Murdoch]

Hi!

In addition to traditional fee-for-service health insurance, you may want to look into a Medical Savings Account. There are substantial advantages to an MSA for people who are self-employed--chief among them that you are paying for your health coverage with pre-tax dollars, but also you are able to keep a significant portion of what you pay.

Here's how it works: a Medical Savings Account consists of two parts:

• A high-deductible insurance policy (typical deductible is $3,500-5,000 for a family)
• An investment account

You pay a relatively low premium for the insurance policy, and you pay a monthly "contribution" into your investment account. Major expenses are paid (after the deductible) by the insurance policy--but the minor expenses, routine medical care, etc. are paid from the investment account.

As I mentioned above, the advantages for somebody who is self-employed (or who works for a small company) are substantial:

• Both premium payments and contributions to the investment account are paid with pre-tax dollars.
• Any amount left in your investment account is yours to keep. The amount in your investment account can grow as large as you wish--and interest or investment income on that money is tax-deferred.
• Once you reach age 65, you can withdraw funds from your investment account, just like an IRA.
• You are not limited to an insuror's list of medical conditions--you can use your investment account funds to pay for any medical expense (including, for instance, eyeglasses for your kids).

The down side of having an MSA is that you can find yourself being taken advantage of by doctors--because they are used to overbilling and then just taking what the insurance company pays. Since you don't have Blue Cross/Blue Shield to say, "the reasonable and customary amount is $48, so that's all we're paying" you can occasionally get popped for a $250 visit to the doctor where the family behind you with traditional insurance pays a fraction of that. Most of the time you can negotiate--but every now and again you'll stumble across a jerk who gets greedy.

To find out more, check out Golden Rule Insurance Company or the Internal Revenue Service publication 969.