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Health Insurance When Leaving the Corporate World?
An anonymous reader writes "I've been working at a large company since I got out of college, so I didn't have to give much thought to getting my own healthcare plan. Now I'm thinking about leaving the corporate world and starting out on my own. I have a family now, so I need to make sure we're going to be covered should anything happen. Researching online turns up horror stories of people trying to get individual healthcare plans, or getting denied coverage on plans they thought they had. Does anyone else have experience going through this and what you've had to deal with, or am I making too big a deal of it?"
When I was self-employed, I was able to get cheaper insurance through my local Chamber of Commerce. I had to join (and pay the membership fee), and it was still expensive, but nowhere near as bad as if I'd done it all by myself. And don't just limit it to your own town - a lot of them don't care where you live/work as long as you're close enough to be in the same general area :)
FYI, in the U.S., you can buy health insurance at a discount by joining either a freelancer's union or your local Chamber of Commerce. I did the latter when I was freelance. Most CoC's offer health insurance packages to their members at group rates, e.g. lower than what you'd pay directly. Still expensive, though. You definitely need to factor that into your budget.
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What you want to do is actually very simple and you will not have to enter into the individual health care market. You likely have these options:
1) No matter what, when you leave you'll be given the option to sign up for COBRA. COBRA lets you keep the health insurance you have now and it is mandated by federal law. So long as you pay the premiums, they have to keep you on at the exact coverage you have today. After 2 or 3 years, the insurance company will take you off of COBRA but will be required to offer you a guaranteed issue policy. This option can be pricey.
2) Most states offer some form of socialized medicine. For example, Maine has a state program that anyone can qualify for provided their employer doesn't provide insurance. Massachusetts requires insurance companies offer you a policy (and requires that everyone carry it). If your wife doesn't work or doesn't make a lot, until you can cover your new company's expenses and pay yourself you are low income and will therefore qualify for many of the programs out there.
3) Some states such as Florida require that health insurance companies offer guaranteed issue policies to companies under a certain size (50 employees in the case of Florida). Since your company has only 1 employee, you qualify. Insurance salesmen don't often like to take these policies because the commissions are intentionally set low to encourage the salesmen to put you in an individual policy instead.
I had a stint of several years without corporate insurance. The situation is grim and I can only tell you what I ended up doing.
I too had a family (3 kids and a wife). I found a private plan with Blue Cross that cost around $1200/month and considered it a steal. (Although I was not affected, I heard horror stories about individuals who were unable to get private insurance at any cost.) The coverage was similar to my prior corporate plan but with higher deductibles and more gate-keeping by our primary care physician.
After a year of this I looked around for an alternative and moved to a high-deductible plan with Aetna (deductibles were $5k/person; $15K/family) and opened an HSA. I contributed the maximum allowed to the HSA each year (note, this is not a FSA!). For the remaining years this was the approach I took and it worked well but no one got seriously ill, we didn't need any hospitalization, and only used a hospital once for my daughter's broken foot. For the duration I was with Aetna's high-deductible plan, they paid nothing, but my cost was only $612/month and I got the tax benefits of the HSA.
Absent a health plan you are paying retail for all medical services vs. the negotiated cost your insurer has obtained. You still end up paying a lot (all?) out-of-pocket but at a reduced rate. The same applies to prescription drugs. This negotiated cost business is the secret sauce of the industry. You go to your doctor and he charges you $100 for the office visit and $300 for an x-ray. But Aetna has negotiated these fees to be $65 and $125 respectively which is what you end up paying unless you've reached your $5K deductible. If you've got the money in your HSA you pay it from there using pre-tax dollars. If you don't have any insurance (or the doctor doesn't take your plan) then you pay the whole retail price ($400 in this example).
We had no dental nor eye care coverage for the duration but both can be paid using the HSA account.
In both policies a pregnancy was specifically excluded but we had finished our family by then so it was not an issue for us.
I hope this helps.
Interesting experiences. I too have had experience with both the U.S. and U.K. and I came away with a much higher opinion of the U.K. I lived in the U.K. for about a year and towards the end of my stay my parents came for a visit. My mother hurt her back getting out of the bath on the weekend. By Monday (a bank holiday Monday) she was bedridden and my landlord suggested we call the hospital. I was very skeptical, having grown up with the U.S. system. I called the local hospital (South London - Herne Hill) and the first thing they asked was whether she was well enough to travel to the hospital. If not, they offered to come to the house. I couldn't believe it. I told them we would get her in a cab and bring her over. Once there, there was no paperwork to fill out, and they saw her right away. After just a few minutes she was given a prescription for a muscle relaxer and a pain-killer. Got another cab to take my folks back to my place, and then I asked the cab driver to take me to the nearest chemist to fill the prescription. Got both prescriptions filled for about $16. I tipped the cabbie handsomely when he dropped me at my place. He asked me, "Do you know how much you are giving me here?" I told him I did, and that it was because I was having a great day. In the U.S. I would have had to have taken her to an emergency room. That would have taken 4 to 12 hours of my day and cost her about $500 copayment. Then the drugs would have cost another $65 copayment. In the U.K the whole thing took less than an hour portal to portal, and the cost was $20. As others have commented, maybe the U.K. is better for the little things than the big things, but I've got plenty of U.S. horror stories for big things too. I just find it interesting that the U.K. spends significantly less in terms of GDP and they don't have reduced life expectancy than the U.S.