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For the entrepreneur who is supporting
a wife and children, getting health insurance coverage for the family
can make earning a living even more difficult.
Dear Small Biz Adviser
I am interested in learning where I can obtain information about
purchasing health insurance for my family (three members) at group
rates. My husband owns a small business, consisting of just himself.
How can I find out if it is possible to form a group, in order to
purchase more affordable health insurance? Thank you for your anticipated
response.
Concerned
Dear Concerned:
Being self-employed and a father of two, I empathize with your concerns
about protecting your family. Health insurance for small-business
owners has been an issue of great concern from many years. In fact,
a recent survey
put the cost of health care as small-business owners' No. 1 concern
-- the same rank it's held in the survey for the past 14 years.
Typically, for small firms, cash flow is simply
insufficient to include family medical expenses in the first years
of the venture.
If you're self-employed, only 60 percent of
the premiums you pay paid for yourself, your spouse and your children
can be deducted.
And there are conditions under which the deduction
can be taken:
- You must have been self-employed and earned
a net profit for the year; or
- You must have been a 2 percent or greater
shareholder in an S corporation from which you received wages.
If the spouse of the self-employed individual
was employed elsewhere and was eligible for group coverage, then
the self-employed person's business concern is not allowed to deduct
any health insurance premiums for that period of eligibility
The good news is that the tax laws will soon
tilt in the favor of the entrepreneur. In the tax year 2002, the
deductible rises to 70 percent, and the following year it rises
to 100 percent. See IRS Publication 535, Chapter
10 for details.
As for seeking a group coverage program, that's
a great idea. You can probably find an existing group -- or start
one of your own.
There are so many group health coverage plans
out there right now. And the very first place you should inquire
is the local
chamber of commerce. More often than not, most chambers provide
the health insurance coverage option to their members.
The opportunity for accessing group health coverage
is not limited to local chambers of commerce. You can reach out
to state, regional and national associations. For example, the National
Federation of Independent Business health insurance program
is offered to its membership.
I took a quick spin online to find similar programs,
and came up with the following items that may be of interest:
- eHealth
Insurance appears to be a nonprofit group that directs you
to low-cost, self-employed programs in 21 different states. Fill
out an online form and they give you a quote.
- The
International Furniture Rental Association Health Insurance program
is a classic example of a group health coverage program that covers
members of a specific industry. You may want to see if such an
association exists for your husband's type of business, and whether
or not they offer the same service.
- Kaiser
Insurance, located in California, is the example of how an
insurance agency can create a group health plan for the smallest
of groups. You may want to show this site to your local insurance
agents to see if they can meet or beat this type of program.
I hope this has been of assistance to you and
your husband.
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editorial content and advice of financial professionals. We make
no claims or representations about the accuracy, timeliness or completeness
of such content, advice or the answers provided to you. Our content,
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final decisions or implementing any financial or investment strategy.
-- Posted: Aug. 18, 2000
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