March 01, 2003
Meetings & Conventions: Planner's Portfolio March 2003 Current Issue
March 2003 Independent LifePLANNER'S PORTFOLIO:


BY Sarah J.F. Braley

When you have your own business, make self-insurance job one

It’s exciting to begin calling yourself an independent. But there are so many details to handle setting up the office, finding clients, networking, insuring the business your own health coverage might fall through the cracks. Don’t let it.

If you’ve left a full-time job with benefits, you can continue your coverage temporarily, thanks to the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), which requires most employers to offer insurance for at least 18 months after someone leaves the company. (You are not eligible for the coverage if you are terminated for “gross misconduct.”)

People who opt to continue their coverage this way find their costs jumping, because they have to make up for the part their employer used to pay. For detailed qualifications and the pros and cons of choosing COBRA, visit

A wide variety of policies are available for individuals. Where to start?

“Self-employed people can put aside a portion of their salary tax-free for medical services in medical savings accounts,” says Larry Akey, a spokesperson for the Health Insurance Association of America in Washington, D.C. ( “They can then buy a policy with a high deductible to cover truly unanticipated health events.”

Akey offers two pieces of advice. First, find a broker to guide you through the buying process: “Insurance is a complex financial product, so get professional advice,” he says.

Second, make sure you know what your policy covers, so when you get sick or injured, you won’t be surprised by any out-of-pocket expenses.

Before doing the cold-calling, find out what kinds of insurance products are available in your area. Ask self-employed neighbors and colleagues in professional organizations about their coverage, who they bought it from and how happy they are with it.

Next, visit the Web site of the Arlington, Va.-based National Association of Health Underwriters ( On the right is the Find an Agent button. The search returns 20 brokers in your area, if your state offers this type of service.

Have all the pertinent information ready when you call the broker: type of insurance you want, whether you want family coverage and how much you can pay per month.

For comparison, we asked broker David Oscar of Oscar & Assoc. in West Caldwell, N.J., what is available. He reports there are two carriers working with New Jersey brokers: Blue Cross Blue Shield and Oxford Health Plans, both of which offer HMO and indemnity policies. The state’s individual plans do not include prescription coverage.

HMOs cost between $368 and $500 a month, depending on which office copay you choose ($10, $20 or $30; hospital copays are roughly 10 times the office amount). Indemnity policies, which have none of the network restrictions of an HMO, cost between $198 and $1,700 a month, depending on the deductible and the ratio of the payout after the deductible is met. For instance, for $198 a month, there is a $10,000 deductible, and the payout ratio is 50/50.

“Typically, for a single person, you’re looking at $500 a month for an indemnity product,” says Oscar. “The deductible is $1,000, with 70 percent coinsurance.”

Oscar adds that if you can prove at least two people are on the payroll of the company you have started, you can save between 30 and 40 percent and get better benefits.

Affordable healthcare is offered to members of the National Association for the Self Employed ( Access-level membership costs $96 a year; premier resource-level membership is $420.

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