There are currently 23 million self-employed entrepreneurs in the United States, and that number continues to rise. In Missouri alone, more than 358,209 self-employed firms are contributing to our economy’s growth and success. These innovative entrepreneurs reflect a diverse array of professions and businesses that are helping to drive our economy – from consultants and information technology specialists to painters and roofers.
As the number of self-employed individuals continues to grow due to technology that allows more geographic flexibility and baby boomers looking to open their own firms, one key concern for entrepreneurs considering a business for themselves has historically remained unaddressed: health care. But the Affordable Care Act is offering new options for health coverage for the self-employed.
We know that increased access to quality, affordable health care will make it easier for potential entrepreneurs to go out on their own instead of staying at larger firms simply because of “job lock” or the lack of access to affordable insurance outside of work. In fact, one recent study by the Urban Institute estimated that by making health insurance more affordable and ending discrimination against pre-existing conditions, the law would enable an additional 1.5 million Americans to go into business for themselves.
Under the Affordable Care Act, self-employed business owners now have more options to find affordable health coverage, and it’s important to know the facts about the choices available as you start or continue to operate your own business.
First, beginning in January 2014, the self-employed and other consumers will be able to purchase their insurance through health insurance marketplaces, aka exchanges.
All qualified health insurance plans offered in these new insurance exchanges will cover a core package of “essential health benefits” ranging from preventive and wellness services to maternity care and mental health services. The plans will vary according to the percentage of costs the health plan covers. Additionally, issuers may offer catastrophic-only coverage, which includes free prevention and several primary care visits, primarily to young adults under 30 years of age.
Enrollment begins on Oct. 1, and the exchanges open in January.
Self-employed individuals also might qualify for lower costs on monthly premiums when they apply for and purchase private health coverage in the exchanges. Depending on income, consumers and the self-employed also might qualify for lower out-of-pocket costs, so they won’t have to pay as much for deductibles, copayments and coinsurance.
It’s also important to know that, next year, the Individual Shared Responsibility provisions of the ACA call for each individual to have basic health insurance coverage (known as minimum essential coverage) for each month; qualify for an exemption; or make an Individual Shared Responsibility payment when filing a federal income tax return starting in 2015.
However, if coverage is unaffordable, you go less than three consecutive months without coverage or you qualify for an exemption for other reasons (including hardship and religious beliefs), you will not be required to make a payment.
Health coverage is a key factor in deciding to venture out on one’s own and transform an idea into a business. For more information on individual tax credits, cost-sharing reductions and other key points for the self-employed, visit
HealthCare.gov/what-if-im-self-employed and
SBA.gov/healthcare.
—Patricia Brown-Dixon, U.S. Small Business Administration Region 7 administrator[[In-content Ad]]
