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Working without a net ...Health insurance too high for many self-employed

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by Carrie Groves

SBJ Contributing Writer

According to the Federal Bureau of Labor Statistics, more than a quarter of America's self-employed workers do not carry health insurance. Faced with paying the total burden of ever-rising health coverage costs, self-employed businesspeople are deciding against health insurance, despite the financial risks.

Cathy and Bruce Clemens of Springfield are the owners of Silver Feather Arts, a small company producing hand-made jewelry.

Bruce Clemens left his job as an electronics technician at a California university some years ago to become a self-employed watchmaker. Cathy Clemens, a jewelry designer/craftsman, said their family of three has "no insurance now because we feel we can't afford it," she said. "If anything major happens, we'd be sunk. We just try to stay healthy, and have faith that nothing bad will happen."

Rates for private plans for a family of four run anywhere from $600 to $1,200 a quarter, usually with a family deductible of $2,000 or more. Lower deductibles push the rates higher. Carrying a high deductible also means the insured pays a larger copay for a doctor's office visit.

These policies function primarily as major medical protection, useful mainly in case of a medical catastrophe. When a family applies for a private insurance policy, the cost of coverage is calculated not only on the claims history of the family, but on the statewide claims history for all of the other private policy applicants enrolling with that insurance company around the same time.

Simply put, this means that even if an applicant has never had a health claim, his family's rates are determined, at least in part, by the health of total strangers.

Elizabeth and Reggie Smith of Rogersville do landscaping and excavation work as S and S Enterprises. "We don't have health insurance," Elizabeth Smith said, "because it's too expensive for a family of four. And I want to stay with my own doctor, but the HMO and PPO plans limit who I can see. I have some ongoing health issues, and insurance companies don't want to cover those, anyway. So I'm very careful about my health, but we worry."

Lack of coverage for pre-existing conditions is another problem many of the self-employed face when looking for health. Most companies mandate a waiting period of one or two years before paying on claims related to chronic illnesses or ongoing health problems.

And with premiums rising up to 15 percent a year, costs just keep escalating. Susan Bieri and her husband ran a dairy farm in Taney County before ending up in Springfield. They had no health insurance then, and now, as Bieri prepares to open her "art, antique and eclectic 'junque' store" The Rare Breed, on Walnut Street, she is still without coverage.

"I have insurance on my two kids," she said. "I'm looking at various plans right now, but I'm not convinced that I can afford it for myself."

Currently, there are only limited benefits to be gained by providing insurance for yourself if you are self-employed. New federal legislation will ensure that by the year 2003, all medical plan premiums will be fully deductible expenses for sole proprietors and S Corporation shareholders. However, the self-employed will still have to deal with large out-of-pocket expenses.

Medical savings account plans have been around since the 1980s, and their use was strengthened by Congress in 1997. Although the coverage is fairly simple to implement, the plan demands strong financial discipline on the part of the insured, as money must be set aside every month to pay for the required high deductibles.

Customer resistance to the enforced savings, along with the fact that sales commissions on these plans are low, may discourage insurance salespeople from urging their consideration.

Self-employed businesspeople almost never carry workers' compensation for themselves, seeing it as yet another financial burden.

Coverage is state-regulated, and in Missouri, if you have fewer than five employees, you are not required to provide workers' compensation. You are, however, still obligated by law to pay medical costs for a worker injured on the job. Without work comp coverage these unlimited medical benefits are the burden of the business owner.

Health coverage for the self-employed? Cathy Clemens sums up the prevailing view: "You just can't afford to get sick."

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