How can I get health insurance for myself and family and pay for it as business......

Jul 4, 2007

  1. infoman
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    infoman New Member

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    I'm a successful part time entrepreneur in California, but I maintain my day job because of the group health insurance they offer. I'd like to cut the apron string and go out completely on my own, but the insurance situation holds these plans hostage.

    I don't want to buy private health insurance, I would like to structure my one man business so that I can easily purchase group health insurance for myself and family. I'd like to purchase group insurance as opposed to private insurance so that I don't have to deal with preexisting conditions and riders, etc. Since I'm still a sole proprietor, I have plenty of leeway in regards to business structure, and I'm willing to change whatever is necessary to get the best deal possible.

    How can I get health insurance for myself and family and pay for it as business expense without employees?
     
    Last edited: Jul 5, 2007
    infoman, Jul 4, 2007
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  2. GreenSky
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    GreenSky Guru

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    First of all, in California there are no such things as riders and since you have current coverage, there would not be exclusions for pre-existing. So, as long as you can qualify medically, you can get an individual/family policy (IFP).

    As a self-employed person, I understand that all premiums are deductible from your income tax. If you use an HSA compatible policy AND fund the HSA itself, you can add to your tax benefits and keep your cost quite low.

    For people who are not insurable under an IFP, then and only then do I ever suggest a group plan since it is more expensive. It used to be easy for a husand and wife to do this simply by getting a business license in both names and have this for 1/2 of the prior quarter. However, it is getting more difficult and most companies require a partnership agreement. But it IS doable.

    I would first try for the IFP. Then look at a group if required due to health conditions.

    Hope that helps.

    Rick
     
  3. arnguy
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    arnguy Guru

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    Rick is correct. Under current law 100% of your health premiums are deductible as an adjustment to AGI if you are self-employed without employees. You must file a Schedule C or C-EZ (as well as Self-Employment Tax). That deduction started a few years ago and was gradually increased to 100%. Prior to the change in the Code, the only way a sole-proprietor without employees could deduct health insurance premiums was by using Sec.105 of the Code. It involved hiring a spouse at minimum wage and the employee/spouse securing a health insurance policy naming the self-employed/spouse as a dependent. Then the premiums paid were deemed an ordinary business expense and were deductible. That manipulation is no longer required.:cool:
     
    arnguy, Jul 4, 2007
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  4. LGilmore
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    LGilmore Guru

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    I guess what you should find out is California still a state that sells groups of 1. I am a sole prop as an independent agent in WA and I have group insurance. However, in bringing back individual coverage to the state carriers were "allowed" to eliminate groups of one. So I am stuck as I am grandfathered in.

    If Cali only goes down to two, you may need to buy individual.
     
  5. TheSalesWolf
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    TheSalesWolf Super Genius

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    The only reason you would want to purchase Group Health in California is if you can not qualify for regular health insurance. On average you will pay 40% more money to put yourself on a group plan for the same benefits.

    Don't waste your money if you don't have to.
     
  6. LGilmore
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    LGilmore Guru

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    "The only reason you would want to purchase Group Health in California is if you can not qualify for regular health insurance. On average you will pay 40% more money to put yourself on a group plan for the same benefits."

    In WA I would say the opposite is true. Group is pretty good bargin compared to individual plans. More stuff and choices. I fear having to buy individual here.
     
  7. salpro22
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    salpro22 Guru

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    Agreed. I fear having to sell insurance in that state. I spoke to the RSD at BCBS in WA recently and she was quite proud to inform me of the wonderful 5% commission level for agents. I asked her if her company and Carefirst had a talk!
     
  8. grint
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    grint New Member

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    Re: How can I get health insurance for myself and family and pay for it as business..

    First you need to find an insurance company that will sell you group insurance. I don't think it's going to be possible because of the fact you have no employees.

    Companies are not going to be interesting in providing group plans (with them giving a group discount) without a group for economies of scale.

    If you have a large family that is of employable age you MIGHT be able to employee them and have them covered.. BUT you're going to be paying for it like they were all separate families.. not in a covered policy of your own.

    I would be surprised if you could get this to work. I've heard TV commercials for small business insurance plans.. might want to google that.
     
    grint, Aug 2, 2007
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  9. infoman
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    infoman New Member

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    Re: How can I get health insurance for myself and family and pay for it as business..

    Thanks for your advice sir! Good suggestion!
     
    infoman, Aug 20, 2007
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  10. TXINSURANCE
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    TXINSURANCE Guru

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    Re: How can I get health insurance for myself and family and pay for it as business..

    CA has loads of goofy laws and more coming... I am predicting CA will be the first casualty in the war against private health insurance...




    I found this online some time ago:



    The California Major Medical Insurance Plan (MRMIP) provides access to health insurance for Californians who are not able to be underwritten by traditional individual insurance plans. The legislation passed in 1989 and became operational March, 1991.
    California's high-risk health insurance plan switches to a "short-term incubator"
    In May 2005 there were 8,572 Californians enrolled in the plan, nearly half the number enrolled in 2003 and before. This is a result of a recent law which changed the state’s high-risk pool into a ‘short-term” incubator.’ After three years, people enrolled in the pool are granted “guaranteed eligibility” to the individual insurance market (if they enroll in the guaranteed-issue coverage with 63 days of their MRMIP ending). In May, 2005, there were 11,505 Californians who completed their 36-months in the MRMIP and were then eligible to be enrolled in guaranteed-issue coverage.
    NOTE: According to materials published by MRMIP, the switchover to a short-term incubator was done, in part, to reduce the waiting list for MRMIP and to allow it to serve more Californians with the state's limited funding.
    The guaranteed issue coverage is based on what is currently offered by the four plans in MRMIP, but with a higher annual benefits level ($200,000) and new $750,000 lifetime cap. Premiums for the guaranteed issue products are 10 percent more than the matching product in MRMIP. The State of California and guaranteed issue health plans split any losses from claims 50/50. Once in the guaranteed issue program, individuals can keep their individual coverage until they are eligible for Medicare, or find other coverage.
    The plan is funded by subscriber premiums and from an additional $40 million a year in state cigarette and tobacco tax revenues.
     
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