Millions of Americans are now working as independent contractors. It saves companies money, and can be very rewarding for the worker. Contractors are responsible for obtaining their own health insurance, for one thing. Unfortunately, a portion of that population is incorrectly classified. How can you know the difference, and how can you find affordable insurance if you need to? Here are 10 tips to help you:
Know how being a contractor impacts your eligibility. The U.S. Labor Department believes that up to 30% of businesses may classify workers under the wrong category, either intentionally or accidentally. Being considered a contractor versus an employee is significant. Employers don't have to pay unemployment or worker's compensation taxes for contractors, unlike employees. While an employer is not required to offer coverage to an employee, either, they are more likely to receive that benefit than a contractor. Make sure that you are truly an independent contractor, not an employee. The main difference between an employee and a contractor centers around autonomy and control. If you must report to an office every day during specific hours and receive specific assignments, you are generally considered as an employee. If you can decide when and where to perform your work, you're a contractor. If you have been denied group benefits because you were falsely classified as a contractor, report it. You can file a lawsuit with the labor department against your company for the back value of lost benefits. The IRS is also stepping up enforcement, so you may want to contact them. If you are a legitimate contractor, start looking for affordable health insurance as soon as possible. As an independent contractor, you have the freedom to pick from among the variety of health insurance plans available. The healthier and younger you are, the more options that will be available. The good news is that you don't have to wait for a corporate open enrollment period; just buy a plan right away, and it can take effect as soon as the next day--and no later than the following month. Try to sign up for your spouse's health insurance, if you are married. In most cases, group health insurance tends to be cheaper than coverage for the self-employed. There is also little concern about policy exclusions. You can often qualify for health insurance through your husband or wife's place of employment. Of course, if they are entrepreneurs or fellow independent contractors (or if you are unmarried), this route may not be open to you. Choose a high-deductible plan. If you are in generally good health, consider buying a scaled down high-deductible individual health insurance plan. It still covers most essential health care, but normally forces you to pay a certain percentage of the cost of doctor visits and medications (as opposed to a set co-payment). As a result, the premiums are lower. It's better to have less comprehensive coverage for awhile than to stay uninsured, especially if you later develop a pre-existing condition. Look into any organizations you're a member of for group deals. Many affinity groups and organizations of various sizes offer discounted health insurance to their members. These groups include fraternities, sororities, and professional associations (including the Freelancers Union). Think about guaranteed issue health insurance if you have a pre-existing condition. When getting insurance through an employer, your health status rarely matters. On the open market, it's the complete opposite. Most health insurers will reject you if they believe you will file too many claims. However, guaranteed issue insurance is required by law to accept all applicants. It's slightly more expensive than regular medical insurance, but there are still affordable options available. Shop around! Prices vary among health insurance companies. Each of the major providers (including Aetna, United Healthcare, and Blue Cross Blue Shield) offer different plans. One is sure to fit your needs. Remember that you're not alone. A quarter of the American workforce is now made up of independent contractors and other "non-traditional" workers. Almost two thirds of them don't get health insurance from their employers. Also, stress can cause health problems!
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