Self employment has many perks. Figuring out health insurance coverage is not one.
As more friends and colleagues take the leap into freelancing, one of the most common questions I receive is how I approach health insurance.
When I walked into my boss’ office a few years ago to quit my job, that also meant giving up my employer-provided plan. Back then, I couldn’t have told you the difference between between a co-pay and a deductible. I probably couldn’t even tell you how much I paid since premiums were automatically deducted from my paycheck.
But self employment forced me to figure a lot of this out. Though I’m by no means a health insurance pro, I can now look at a plan and decipher most of the lingo and fine print. This came from necessity. In 2016, I had to switch insurance three times because one provider went bankrupt and another went off the insurance marketplace.
After muddling my way through the murky health insurance waters, here’s how I handle these costs today. There certainly isn’t a “right” way to do any of this stuff. This is just how I do it. If my experience can help you in any way, great!
For 2017, I bought my plan through healthcare.gov. I specifically looked for a high-deductible plan that was HSA eligible. I’m young, healthy and don’t use insurance for much else other than check-ups and preventive care (knock on wood). I do not have preferred doctors or specialists I need to see.
My plan is basic and mostly for something catastrophic. I pay $247 a month. It’s an HMO, which means I don’t have a lot of choices and my options are limited. I had to designate a primary care physician — someone whom I’ve never met. I cross-referenced my insurance company’s list of in-network providers with doctors who had profiles on ZocDoc to find someone who had good reviews from patients.
I could pay more for better coverage with access to a wider network of doctors, but I take this risk based on my uneventful health history.
I also have my own medical records. The past few years I’ve had to switch doctors several times because I’ve had to switch insurance several times. So I figured it would be smart to get my hands on my records in case this happens again. This process was a huge pain, requiring several phone calls, follow-up calls, paperwork and emails to the doctor’s office. Still, it was worth it. I have better peace of mind knowing I have all my medical information easily accessible.
Health Savings Account
I have a fee-free Health Saving Account with Byline Bank. This includes a debit card I can use for most health-related costs. I put as much money as I can into my HSA every year. There are three advantages to HSAs:
You can use the money for qualified medical expenses. Some of these are obvious, such as co-pays at your doctor or contact lenses. Others are more surprising, such as Band-Aids and high SPF sunscreen. If you take out HSA funds for anything other than qualified medical expenses, you have to pay a 20% penalty tax.
Contributions are tax deductible. Contributing to my HSA helps me lower my taxable income. For 2017, a single person can contribute up to $3,400 annually. If you are over 55, you can contribute $1,000 more. Families can contribute $6,750.
You can invest and grow the money tax free. I don’t invest my HSA, so have no insight to offer on this point. I earn a small amount of interest from the bank that holds my account. Unlike FSA funds, which need to be used by the end of the calendar year, HSA funds can just sit there and grow. There’s no use-it-or-lose it component to HSAs.
Since I’ve been stashing away money for a few years, I nearly have enough in my HSA to meet my ginormous deductible if necessary. I also use money in my HSA to cover dental cleanings and eye exams. I pay for that stuff out of pocket. So it’s not as big of a hit because I already have that money in a separate account specifically for this purpose.
Teeth and dental insurance
I don’t have dental insurance. I looked into it, it didn’t balance out cost-wise. Instead I have a dental plan.
I discovered dental plans a couple years ago when one of my clients at the time, The Penny Hoarder, asked me to write about them. It’s not insurance. You pay an annual fee to be part of a plan, and in return receive discounted dental services.
I started by calling my dentist to if he accepted dental plans and which ones. He accepts a dental plan called the Careington Care 500 Series. I bought mine through dentalplans.com.
I pay about $150 a year for my Careington plan, then receive 50–60% discount on my twice-yearly cleanings, office visits and X-rays. Even after paying the annual fee, my cleanings come out cheaper. When I crunched the numbers a couple years ago, I calculated a savings of $94 in one visit, or 67%. If I needed a cavity filled or a much pricer root canal, I would get discounts on those services, too.
I use HSA money to pay for both my dental plan and the bill at my dentist.
(Update: After I wrote this, Dental Plans reached out to me to offer interested readers a discount. Call 1–844–435–3364 and save 15% with code SMILES15.)
Eyes and vision insurance
I also don’t have vision insurance. As with dental insurance, I looked into it, but it wouldn’t save me much. Most vision insurance covers an annual eye exam, plus a portion of lenses every couple of years. I decided the most affordable option was to pay out of pocket for eye exams (about $80), then pay for glasses as needed.
Every time I see the eye doctor, I also request a new copy of my prescription. They don’t automatically hand this over because they’d like you to buy frames from them. But they will give it to you. It’s your medical information. This comes in handy when shopping around for frames.
Since my prescription hasn’t changed much over the last several years, I’ve been going to the eye doctor every other year. I was due this year, and my eyes have gotten a tad worse in my old age. So I’ll need a new pair of glasses, which aren’t cheap. Especially with my high prescription.
Warby Parker offers cost-effective and nice-looking prescription glasses. Many of my friends have Warbies, but their frames aren’t for me. Several years ago, I went through a phase of buying cheap prescription glasses through Coastal.com. But then I got freaked out that I was destroying my eyes by buying cheap glasses because my pupillary distance wasn’t exact when I shoddily measured it myself in the mirror. The cheap glasses would also loosen up fairly fast and slip off my face. I wear glasses daily, so I decided it was better for my eye health to invest in high-quality frames that would last longer and were professionally fitted by an optician.
I’ve also found I get better customer service when shopping directly from an eye doctor. Example: One of my ears is a smidge higher than the other, which is pretty common. Anytime I get a new pair of glasses, the eye doctor will adjust them with some magical machine so they’re the perfect fit to my head.
Every few years, I find myself buying a pricey pair of frames. The “beauty” of paying out of pocket for prescription glasses is that you’re not limited to a single eye doctor or particular network. So I’ve been shopping around for frames. I’ll probably get a few quotes before I decide.
I’m extremely lucky to be in great health and not have high prescription costs. There’s also a lot of uncertainty with the future of health insurance right now, so much of this could change. For now, I’ll continue to invest in my health and keep rolling with the health insurance punches.
Last thing: Impact Health is offering $25 to people to take this survey who bought their own health insurance for 2017. Check it out if you bought yours through healthcare.gov or directly through a health plan. I got a $25 Amazon gift card for answering a few questions about my experience shopping for experience.