Independent Health Insurance

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Why You Need to Know About Independent Health Insurance

Double-digit annual increases in health insurance costs have forced many employers to adopt some new strategies where providing this benefit to its employees is concerned.

Ways Businesses Save Money on Health Insurance

Common tactics employed by businesses in an effort to curtail health insurance expenses in recent years include:

-Cutting benefit packages—such as lowering the amount of overall coverage and the options available to the insured
-Raising the share of employee cost in health insurance plan
-Using more temporary agencies to supplement staff
-Increasing proportion of part-time workers
-Outsourcing to areas where health insurance is not mandated by law for full-time employees in companies

How the Cost of Health Insurance Affects Employees

At annual reviews and during salary negotiations, one factor that is truly limiting the amount of compensation businesses can offer employees is the rising cost of health insurance causing more and more to use the “3, 4, 5” rule: Good performance in recent year is rewarded with a 3 percent increase in salary, and so on… This is not necessarily greed on the part of the company so much as it is simple economics because the cost of benefits like health insurance are truly rising faster than anyone, including employers, can cope with.

Insurance for the Self-Employeed

Independent health insurance is becoming a necessity for more and more Americans as self-employment figures continue to rise. The number of self-employed Americans is at an all-time record level and many economists believe that businesses are cutting staff to minimal levels in an effort to control costs associated with maintaining health benefits for full-time employees. However, the price of self-employment is steep and part of the cost is increased expenses when securing health insurance.

Cost

Like anything, the cost of any product or service decreases when you buy in bulk. When an employer negotiates a new health insurance plan for employees, they are getting a rate based upon a large number of employees—say 100. Statistically speaking, all 100 of those employees will be paying into the plan but unless some rather unlikely disaster occurs, not all 100 will be using the benefits at the same time nor to the same extent. Thus, the odds of the health insurance company making a profit are actually higher than if they were insuring just one person who would have a very limited contribution to the plan but just one major illness or accident might forever make the plan unprofitable. Thus, independent health insurance premiums are higher than for buying or opting into a plan through their employer.

Cooperative Health Insurance Plans

However, there are health insurance plans that independent people can buy into which lowers costs.

These co-operative health insurance plans involve hundreds, perhaps thousands of independents who are actually participating in a “group plan”—just not one put together by an employer.

However, the insurance company provides lower premiums because it is insuring more people and thus collecting more revenue and lowering its risk of paying out catastrophic claims. The ranks of the self-employed get the peace of mind provided by having insurance but the lowered costs of buying in bulk by participating in the plan. Everyone wins.

An independent health insurance agent (as opposed to one working for a specific insurance company) is perhaps the best resource for finding the best rates if you are self-employed and in need of medical coverage.

Agents working for specific insurance companies are employees of that organization and thus will act in its best interest while an independent health insurance agent works in your best interest to find the best rates and coverage possible.

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