Let me know if this resonates with you at all. A friend of mine is a part-time piano tuner. He’s just been doing this on the side, nights and weekends. For a while now, he’s really good at it, and it’s pretty lucrative. Recently, he’s been able to work it out with his employer to still have a full-time job but work only four days a week. He now has one full day free to do piano tuning and work with clients. Here’s the thing: in that one day, he makes more money than he makes the rest of the week at his full-time job.
The Dilemma
So why doesn’t he quit and go all in on his piano tuning business? The market is there. It’s not like he doesn’t have enough clients (He told me he has a list of over a thousand people he could follow up with). He just needs the time, and he could easily quadruple his income and the value he brings home to his family. What’s the holdup? Now, there are a number of things, but the main obstacle is health insurance. He’s concerned about losing the benefits he currently receives as an employee from his W2 job.
And I totally get it because I was in the exact same position not that long ago. Lots of people I talk to are dealing with this same issue, feeling stuck where they’re at, feeling like they can’t pursue this wonderful opportunity in front of them because they don’t know how to navigate the health insurance business. They don’t know if they can afford it. It’s funny, or not funny, but for all of the talk about health insurance and health care, all of the news and social media hot takes, all of the politicking around it, I feel like most of us don’t have a good understanding of what it actually looks like, what the options are out there, and that lack of understanding or misunderstanding of what is actually available keeps us from even looking, even beginning the process of trying to understand it.
And we let ourselves get stuck.
Practical Tips for Exploring Health Insurance Options
So, I want to provide a quick little pep talk and some practical tips on how to get unstuck and start exploring your options. I think once you start digging around, you’re going to find that it might be a lot more affordable than you realize.
The first point I want to make is that it is absolutely possible to find affordable health insurance outside the context of it being provided by your employer. I am sitting here before you as a fully insured individual, married to a lovely, fully insured wife, and raising three beautiful, fully insured children. And we’re not breaking the bank to do it. I can tell you a little bit about how we’re managing that. But I do need to qualify that my situation is my own; your situation may vary. Your health care needs will determine the plan you need, and that plan might have a higher price point.
I can’t just say, “Oh, just sign up for the premium package with this company. It only costs X dollars.” You have to do your own research and do your own math. There’s help available for that. You can reach out to a health insurance broker. But before you pick up the phone, a good place to start would be your state’s health insurance marketplace.
Using Health Insurance Marketplaces
Whether it’s healthcare.gov or, in Pennsylvania, we use Pennie. Different states have their own marketplaces, but they’re all pretty similar. I believe they all run on the same “engine” so to speak, and they make it pretty easy to see your different options. They also make it easy to calculate family’s eligibility for a premium tax credit that can bring the cost of these plans down. Be sure to plug in that information so you see accurate pricing. Otherwise, if you just go in cold, you’re going to see prices that are a lot higher. It might scare you away.
CHIP Program for Families
If you have a family, if you have kids, I would absolutely recommend you take a look at your state’s CHIP program, Children’s Health Insurance Program. I used to think that this was only for people at or below the federal poverty level. It’s not. It’s for anybody.
The price might change based on your income, but can reference the pricing tables that are available to get a better idea of what our costs will look like based on your household size and income.
ex. In my county, a family of five with an income between $48K and $76K would be eligible for free CHIP insurance. A family of 5 making over $76K would still be eligible for low cost CHIP (approx. $53 per child). It’s not until you make over $115,000 would you have to pay full cost.
Managing Income for Health Insurance
A couple of things to note: they are basing this off of your adjusted gross income that you report on your tax return, and there are ways to control that and keep it lower. you can leverage S-corps and retirement contributions to reduce your tax liability.
For example, you can make pre-tax retirement contributions that lower the adjustable gross income reported on your return. You can also leverage S-corps and retirement contributions to reduce your tax liability (watch my explanation of how that works).
Now, if you’re filthy rich and swimming in your money bin like Scrooge McDuck, you really don’t need to worry about any of this. But if you’re in that middle transitional point where you’re trying to make more money, but worried if you make too much it will hurt you by increasing your insurance costs, there are moves you can make.
The other thing I want to say about CHIP insurance is that it’s good. This isn’t government cheese. The plan that my kids are on is rock solid, and it covers vision and dental. I feel like they have a better plan than me and my wife.
Health Insurance Marketplace Tips
Now that my wife and I have taken advantage of CHIP for our kids, I only need to insure two people. So, we go back to the health insurance marketplace, and we can find a plan that suits our needs.
Similar to CHIP, the health insurance marketplace is going to use your adjusted gross income and your household size as the main basis on which they calculate your premium tax credit eligibility. That’s the thing that’s going to reduce your insurance costs.
You can opt to take this tax credit in one big lump sum when you file your taxes. Most people choose to have it divvied out over 12 months, and it gets paid directly to the insurance company, effectively lowering your monthly insurance premium bill. So again, when you are playing around with these marketplaces, be sure to provide that basic information about your income and your household size, and they will spit out all the different plans, the different tiers, the different providers, and the price should reflect the discount that you’re eligible for.
Additional Resources
I have a whole other video that I made about how to actually use the health insurance marketplace. I live in Pennsylvania, so the video covers Pennie specifically, but I believe most of these marketplaces run on the same engine and have a similar user interface. You can check that out here if that would be helpful. But you probably can figure it out on your own. It’s a pretty straightforward and user-friendly experience.
Alternatives to Traditional Health Insurance
If you look at all the marketplace options and still decide that it’s out of reach for you, there are alternatives that you can explore. In fact, when I first left my job to go full-time self-employed, I didn’t enroll in insurance at all. Instead, I signed up with Unite Health Share Ministries (UHSM). There are different flavors of health shares and health care ministries. Some of them are basically just a community pool of cash that’s available to cover medical emergencies for their participants. The company I signed up with much more closely resembled a traditional health insurance plan. Other groups and services like this won’t cover preventative care. If you want to go for your annual doctor checkup, you’re going to have to pay out of pocket for that.
Paying Medical Bills in Cash
On that note, if you can pay your doctor’s bill in cash, the office will probably be more than happy to offer you a pretty nice discount. If they can take payment right away and not wait months for the insurance company to decide whether or not they’re actually going to cover it and how much of it they’re going to cover, you probably won’t have to pay full price, whatever full price is. You’ll save some money.
Final Thoughts
I have some other resources on the topic of health insurance, providing an overview of different options, walking you through how to shop on Pennie or your state’s marketplace, when you can enroll in health insurance, and how to leverage S-corps and retirement contributions to lower your tax liability and effectively lower your health insurance bill. But all that said, I am not an expert on health insurance. I’m really just speaking from my own experience about what I have found works for me and my family.
A professional health insurance advisor or broker is just a call away and will be able to help you find the best option for your situation.
