Health Insurance for the Self-Employed 1-2-3
Having health insurance and being able to afford it is a great concern for many who
leave a corporate job to run their own business.
The national crisis in health coverage is hitting the small business owners especially hard. About 24
million small-business employees and their families are uninsured, according to a study by the Kaiser Family
Foundation.
After you leave your employer you may elect to continue to receive coverage in the employer's group plan at
your expense for up to 18 months. The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law
that requires employers to allow
However, the cost of the monthly premiums for COBRA can come as quite a surprise if you're accustomed to you
employer picking up most of your health insurance tab.
Luckily starting in 2003, if you work as a consultant, freelance worker, and other self-employed individual
you will be allowed to deduct all of your health insurance premiums. This is an increase form the 70% that was
deductible in 2002. You can take the self-employed health insurance deduction even if you do not itemize your
tax return.
But, even with health insurance the medical expenses that come out of your pocket can overwhelm you. If you
have to dip into your retirement savings for certain medical expenses, the best way to do so is to transfer
your IRA or previous 401(k) account to a Self-Employed 401(K) plan that you set up. You can then take a loan
from that plan. Loans from a Self-Employed 401(k) plan are tax-free and penalty free as long as they are paid
back.
About the Author: By Daniel Lamaute of www.InvestSafe.com Daniel is a retirement plans specialist and owner of Lamaute Capital,
(InvestSafe.com) an investment brokerage firm that works with individuals and small businesses.
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