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Many prospective small business owners may be reluctant to go out on their own because they don’t want to give up the health insurance they have through their current employers. The cost of health insurance can be a big hindrance to joining the ranks of the self-employed.
If you are leaving your current job to work for yourself full-time, it is advisable to take advantage of COBRA. COBRA is a program that permits you to pay the full cost of your health insurance plan and keep the insurance for yourself and your family for a period of up to 18 months. This gives you ample time to research and compare other health insurance plans without experiencing an interruption in care.
One reason that many people hesitate to go into business for themselves is because they have a pre-existing condition which might not be covered on a new health insurance plan. By law you can’t be denied coverage for a pre-existing condition as long as you are paying for COBRA coverage. But when you look for a new insurance plan, you do run the risk of being denied coverage. The Patient Protection and Affordable Care act, which started taking applications in 2010, is a way for individuals with pre-existing conditions to receive coverage.
While it can be challenging to find a suitable health insurance plan if you are self-employed, once you obtain coverage you can take advantage of tax deductions. The cost of your health insurance premium can be deducted from your federal taxable income, so long as that amount does not exceed your income.
