I have a friend who is in the process of moving to Tx and is looking to start his own business but is hesitant because he has a wife and two kids and does not know what to do regarding health insurance.
Insurance - 4 Answers
Random Answers, Critics, Comments, Opinions :
1 :
One of the best options to consider are health savings accounts. They combine a high-deductible health plan (HDHP) with a cash savings account which is investible in almost any kind of investment. You use the cash (which is put in, builds and spent tax free so long as it is on medical expenses) to pay off your medical expenses until you hit the deductible and then the health plan pays, except that routine care like doctor visits, etc. are covered first dollar by the health plan. As a small business there are tax advantages to the business for doing this and as an employee you get tax advantages and the ability to use the cash for whatever you want (up to 65 as long as you pay the tax when you take it out....after 65 it is like an IRA where you pay your post retirement tax bracket rate on withdrawls). You have to be diligent about funding the cash portion, but treat that part like an IRA account that you plan to build up and use for retirement.
2 :
The HSA is awesome. If you want to offer something to the employees at no cost to you (unless you want to pay a % of the premium), offer Aflac benefits. You can payroll deduct the premiums pre-taxed which saves your employees taxable income and lowers the FICA match you pay as a business owner to Uncle Sam. The plans never increase in price and are portable so the employees can keep them at the same price should they ever leave your company, retire, etc.
3 :
Whatever you do, DO NOT use MEGA ,Alliance for Affordable Health, or PHCS. Absolutely awful. I have put in more than $100,000 in premiums than I ever got out of them. AWFUL. I am switching to Blue Cross. Expensive, but worth it, according to my friends who freelance.
4 :
If he is currently employed at a company that provides health insurance, he should look into COBRA. If the company (depending on size) is required to offer COBRA, your friend can continue on his current plan for 18 months. He should check to be sure his current plan has a national network of doctors/facilities to be sure the are available in Texas. Another place to go is the STate dept of Insurance. They will give you a list of companies that will sell policies to individuals. Then he'll need to decide what type of insurance he needs. Others have talked about high deductible plans and they might work, but it will depend on his own circumstances and tolerance for risk. There is no one size fits all for health insurance. Also, depending on what business he starts there may be industry groups that offer group coverage (pools). Another company that does offer plans and I'm using it for my son who will age off my policy this spring is Golden Rule. They sell to individuals and have various policies.
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