Your Business, Your Body: Health Insurance and the Self-Employed

Being self-employed and running your own business has plenty of advantages and allows you the chance to control your financial future to a certain extent, but an unexpected health issue or injury that prevents you from working, could soon derail your plans.

Self-employed people can often find that healthcare is a problem for them, mainly because it is either unavailable or too expensive. The problem comes when you suffer an injury from having a car accident or maybe suffer an illness that prevents you from working, so how should you deal with this potential problem?

Making the most of your self-employed status

Many self-employed people will point to an unlimited income potential as one of the many advantages attached to being your own boss, but there are of course a number of negative aspects too.

Paying the self-employment tax rate, means that you have to fund your social security and Medicare taxes in their entirety, whereas if you were employed, your employer would be covering half of this.

That takes a bit of getting used to when you start writing out the checks to cover these amounts, but it is not all bad news and there are some things you can do to take advantage of your self-employed status.

Health insurance premiums

One of those benefits that self-employed can take advantage of, is the ability to be able to deduct the cost of your health insurance premiums, as well as any premiums you pay for your spouse and children as well.

There are conditions attached to being to claim for your spouse, as you can only claim if they don’t already have cover through their employer, but as good as the prospect is of being able to claim back the cost is, it should be noted that self-employed people don’t always get access to the best rates.

You could well end up paying higher premiums on the open market, which can be higher, but at least you are able to deduct the cost of these health insurance premiums.

Don’t end up with a tax penalty

You need to take decisive action when it comes to getting your health insurance organized, otherwise you could end up facing a tax penalty if you don’t beat the filing deadline.

If you don’t apply for your health insurance by the April deadline, you could be facing an automatic tax penalty of either $695.00 or 2.5% or your income, whichever is the greater.

It probably goes against the grain if you are self-employed and your own boss, to be told what to do, but there is a fair reason why the government has set up their system in way that encourages you to get health insurance sorted.

Without health insurance cover you leave yourself in a vulnerable financial position and you just need to ask yourself whether you are prepared to risk the future of the business and creating havoc on your family finances, which is what you are potentially doing of you don’t have health insurance cover in place.

Aaliyah Harris stepped into the world of self-employment several years ago. Often asked questions from friends and family members also wanting to work for themselves, she has started to share some information online so more people can benefit.

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