Business & Finance Entrepreneurs

How the Affordable Care Act Affects Entrepreneurs

You're ready to become an entrepreneur. You've quit your job, you've written your business plan, but have you overlooked one critical detail...your health?

If there's anything a freshly-minted entrepreneur has been known to skimp on, it's health insurance. When you are just scraping by or investing all you've got in building your business, a monthly insurance premium can seem like a luxury. Beside, insurance has traditional been tied to a job, and so when you no longer have a "regular job," you may be hard pressed to find an affordable way of seeking health insurance.

Of course, needless to say, the Affordable Care Act, aka "Obamacare," has changed all that.

Starting in 2014, the Affordable Care Act mandates that all Americans have basic health insurance coverage (known as "minimum essential coverage"), qualify for an exemption, or make a shared responsibility payment when filing a federal income tax return.

What does that mean for you, the entrepreneur? Well, given the website snafus during the roll-out of the program, you'd be forgiven for being confused about what you need to do next.

Bottom line -- you need health insurance, or you need to be ready to pay the penalty. The fee for not having health insurance in 2014 is $95 per adult and $47.50 per child or 1% of your taxable income (up to $285 for a family), whichever is greater.

It may not sounds like a lot, but obviously, not taking care of your health can carry a large penalty. So below find some tips on finding your own insurance.

Can I afford it?

Cigna did a recent study on freelancers' attitudes toward health insurance and found that most overestimated the cost of health insurance and underestimated the cost of medical procedures.

Where perhaps a decade ago, there was little choice in the arena of health care, due to the changing nature of the American working life (and plenty more entrepreneurs and freelancers) options for healthcare have opened up in recent years.

To Exchange or Not to Exchange?

The Health Exchanges are meant to make selection of an affordable health plan easy. Says the Small Business Administration's website: "Individuals and the self-employed may qualify for individual tax credits and subsidies on a sliding scale, based on income. Increased access to quality, affordable health care will make it easier for potential entrepreneurs to go out on their own instead of staying at larger firms simply because of "job lock."

Yet the roll-out of the Health Exchanges, where individuals are to go to select their coverage, has been fraught with frustration. Turns out that the Health Exchanges may not be your only option.

The New York Times writes: "With so much attention being paid to the troubled debut of the Obama administration's health insurance exchanges, another alternative has largely gone unnoticed: unless you live in Washington, D.C., or Vermont, you can also buy insurance outside the exchanges -- by going directly to insurance brokers, agents or company Web sites."

Sole Proprietor or Small Business?

Along with the individual marketplaces, there is also The Small Business Health Options Program (SHOP). For 2014, the SHOP Marketplace is open to employers with 50 or fewer full-time-equivalent employees (FTEs). SHOP gives small businesses the following benefits:
  • Compare health plans online
  • Control amount of coverage and how much you pay toward employee premiums.
  • Qualify for a small business health care tax credit worth up to 50% of your premium costs. You can still deduct from your taxes the rest of your premium costs not covered by the tax credit. Beginning 2014 the tax credit is available only for plans purchased through SHOP.

Still feel at loose ends?

Here are 9 ways to feel more balanced -- and maintain your sanity and health -- as you pursue your entrepreneurial goals.

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