Whether you call yourself a freelancer, consultant or entrepreneur, if you’re self-employed in Ontario you must take responsibility for all medical, dental, and other health care costs that aren’t covered by the Ontario Health Insurance Plan (OHIP). Provincial public health insurance covers a lot of medical services, but if you need eyeglasses, or a prescription, or physio because you threw your back out on the golf course, you’ll be on the hook for these expenses.
Health Insurance is Critical for the Self-Employed
As a self-employed individual, your ability to earn is largely dependent on your ability to work. If you were to become seriously injured or ill, a health insurance plan can insulate you from a financial setback. With no health insurance, you’d have to cover all medical, which – depending on the length and severity – could cause bankruptcy to you and your family. Knowing you have health insurance can give you peace of mind. You can focus on growing your business, not worrying about surprise medical costs.
And if you aren’t a solopreneur, having health insurance can benefit your growth. Being able to offer a comprehensive plan as a benefit to employees will make your business more competitive and attractive as an employer.
Types of Self-Employed Health Insurance
In Ontario, there are a variety of health insurance plans available to those who are self-employed.
- Personal health insurance – sometimes called private health insurance, this is the most common. Personal health insurance policies can be customized to meet a range of budgets and health care needs.
- Association Health Insurance Plan (AHP) – Professional associations and trade groups often offer these types of health insurance plans to their members. When many small businesses and self-employed individuals can unite, it allows the association to offer an extensive group health plan. Because of the buying power, these association health insurance plans can be less expensive than personal health insurance plans. However, their eligibility requirements may be stricter.
- Group health insurance through your spouse’s employer – If your spouse works somewhere that provides group health insurance to their dependents, ask if you can be added to their plan.
Choosing the Right Self-Employed Health Insurance
It all comes down to health care needs and what you can afford, when selecting a health insurance plan.
- Health care services you need: Do you visit health practitioners such as a massage therapist, orthopedist, or chiropractor regularly?
- How large a monthly premium can you afford? Also consider the cost of deductibles, if coverage isn’t 100%.
- Do you have any pre-existing health conditions? be sure to disclose them to the insurance companies you are considering. This will help you to avoid any surprises down the road.
- Are you on any medication? Check to see that the new plan will cover them.
- Do you have an existing network of preferred doctors and specialists that you want to continue to see?
- Do you like to travel? Some plans include a travel insurance component as well, so be sure to ask.
It’s a lot of detail and options to consider so be sure to read the health insurance policy carefully. Understand the waiting periods, exclusions, costs, and limitations before you buy.
How to Save Money on Self-Employed Health Insurance
When you’re running your own business, saving money is paramount. Here are a few tips to make sure you aren’t overspending on health insurance.
- Look into a buying a high-deductible plan with a health savings account (HSA), which enables you to save money on taxes and pay medical expenses with tax-free dollars.
- Comparison shop. Get quotes from a few different insurance companies.
- Take care of your health. Go to annual checkups, get screenings, stay active. These kinds of preventive care services are often covered by health insurance. Stay healthy so you are less likely to have expensive medical issues in the future.
Transitioning from a Group Plan
Perhaps you are transitioning from being an employee to being self-employed. If you are currently on a group health insurance plan here are a few things to be aware of, to make the transition less daunting.
- Before you begin looking a self-employed health insurance policies, understand your current group plan coverage. What kinds of health care services are covered? How much are the deductibles and copays? Do you have pre-existing conditions that are covered, and will need to continue?
- When you know the coverage you need, compare quotes. Request quotes from a few different insurance companies so you can find the best plan for your budget and health needs.
- Transitioning from a group plan to self-employed health insurance isn’t instantaneous. Plan early and give yourself plenty of time. You want to make sure that your new medical coverage is effective before your old group coverage benefits come to an end.
- Some health care services such as vision care may have a wait period, based on the date your insurance coverage starts. Plan accordingly. You may want to book that eye exam or teeth cleaning while you’re still on your group plan.
Disability Insurance for the Self-Employed
Disability insurance provides financial support to if you become ill or injured and are unable to work. And, as a self-employed individual it’s something you should consider. Disability insurance can help with the cost of mortgage or rent, utilities, and other your living expenses – not to mention medical costs like in-home care and medical supplies and treatments.
Disability Insurance Factors:
- Consider if you need coverage for short-term and long-term disabilities
- Calculate how much of an increase you can afford in monthly premiums
- Do you have pre-existing medical conditions that may impact your ability to work
- How much of a financial benefit will you require each month to cover lost income
- How long can you carry your expenses before disability benefits take effect
Tax Deductible Health Insurance Premiums
In Canada, as a self-employed individual, you can deduct the cost of your health insurance premiums from your income as a business expense. Keep track of your health insurance premiums and submit them with your tax return, using Form T2125, Statement of Business or Professional Activities. Reduce your taxable income!
Self-Employed Health Insurance to Protect Your Future
As a self-employed Ontarian, health insurance is a critical piece of your business. By shopping for the right plan that fits your needs and budget, and taking advantage of the benefits available to you, you can save money on health insurance, look after your health, and be protected from financial hardship caused by an illness or injury. In addition it can ensure business continuity, enhance productivity, and save you money on taxes. Learn more about our Ontario Blue Cross private health insurance plans. And don’t hesitate to contact us if you have any questions.