When you left the consulting firm, its health benefits didn't come along with you. Here's how consultants are finding replacement insurance that accommodates uneven project income and time spent working in clients' cities, without paying more than necessary.
Hi, I'm Sam Jaber, a licensed health insurance broker based in Tampa. I work with people across the consulting world, including strategy, operations, HR and finance professionals, as well as former firm employees who now work directly with their own clients. Since I'm licensed in 36 states and handle my business over the phone, you can work with me even if your consulting schedule keeps you traveling from place to place.
Once you start consulting for yourself, you no longer have the health insurance your firm provided. Your replacement coverage needs to account for two realities you may not have faced as an employee: payments arriving through projects and retainers instead of regular wages, and spending part of your workweek in another city serving a client. Let's look at how consultants manage those challenges while bringing down insurance expenses.
Most of the decision comes down to a single question: will your household's income this year fall below the marketplace subsidy threshold, or will it exceed that limit?
If your consulting business operates as an LLC or you receive 1099 income, the marketplace looks at your net self-employment earnings. That's your practice's revenue after deducting the expenses required to operate it. Those expenses can include unreimbursed client travel, business software, home office costs and professional fees. If you're married, your spouse's earnings are included in the household calculation as well.
Marketplace subsidies end at four times the federal poverty level. For someone in a household of one, the cutoff is slightly above $60,000, with higher limits as household size increases. Consultants with established practices frequently exceed that amount. But during your first year in business, or when projects slow down, you could fall below it. Let's identify which situation applies to you.
When your income is too high for a subsidy, you're paying the marketplace's entire premium yourself. Depending on where you live, many of the available plans may be HMOs or EPOs. These typically pay for out-of-network treatment only in emergencies. That's a serious limitation when you're spending an entire month working for a client three states away from your home.
If you're healthy, private medically underwritten insurance gives you another route to consider. The insurer asks about your medical history and uses those answers to determine your rate, which can leave healthy applicants paying substantially less than the marketplace's unsubsidized premium. These plans use nationwide PPO networks, provide benefits for out-of-network treatment at a greater cost to you, and let you make specialist appointments without first obtaining a referral.
Here's what you're giving up in exchange. The insurance company's underwriter can accept your application, reject it, or offer coverage that excludes a particular condition. Benefits also differ from one plan to another. Before you commit, I'll review the details with you so you understand exactly what you're choosing.
Next step: Schedule a phone call with me, and I'll compare a nationwide PPO quote for your household with what you'd pay for marketplace coverage without any subsidy.
Your health benefits from the firm generally stop when your employment ends. Losing that coverage creates a special marketplace enrollment period, typically lasting 60 days, even outside the regular enrollment season. COBRA may also be available to you. Be careful about choosing COBRA and then voluntarily ending it early, because that decision won't create another special enrollment opportunity. Compare your routes before making the COBRA election.
Private plans requiring medical underwriting aren't restricted to marketplace enrollment periods. However, approval isn't immediate, so it's better to apply ahead of time. You'll also need to project your income during that first consulting year, since your estimate determines how the marketplace subsidy rules affect you.
Next step: Get in touch while your firm's health insurance is still active. We'll arrange your replacement coverage in advance, with the goal of having it begin the very next day after your current plan ends.
Every consulting practice can have a slower year, especially when you're first getting started. If your household income falls within the subsidy limits, marketplace coverage is generally the most affordable choice. The reason is straightforward: marketplace subsidies can't be applied to plans purchased outside that system.
Consulting income can be difficult to forecast when retainers and projects don't arrive evenly. Start with your most realistic annual earnings estimate, then notify the marketplace whenever a major client engagement begins or finishes. If your actual income exceeds what you originally reported and you don't correct the estimate, you might need to repay some of the subsidy at tax time.
Next step: Share your signed contracts and potential upcoming work, and I'll help you estimate your income and choose coverage.
Leaving a consulting firm doesn't automatically mean giving up PPO health insurance. Many consultants think it does because their marketplace only lists HMO and EPO options, or the PPO premiums are beyond their budget. If you're healthy, I can still help you apply for a nationwide PPO in any of the 36 states where I'm licensed. When client travel is part of your routine, give me a call and we'll compare the pricing.
My assistance costs you nothing. The insurer compensates me once your enrollment is complete.
Straight answers, no sales pitch.
You have several ways to replace your firm's coverage. You can keep that existing insurance temporarily through COBRA, use the special marketplace enrollment period triggered by losing your benefits, or apply for medically underwritten private coverage if you're healthy. Your income and medical history will help determine which route makes the most sense.
Your network determines how much protection you have while traveling. HMO and EPO plans generally limit out-of-network coverage to emergency situations. A PPO also provides benefits for non-network treatment, although you'll have higher costs when using them. That flexibility can be valuable when consulting assignments regularly take you to different places.
In many cases, yes. The deduction for self-employed health insurance premiums cannot exceed your business's net profit. It also generally excludes months when you were eligible for employer-subsidized coverage, including insurance offered through your spouse's job. Have your tax preparer review your circumstances and verify what you can deduct.
Generally, no. When your consulting business has no employees, you normally purchase health insurance through the individual market. That means choosing either a marketplace policy or private coverage sold outside the marketplace.
To get started, tell me your net earnings from last year, which contracts are signed for this year, and where your clients are located. I'll explain the coverage routes and costs, and I'll be straightforward if your existing plan is still the best choice.
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