Medical Coverage As a Small Business Owner

A Home Business Article Contributed by Sharon Hill

Covering Your Medical Costs While Growing Your Small Business

The biggest advantage, of course, to keeping your day job, besides that timely paycheck you can always count on, is your medical coverage - not so with your own small business, of course. Taking advantage of group rates you may, especially if your employer is a large corporation, pay little or no out of pocket monthly fee.

So what happens when this goes away - when you quit your job and start your small business full time. How do you care for your own medical and surgical need without bankrupting yourself.

Cobra - a Small Business Owners Best Buy

Created in 1986, the Consolidated Omnibus Budget Reconciliation Act was designed to provide a continuation of group coverage to retirees, former employees and spouses and dependent children. It is available to folks who worked for companies with 20 or more employees, if the firm is private or state or local government. COBRA is not available for former federal government employees. Its coverage mirrors the insurance coverage the terminating or retiring worker had while employeed.

The only exception is life insurance. The way COBRA works is that you, the former employee, (and now current small business owner)opt to pick up the total combination of the tab which you and your employer were previously paying. If, for instance, your monthly out-of-pocket premium expense had been $25, and your employer was paying your insurance company another $175 each month, you will now need to pay $200 each month to take advantage of COBRA.

Your employer, upon your resignation or termination will arrange for you to receive COBRA correspondence that explains your options. You are not obligated to take it, nor are you obligated to choose all of the coverage you once had as an employee. The bill will be broken down and the expense of each option explained to you. If, for instance, you had opted for medical, dental and vision while an employee, your COBRA letter will tell you the individual monthly cost for each.

You can decide, if you wish to take medical and vision, but skip the dental. Whatever way you, a new small business owner, wish to package the coverage. You will have 60 days from the date your group work coverage ends to make the decision to join COBRA. You must take responsibility each month, however, for mailing the payment into the COBRA office. Make it one of your crucial small business tasks. They send no invoice.

Should you miss a payment, however, you do have a 30 day grace period before termination.

Other Small Business Medical Coverage Alternatives

As a small business owner you may find affordable medical coverage through your local Chamber of Commerce or a trade association. Numerous small business associations also offer affordable health coverage. Two examples are the Small Business Service Bureau and the United States Federation of Small Businesses. But look into the various associations in your small businesses' industry.

If you're a carpenter there's probably a craft association offering discounted coverage; I belong to two writers' groups that offer a discounted medical plan. Ask around - do a keyword search of your trade and the word association online. Ask at the local library. Pick up the phone and call your competitors. They'll know.

You'll get a much better deal jumping on board an organization bandwagon than trying to buy individual medical insurance plans.