The Self-Employed and HMOs
HMOs (Health Maintenance Organizations) are usually less expensive than other types of health insurance plans. There are pros and cons in almost everything in life, especially with the health insurance for the self-employed people who have HMOs. As already stated, HMOs are less expensive, which is why most people select an HMO in the first place.
A self-employed health insurance within an HMO is a little more rigid than a Preferred Provider Organization (PPO). With an HMO you can only choose a health care provider that is on your provider list. Healthcare cost will not be covered once the individual choose a doctor outside the HMO network. Your primary doctor will be a member of the HMO, and if you require any specialized health care your primary physician will refer you to another doctor who may or may not be in the HMO. There are somewhat fewer specialists, such as internists and surgeons who are members of HMOs, because they would suffer a reduction in pay.
Health insurance plans in the HMO system didn’t come into being until the late 1970s as part of the managed care industry. Healthcare costs could skyrocket without any restrictions in any form before the HMO system was founded. An HMO insurance provider puts a limit on what health care providers can charge you for their services. The positive affect of cost containment allows the health insurance industry to make the HMO insurance premium more affordable.
The premiums for health insurance for self-employed people covered with HMO insurance can be deducted as a business expense on your income taxes. Your health insurance policy must be owned by your business and in your name for the premiums to be eligible for tax deductions. In 2002 you could only deduct 70 percent of your premiums, but now the premiums for health insurance for the self-employed are 100 percent deductible. The tax law was changed in 2003. One nice thing about deducting premiums from the taxes is that the individual is no longer required to fill out the long itemized deduction forms.
Even with an HMO, health care costs can mount up. As a rule, health insurance pays 80% of your doctor bills, hospital bills and other healthcare-related expenses. The other 20% of the medical bills not covered by the insurance will the the individual’s sole responsibility unless there is a supplementary health insurance plan. If you were to use your IRA account to pay those outstanding medical bills, you may not be charged the normal 10 percent early withdrawal penalty fee, which is a very good thing for the small business owner.
Posted in Healthcare Professionals, Healthcare Services