Chapter 2: Building Your Business Protection Blueprint
Part 1: Basic Insurance Needs for Independent Architecture, Engineering, and Design Contractors
Health Insurance and ACA Considerations for Independent Architecture, Engineering, and Design Contractors
Finding affordable Health Insurance is always a concern for freelance consultants and independent contractors. And starting in 2014, most Americans will be required to carry this coverage under the Affordable Care Act.
Under the ACA, all Americans must have Health Insurance — even self-employed individuals.
How the Affordable Care Act Affects Solo Practitioners
Solo practitioners in the architecture, engineering, and design fields tend to be either…
- Employees at a firm who moonlight on the side.
- Self-employed business owners.
If you don't receive healthcare benefits from an employer, you'll need to purchase your own coverage. (Looking for a place to start your search? Check out the "What If I'm Self-Employed?" article on the federal government's healthcare website.) You can find a plan that meets your obligations on the Individual & Families Marketplace.
Failure to secure a policy means that you…
- Won't have healthcare coverage.
- Will be penalized for noncompliance.
To avoid penalties, you must carry a healthcare plan that meets minimal essential coverage (and all Marketplace plans do). The penalties increase each year:
- 2014: $95 per uninsured adult OR 1 percent of your household income over the filing threshold.
- 2015: $325 per uninsured adult OR 2 percent of your household income over the filing threshold.
- 2016 and on: $695 per uninsured adult OR 2.5 percent of household income over the filing threshold.
You can read more about your obligations on the Individual Mandate Fact Sheet [PDF] produced by Blue Cross Blue Shield of Rhode Island.
Marketplace health plans are tiered from bronze to platinum levels. Remember: the lower your premium, the higher your deductible.
The Cost of Healthcare Coverage
Your healthcare costs depend largely on your family size, financial situation, and the plan you choose. Marketplace plans range from bronze to platinum coverage, and as you might have guessed, the bronze plans have the lowest premiums and the highest deductibles. On the other side of the spectrum, platinum plans have the most coverage, highest premiums, and lowest out-of-pocket spending.
Be sure to see if you qualify for assistance programs or premium subsidies (federal tax credits). According to an article by the Kaiser Family Foundation, premium subsidies will be available to people who earn incomes from 100 percent to 400 percent of the poverty level. Below is a graphic from the KFF's brief, which illustrates the average individual's subsidy.
If you're interested in hiring employees later on, you probably won't be required to offer them Health Insurance unless you have 50 or more people working for you. You can learn more about your obligations and options on the Small Business Health Options Program (SHOP) page on the government's healthcare website.
NEXT: Part 2: Industry-Specific Insurance Needs for Architects, Engineers, and Design Professionals