Self employment health care

The first thing I did as a 42-year-old with a wife when I left my job to go down the self-employment route was to get health care insurance. And boy is it complicated!

To summarize, I managed to get Aetna with a moderately high deductible ($5k/year) for both of us for around $300/month.

What made the decision making process complicated is not really understanding the various deductions and coverage exemptions. But it boils down to this: the various Aetna plans essentially have two rate structures. The first rate structure is when you see people who are part of the Aetna system; the second is for those who are not part of the Aetna system. And each rate structure includes a deductible (the maximum you will have to pay out of pocket for medical care per year), a “major medical” deductible (the maximum additional amount you’ll have to pay out of pocket if you get something like surgery), a visit co-pay (what you’ll have to pay when you see a doctor) and a prescription co-pay (what you’ll pay for a prescription). Each of these four numbers (deductible, major medical deductible, co-pay, prescription) is repeated twice: once for in-system and once for out-of-system. Once you’ve hit the deductible, of course, Aetna covers the rest up to $5 million–at which point, I presume you’re screwed. (A friend of mine died a few years ago; his medical bill exceeded $1 million for a 90 day stay in the hospital with a constant stream of tests and the attention of a whole bunch of specialists. That means that while a $5 million cap isn’t impossible to hit, it’d require a pretty nasty health care disaster on the scope of 15 months of hospitalization.)

Each of the different plans I saw from other companies looked roughly the same: about a dozen or so confusing numbers–but all of which boil down to your own responsibility before the health care package kicks in. (I only went with Aetna because I was covered by Aetna when I worked for Yahoo! and Symantec, so I wanted to keep things simple.) Ultimately, however, after wading through each of the numbers, health care insurance boiled down to how much I was willing to pay each month verses how much risk (how high a deductible) I was willing to live with. For someone who is self-employed with a huge pile of savings, it seemed a high deductible made the most sense: in the event of a disaster I can easily write a check for $8k (my max out of pocket if I’m hit by a bus, which is the deductible amount plus the “major medical” deductible on my policy), but in the starting stage of my startup, I’m not making any income.

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