This makes COBRA coverage look like a bargain! Add this to the fact that, unlike group plans offered by employers, individual plans can impose pre-existing condition clauses, or even turn you down for coverage due to health issues.

Pre-existing conditions include all kinds of health issues which Murphy’s Law dictates won’t be a problem until you are covered by a health plan, which precludes them.

And then there are the plans that cost a fortune. Insurance companies generally don’t like to insure individuals. In a group insurance plan owned by a company, the insurance company is assuming the risk of both sick and healthy employees.

Averaged out, the premiums paid for by the healthy tend to cover the costs generated by the sick. Not as much of a sure thing with individuals. The insurance company wants to insure that the premiums you pay are going to balance any costs you incur for healthcare.

So they charge you lots of money to make sure they don’t face a loss for your potential future illnesses. Obviously, the older or more dicey your health history is, the more you are going to pay.

Another fairly new option for the self-employed is a Health Savings Account (HSA). Similar to an IRA, you can put funds into the plan tax-free in order to be reimbursed for out of pocket medical expenses.

Naturally, there are limitations imposed by the IRS on how much tax-free money you can set aside. You will also need to go through an HSA administrator and enroll in a high deductible health plan to qualify for the HSA. 

Corporations, on the other hand, are eligible to purchase small group medical insurance plans. Small corporations may also be able to buy into healthcare cooperatives where multiple small businesses are pooled together to achieve better small group rates.

While the rules vary from state to state, small group medical plans are generally fully insured. The technical aspects of medical insurance plans tend to be complicated, but in a nutshell, fully insured means that your company will pay a premium to an insurance company for managing and assuming the risks of employee healthcare coverage.

This eliminates the complex and perilous administration of a self-insured plan, where your company would take full control of the management, as well as assets and losses of health care coverage.