Why securing healthcare coverage is essential for remote consulting pharmacists
The United States possesses the highest healthcare costs in the world, averaging ~$12,900/person and comprising 18% of GDP in 2021. Additionally, the price of medical care since 2000 increased by 115.1% in contrast to 78.2% for all consumer goods and services. As a result, securing cost-effective health insurance coverage is an important component of one’s financial plan. For consulting pharmacists transitioning from being a W2 employee to self-employment, many factors should be considered when selecting benefits.
Health insurance considerations for consulting pharmacists
As with many financial decisions, there’s no one-size-fits-all approach. Coverage may differ depending on the size of your family, budget, provider networks, inclusion of dental/vision coverage, pre-existing conditions, and availability of a Health Savings Account (HSA).
For starters, the Health Insurance Marketplace provides resources to research eligibility for Medicaid or tax credits, considering various states offer their own marketplaces. This central hub for non-employer sponsored insurance (ESI) allows users to compare qualified health plans (QHPs) using filters such as their ZIP code, eligibility for other coverage, legal parent/guardian status, pregnancy, tobacco usage, and income.
If it’s your first time being self-employed, the health insurance choices available might be overwhelming. What’s most important to keep in mind is:
Your deductible: How much of a deductible are you willing to pay if/when you need healthcare services? A high deductible health plan that works for a young, healthy individual may not be the right choice for an older person with chronic conditions, and vice versa.
Do you use an HSA?: A health savings account (HSA) can help you pay for your medical expenses using pre-tax dollars. Many high deductible health plans are coupled with an HSA to minimize members’ monthly healthcare expenses.
Who else will be on your plan?: It’s also important to think about any family members or other dependents who might be covered under your plan. For example, if you have a child with a costly medical condition, a richer plan with a higher monthly premium could be a better option than a high deductible plan.
Healthcare coverage options for consulting pharmacists
The table below summarizes the most common options utilized by independent contractors and small business owners, including consulting pharmacists, who don’t have health insurance coverage provided to them via other employment or through a dependent or spouse.
| Option | Description | Pros | Cons |
| ACA Individual and Family Health Insurance Plans | An ACA health insurance plans meet the regulations set forth by the Affordable Care Act (ACA) signed into law in 2010. |
Guaranteed coverage, screenings, immunizations, and preventative care.
Potential tax subsidy.
Individuals with pre-existing health conditions can’t be denied. |
Open enrollment from November to mid-January (can submit for special enrollment).
May cost more if not qualified for a tax subsidy.
Variability of in-network providers and coverage. |
| Short-Term Health Insurance | Short-term medical plans may serve as a bridge, offering affordable but less comprehensive coverage. The duration varies, so it’s important to consider each plan’s details including levels of coverage, state, and pre-existing conditions. |
Can purchase anytime with no enrollment period.
Less expensive than comprehensive medical plans.
Beneficial for younger, healthier individuals with fewer pre-existing conditions. |
No guarantee of renewed coverage.
May not provide ideal coverage.
Duration of coverage varies by state. |
| COBRA Coverage | The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers and their families who left full-time status to stay on an employer-sponsored plan for 18-36 months after it would have ended, depending upon the circumstances. Insured parties must meet specific criteria, such as death, divorce, or job loss by the covered employee. |
Continuous coverage while transitioning.
Same health insurance policy upon change.
Can be extended depending on qualifying events. |
More expensive.
Will expire in 18-36 months.
Must meet eligibility criteria through a qualifying event: death of covered employee; covered employee’s termination of employment or reduction of hours of employment; entitled to Medicare; divorce or legal separation from the covered employee; or a dependent child ceasing to be dependent under the plan requirements. |
| Multiple Employer Welfare Arrangement (MEWA): | A MEWA is when a group of employers pool resources to obtain better health insurance or offer coverage for independent contractors in the same plan. Although these are less common due to compliance burdens, insurance limitations, and state restrictions, this is an attractive option for individuals with an LLC. |
Generally lower in cost than ACA plans.
Beneficial for younger, healthier individuals with fewer pre-existing conditions.
|
Factors in health status (via completion of a health questionnaire).
Typically requires membership in a local Chamber of Commerce.
Rules surrounding full-time employment to be eligible for MEWA.
|
| Health Care Share Ministry Programs | These faith-based non-profit organizations are alternatives for those sharing beliefs, using these as guidelines for medical expense distributions. Examples include Christian Healthcare Ministries, Medi-Share Samaritan Ministries, and Altrua HealthShare. Unlike traditional plans, members can sign up anytime and contribute a fixed monthly amount to a savings account. However, many regulations don’t consider this as insurance, so there’s little legal protection if a claim isn’t paid, coverage is denied, or the ministry goes bankrupt. |
Substantially lower in cost than other options.
While not insurance, plan make-up mirrors that of an insurance plan.
Beneficial for younger, healthier individuals with fewer pre-existing conditions.
|
Not considered insurance.
Variability in the quality of plans and oversight of plans.
May not align with one’s beliefs. |
In addition to the above options, while utilized to a lesser degree, the following should be considered:
- Medicaid/Medicare: Participation is available on income below 138% of the federal poverty level, disability, children status for Medicaid, and age > 65 for Medicare. Users determine eligibility through healthcare.gov.
- Military programs: TRICARE is the government’s health care program for military service members/families. Users can determine eligibility here.
- Membership organizations: Group plans may be a low-cost option through various professional or trade organizations. Some examples include AARP, colleges/universities, the Freelancers Union, and more. Many plans typically function similarly to ESI but differ in coverage levels.
- Limited benefit plans: These plans are lower-cost options for those seeking to supplement existing insurance, especially with high deductibles or minimal coverage. They’re more restricted with lower premiums and can include critical illness plans, indemnity plans, and “hospital cash” policies. However, these aren’t regulated by the Affordable Care Act.
- Health indemnity plans: Outside of other cost-sharing plans, including Knew Health, health indemnity plans allow members to choose any doctor or medical facility, as the coverage provider pays a set portion of the charges with the member paying the rest. These “fee-for-service” plans are typically recommended to supplement major medical or health insurance plans.
Tax implications of healthcare coverage
The self-employed health insurance deduction allows consulting pharmacists to deduct up to 100% of their premiums off their taxes after meeting certain criteria. Eligibility is determined monthly, depending on participation in an employer-subsidized plan, and the deduction can’t exceed the earned income collected. The premium tax credit is available for those enrolled in a Marketplace plan who earn between 100-400% of the federal poverty level. Because these calculations are complicated, consulting a tax professional is recommended.