Health Care
Perhaps the greatest expense that most magazine writers take on is paying for their own health care. As with all insurance rates, the cost of health insurance has skyrocketed in recent years. Without an employer to pick up part of that financial tab, the entire burden falls on you.
Nowadays, finding a plan with decent benefits that costs you $100 or $150 a month is considered a good deal — but can be a serious financial strain if you're only selling two or three articles a month that pay $500 or $1,000 apiece.
According to the Kaiser Family Foundation, the average cost for a single person's annual health insurance coverage in the year 2005 was $4,024. For a policy that covers an entire family, the average annual cost in that same year was $10,880. The average was based on health maintenance organization (HMO), preferred provider option (PPO), and point-of-service plans.
You need to assess your options for continuing health insurance, preferably looking for plans that include some form of disability coverage. Remember, if you can't work, you aren't going to get paid — and you will quickly run through your savings.
Your Spouse's Plan
If you are married, the easiest option may be to simply sign on with your spouse's employer-sponsored health insurance plan. There will be a cost, of course, but you may get a family discount, and you can usually be assured that the benefits will be at least decent, if not quite good, depending on what kind of employer your spouse has.
An additional benefit to getting onboard with your spouse's plan is that even without a family discount, your total costs are likely to be lower than they would be if you got an individual plan. This is because your spouse's employer will still be picking up a portion of the annual premiums, a benefit you will not have if you are forced to look into individual account options.
Individual Accounts
Another way to get health insurance is to open up an individual account with an insurance provider. This is actually a lot harder than it sounds, because most major providers choose to work only with large companies — which you, even as an LLC or an S-corp, most certainly are not.
Why do most health-insurance providers want to work only with large companies?
Because doing so limits their risk. When they insure a large group of people, the odds are good that most of them will be healthy. By contrast, most people who look for individual policies usually have some kind of health-care needs, which the insurers know will cost money.
In addition, if you do manage to find your way into an individual account with a major health-insurance provider, you're likely to have to pay through the nose for it. Some average premiums cost in the neighborhood of $400 to $700 per month, which is often simply too expensive for magazine writers. For this reason, a recent law created the option of health savings accounts, to which more and more writers are turning for coverage.
Health Savings Accounts
Health savings accounts are known as HSAs in insurance circles. They were created as part of the Medicare bill that President George W. Bush signed into law in 2003, and they are becoming a popular choice among writers because of the relatively low premiums attached to them.
Basically, an HSA is a bank account into which you deposit pre-tax dollars. You then use this money whenever you have a health-care need, with any remaining funds being saved for future health-care needs during your retirement. In addition, you pay premiums to the health-insurance provider, though they are typically far lower than the premiums you would have to pay for a traditional, single plan. You can go to any doctor you choose, at any time you like.
With an HSA, you typically pay 100 percent of your medical bills out of pocket, without the benefit of a co-pay, until you satisfy your deductible. This means that instead of getting a bill for, say, $75 for a blood test that your insurer has paid extra to cover, you very well may receive a bill for the entire $750 that the test actually costs.
Deductibles on HSAs are high. By law, you must carry a “high-deductible health plan” to qualify for an HSA, and as of 2006, the minimum deductible amounts were $1,050 for single coverage and $2,100 for family coverage. Many HSAs have deductibles that are twice those amounts or more.
You pay 100 percent of your medical expenses out of your health savings account until you satisfy that deductible. It sounds like a lot, but in reality, for healthy individuals, the overall annual expenses for an HSA are about the same as or even lower than annual expenses with a traditional plan. That's because with a traditional plan, the monthly premiums are far higher than they are for an HSA. What this new form of insurance does is help you to save on premiums, but force you to pay more for the care you decide you need.
No matter what form of health insurance you choose, be sure to save all of your receipts for premiums and expenses. In many cases, those expenses are fully deductible for self-employed magazine writers at tax time. (Check with your accountant to determine whether you are eligible.)
Using Writers' Groups
Heatlh savings accounts and traditional forms of insurance are becoming more easily accessible through writers' groups. Some groups, like
