Running my own
business has been one of the best and most rewarding decisions of my career.
But I almost didn’t take
the leap.
I was frightened at
first, unsure how to secure many of the benefits I’d grown accustomed to
working for a company.
How will I save for
retirement without the convenience of a 401(k)?
How will I be able to
afford health, dental and vision care without my company’s insurance plan?
Will I be able to afford
the time off to take a vacation?
I was scared to make the
transition because I was ill-informed. I just didn’t know about the plans and
services out there that could benefit me – and there are quite a few. Thanks to
some research and the guidance of fellow freelancers and small business owners
pointing me in the right place, I was able to build a benefits package of sorts
for myself.
If you’re considering
pivoting to self-employment, don’t let uncertainties over things like retirement
planning and a vision plan stop you from pursuing your dreams. Here’s how I’ve
been able to affordably craft my own benefits.
Medical Insurance
There are a number of
ways you can secure health insurance when you are self-employed.
First, if you’ve
recently left your job, you may qualify to keep your previous health insurance
plan provided by your employer through COBRA, a federal program, for up to 18 months. This can be relatively
pricey since you have to pay not just your portion of the cost, but also your
employer’s, plus typically a 2 percent fee. Your employer usually sends
you the election form within 30 days. You have another 60 days to apply.
Coverage begins on the date of your last day or the date when your benefits
end.
Alternatively, if your
spouse or partner has health insurance from his or her employer, see if you can
piggyback on that. (That’s what I do!)
Another route: Your
state’s Marketplace. While the open-enrollment period is generally in the fall,
if you lose your job at any point and expect to lose coverage in 60 days, you
may be eligible for a “special enrollment period.” To learn more, visit HealthCare.gov or call 1-800-318-2596.
Finally, if you’re a
member of a union, a professional organization or taking courses part-time at a
local school, you may be able to get access to a more affordable, group health
insurance.
If you’re reading this
and you are younger than 26 years old and your parents have a health insurance
policy, current law states that you may be able to be covered by their
plan.
Medical plans often
provide dental care as part of the plan or an add-on, but you can find separate
dental plans at sites like eHealth, which surf the web for the
top dental plans for your individual needs.
Vision Care
My
father was a stickler (still is) about getting our eyes checked regularly. I
remember going to see an optometrist as early as 6 years old and receiving
glasses when I was 12 (that was a big day).
Excited to announce that I’m teaming up with VSP Individual Plans, which provides super affordable vision coverage that you can buy on your ownfor as little as $13 per month. It’s perfect for the self-employed and thanks to VSP, I was able to secure affordable (and fashionable!) glasses recently.
Their website provides a number of great tools including a savings calculator and a Plan Wizard. Check out GetVSPVision.com to learn more.
Retirement Savings
While you can no longer
contribute to your company’s 401(k) retirement savings plan, there are still a
few ways to continue saving up for the golden years when working for
yourself.
You can still contribute
to a Traditional or Roth Individual Retirement Account (IRA). These accounts
are designed to help you save for retirement. Each allow you to make
contributions up to $6,500 this year. In a traditional IRA, contributions are
tax deductible today. In a Roth IRA, contributions are not tax deductible, but
then withdrawals after age 59 ½ can be made tax-free.
If you’d like to save a
lot more each year for retirement, then consider opening a SEP IRA, which
stands for a Simplified Employee Pension IRA.
Your
annual contribution in 2019 can be as much as $56,000 (or no more than 25
percent of your compensation.) And it is tax deductible!
Paid Leave
Being your own boss has
many advantages but a paid vacation and paid family leave are not really among
them. For these you’ll have to plan and save. As an entrepreneur, I’ve always
said that it’s important to have an extra bigger savings account that can help
to support you for up to one year in case of a slowdown in your business or if
you want to just take a break from work – for personal, family or medical
reasons.
Automatically saving at
least 20 percent of your earnings in a high-yield savings account each month
(or every time you get paid) can be a way to quickly shore up savings to better
afford life’s ups and downs as a small business owner.
This article is
sponsored by VSP Individual Vision Plans.
The post Benefits Advice for Self-Employed, A DIY Plan for Insurance appeared first on Farnoosh.
