| More than one-fourth
of all self-employed persons are uninsured (compared with
12.6% of workers in firms with 1000 or more). Not only are
these individuals taking a risk to start and manage their
own companies, often they are taking chances with their financial
security by going without health insurance.
What Barriers Keep THE SELF-EMPLOYED
from OBTAINING Health Insurance?
Cost
The National Association for the Self-Employed reports that
an employee in a firm with less than 10 employees pays 18%
more for his or her portion of the health insurance premium
than a worker in a firm with 200 or more employees. Health
care costs are continuing to rise in double digits for micro-businesses,
as well as for all companies.
Convenience
The self-employed do not have a full-time human resources person
to research and negotiate rates, file claims, answer employee
questions, and address problems as they arise.
Inequitable Tax Treatment
When people receive health insurance through their employer,
they pay no income tax on the portion of their income used
to pay for the insurance. However, when people are not offered
insurance through their employer and/or purchase coverage
in the individual market, they must pay taxes on the part
of their income they have used to pay their premium.
In dollars, this tax inequity
can be significant. Families with a household income of $20,000
to $30,000, who purchase their health insurance outside of
the employer framework, pay an average of $725 more in taxes.
As income rises, so does the tax inequity.
In addition, the self-employed
are not able to deduct the cost of their health insurance
premiums for the purposes of self-employment tax. The self-employed
are the only business entity that does not receive a full
deduction of health care costs. This inequity causes the self-employed
to pay 15.3% in additional taxes.
CAHC believes that health
care tax credits, tax deductions,
Health Savings Accounts,
and other legislative solutions like high-risk
pools targeted at reducing the tax inequities can make
coverage more affordable for small businesses, their employees,
and the self-employed.
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