Work as a contractor for my current employer rather than become a full time employee after my graduation for health insurance continued coverage
I intend to run my side business full time soon and was wondering whether it would be prudent to continue to be a contractor for my current employer rather than become a full time employee after my graduation?
The main focus of this question is on health insurance were I am afraid of paying thousands to continue under my employers plan (cobra) if I was to become a full time employee and then quit to chase my own dreams.
On the other hand, if I were to stay as a contractor and get my own insurance, as I do now, I would continue to pay the very same premium for me and my wife that I currently do, out of my pocket, and not suffer "change in policy".
My main confusion is over something I term "change in policy" where:
my company would have subscribed me for Insurer A, Plan B
and when I quit the company, I could choose to continue paying the full premium for that policy for upto 6 months (cobra)
or get my own policy which would surely be a different policy even if I went with "Insurer A, Plan B" (since my company plan is a group plan and mine would be a family plan)
By changing policies so, I am afraid that the health insurance company could deny a lot of my claims citing that I have to be on the same policy for X years before they pay for those situations, or cite a "break in coverage" clause and turn down an expensive claim.
I have also heard that new health insurance plans tend to be more expensive than if you already were with the insurance company for a while?
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There are several assumptions you made, that don't match the current laws:
Preexisting conditions, are no longer a thing to worry about. When you stop your old policy they give you a Certificate Creditable coverage . The law only allows an exclusion of 12 months, but the certificate shows that you had coverage. As long as the coverage was for at least 12 months with the old plan(s), and the break was less than 62 days, you will be covered.
As the new laws go effect, there will be gap insurance for those that need it, and no preexisting conditions issues for children.
Costs:
In general group plans a cheaper, and the company generally pays for part of it. Your part will be pre-tax. You don't even have to itemize.
There are also ways to put aside money pre-tax to cover co-pays for doctor visits, and prescriptions.
Many companies offer several different plans depending on the coverage you need.
The cost of the group plans is negotiated by the employer, and the portion they pay of the premiums is a function of the employer. For large companies they actually self insure, the insurance company is a way to get access to groups of doctors, hospitals and pharmacies.
Some companies will allow a credit to employees that don't need the group plan. This can be because they are retired military, or they have coverage from their spouses plan.
As part of a group plan, they don't care how healthy you are, or how expensive your conditions are, they only care about the health of the group as a whole.
COBRA:
When you leave the company, if you find a cheaper plan, you can drop the COBRA.
Some families like to keep their current insurance, when they lose they job so that they also don't have to switch doctors.
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