COBRA

• The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allows you to leave your job and keep your current insurance plan for up to 18 months at group rates. This is only possible so long as the company employs 20 or more people and you were not fired for gross negligence or incompetence. However, once self-employed, you will have to pay the full cost of the insurance plan, which includes the contribution your employer was paying for you toward your employed insurance plan. Furthermore, you are guaranteed health insurance for a grace period of 63 days to your next insurance plan after you reach the end of your COBRA benefits.
  
  

Insurance Plans

• Do as much research as possible before committing to any self-employed insurance plan. Self-employed insurance plans mean that you are now responsible for any misjudgments, which could be costly and fatal. Apart from COBRA, if you are married, you may be able to join your spouse's employed insurance plan, which will cost less than most other options, including COBRA. Various commercial insurance plans are also available to self-employed workers. Contact an insurance plan agent for more options and advice.
  
  

Self-Employed Insurance Plan Taxes

• The Federal Insurance Contributions Act (FICA) tax is imposed on the earnings of self-employed individuals, including independent contractors and members of a partnership. Furthermore, the Self-Employment Contributions Act of 1954 is imposed as well. Under this act, self-employed people are responsible for the entire FICA percentage of 15.3 percent, which is applied to 92.35 percent of the business's net earnings from self-employment, rather than 100 percent of the gross earnings.
  
  

Subscribing to an Insurance Plan

• Be sure to read and learn the rules that apply to your situation well and follow them. Furthermore, a good and reputable insurance plan agent can save you time and money. An insurance plan agent can better advise you and work out the financial and legal aspects of any self-employed insurance plan. Before you sign any contract or begin payments, first check with your state insurance commissioner's office. State insurance offices always have information about any complaints against any insurance plan agent or the insurers they represent.