AP 0781: How Do I Get Health Insurance and Other Benefits When I Become Self-Employed?

AskPat 781 Episode Transcript

Pat Flynn: What's up, everybody? Pat Flynn here, and welcome to Episode 781 of AskPat. Thank you so much for joining me today. As always, I'm here to help you by answering your online business questions, five days a week. We have a sweet question today from James, but before we get to his question, I do want to thank today's sponsor, which is FreshBooks.

FreshBooks is out there serving millions of small business owners, including myself, with helping us manage our business finances, keeping track of income and expenses. You can actually automatically track your expenses so you could see what you're spending money on. You can do that by connecting your credit cards and all the stuff goes along with your business. Super helpful. Super handy so you can make some fine decisions in your business related to that. But more than that, I use them for invoicing. So if you do any billing of any kind to anybody, FreshBooks makes it super easy. I've been on both ends of FreshBooks in terms of sending invoices and receiving them too. It just makes the process so much easier, plus they help you keep track of who owes you money and if they've even opened those invoices. Super cool. If you wanna check them out for 30 days for free head on over to www.FreshBooks.com/AskPat and make sure you enter “AskPat” in the How Did You Hear About Us section.

All right, now here is today's question from James.

James: Hey Pat, how's it going? James here. Long time listener. First time asker. Big fan of the SPI community and just getting through Will It Fly? on the audiobook side. Really liking everything that you're doing and appreciate it. My question is this. As a hybrid entrepreneur at the moment, I have my side hustle going and I still have my full-time job, I think one fear that people have is that they worry about losing those full-time benefits, losing that health insurance, vacation time, all that, and all the fringe benefits that come along with a steady nine to five job. As an entrepreneur, how do you handle that situation? Is it as simple as buying your own insurance for yourself and your family or are there other things that are put in place to help you navigate through that? I guess it's just another worry that I think entrepreneurs have and don't want to give up necessarily if they're being taken care of by their company. So I was just wondering how you deal with that. Thanks so much. I hope you answer my question and hope to hear from you soon. I'll be listening. Thanks. Bye.

Pat Flynn: Hey James. Thanks so much for the question. This is really important and something that I didn't know I had to think about until it was kind of too late. Quick story. When my business was taking off after I got let go, I was still young. I didn't know what was going on. Didn't even think about health insurance at that point because I didn't think I needed it. Then after I started becoming an entrepreneur and been working that for a while, I was doing really well. And then my wife and I, we got pregnant, which we were super happy about until we were trying to figure out how to pay for it. And we just were stunned, we're like, “Oh my gosh, we don't have insurance. Let's figure this out. Let's go get you some health insurance.” So we had to go find somebody, like a private company to do health insurance with. And guess what? At that time, we couldn't get insured because pregnancy was a pre-existing condition. So we were pretty much screwed at that point.

So, my son, he was paid completely out of pocket which was tough but I'm super thankful that the business was doing very well. If it wasn't, I don't know what we would have done. And also super thankful that he was, even though he was born a month early which was more scary, super thankful that he was born healthy. During this whole fiasco, we were looking for solutions for ourselves and even though now pregnancy is not a pre-existing condition, which you're probably not having to worry about that at this very moment, James. Maybe you are. I don't know, but the answer is, you can do a few things. If you had a previous job you can do what's called COBRA. And that is to extend the life of your health insurance from the work that you've had, if there are those kind of benefits there, into your life after working there, after you termination date.

I will say, however, when I was doing research on that—again I'm not up to date with all this but hopefully this information is still useful—make sure you check to see how much it is because it was very expensive. It was a lot of money to keep the plans that I had moving forward because I tried to retroactively put those into use for my wife and I. And that wasn't possible and plus it was just abnormally expensive, it seemed. So, the answer is you got to go and find that health insurance for yourself and what I would do is actually ask around because every state is going to be different. You're going to have different options. We used private health insurance. We pay about $1,000 a month for the family for here and that is a higher price than we've been paying for a while but I think everybody's price went up recently with some of the recent policy changes and whatnot. But anyway, things will change over time.

Here's another solution though. While this whole fiasco was happening, we were looking for solutions. We even came up with the idea of, “Hey let's get a divorce so that you can be on low-income and then get some of those health insurance benefits that are given to low-income people.” Because we were way beyond that at that point in terms of my business which—you're a brand new couple, been married, had a baby, talking about divorce for that specific reason. I was like, “No. This is not gonna work.” So, we didn't do that. What we ended up doing was we found somebody who was well-versed in this world, which I would recommend you do too. And this person recommended that because I have a business, I could have April become an employee, so we did that, and then you could get her benefits. Health insurance. You can have the business help you set up your health insurance and this something I recommend checking out too.

When we did that, we're like, “Great. This is such a good idea.” The policy was going to go live so that April could get covered for the birth by January 1, 2009. My son was due January 18, I believe. So we're like, “Just in time. This is all good.” And then my wife's water broke on December 23 and so I just knew that we weren't gonna be able to get that policy there in time for that. Plus it was a month early so I was like, “Oh my gosh, if he's born early he might have to go into NICU and we might have to pay for every single day.” And every day in the hospital was like 8-10 grand. So it was quite a bit. Yes, this is a very serious thing. You should all get expert help from because it is something that you're going to lose when you move from workplace to working for yourself.

But weigh your options, see what's out there. There's also health saving accounts, HSAs, which work very well too. So connect with a CPA related to that for more information. But yeah, it is definitely something to consider. Insurance, we've gotten life insurance as well which is important and then also in terms of vacation time and stuff- What's really cool is when you are your own boss you can set your own hours and be flexible. But at the same time you still need to schedule so you can make sure you get things done and aren't just complacent or being lazy or whatever. I just tend to think about it as rewarding yourself with vacation time after you've done launches or had a good year or whatever. You know, give yourself that vacation time. That's the nice thing about working a nine to five is they give you that and say, “Here are your vacation time hours.” So you go and put those into place. When you're working for yourself, nobody says that.

You have to do that yourself, so put it in the calendar when you're going to take a vacation and make that happen and work harder and make things work. I know that's easier said than done, but that's how it's done. So, James, hopefully that's helpful. Thank you so much for the question. I want to wish you all the best and keep up the great work and thank you so much for the question. I want to send you an AskPat t-shirt for having your question featured here on the show, and for those of you listening, if you have a question that you'd like potentially featured on the show, just head on over to www.AskPat.com. You can ask right there.

Thanks so much. I appreciate you. Also for FreshBooks, if you want to check them out once again for free for 30 days, free trial, head on over to www.FreshBooks.com/AskPat and make sure you enter “AskPat” in the How Did You Hear About Us section.

And then finally, as always, here's a quote to finish off the day by Moliere. And that quote is, “Long is the road from conception to completion.”

It's a journey guys. Enjoy it. Take care and I'll see you in the next episode of Ask Pat. Bye.