Best health insurance options for plumbers, electricians and other independent contractors

As self-employed workers with their own businesses, independent contractors can choose any health plan they like with no more restriction than the limits of their budget. On the downside, however, contractors must wade through many coverage options without any clear starting point.

The dizzying array of choices can quickly become prohibitively complex. How do you filter out the noise? Here, we take a look at some of the best options for trade contractors on the lookout for quality health insurance.

Hitch a ride: insurance by affiliation
Affiliation will get you far when it comes to purchasing health coverage. Are you married? If you have a spouse, and they receive health insurance through their employer, you may be able to ride on a family plan at a lower cost.

Is there more than one employee in your contracting business? If so, you might benefit from setting up a “group” for insurance purposes. If you pursue insurance through a group, you can't be denied coverage, your pre-existing conditions can't be counted against you, and available rates are often more consumer-friendly.

If you do not have anyone else in your enterprise with which to form a group, take heart: one-person businesses still have group options. The Building Trades Association, for example, offers a substantial collection of exclusive insurance benefits for its members on this basis. Members become affiliated with groups set up by the Association, and thereby accrue benefits.

When it comes to the cost of health insurance, there is definitely affordability in numbers. Professional networks like the Home Builders Association (HBA) may offer improved access to a variety of affordable insurance plans, special affiliate discounts, and member rebates. Joining your local HBA could confer a significant advantage in the pricing of health and other fringe benefits.

Managed care: PPOs and HSAs
Should you choose an HMO, or Health Maintenance Organization? HMOs restrict which providers you can see. These organizations are, generally speaking, less expensive than their traditional indemnity counterparts. Be aware, however, that HMOs have earned a reputation for trading high costs for less-than-comprehensive access.

One type of managed care organization similar to an HMO is the preferred provider organization, or PPO. If you're not too picky about care providers and want to save some money, you could stick to doctors within the PPO network and thereby enjoy budget-friendly premiums and smaller copayments.

Meanwhile, Health Savings Accounts, or HSAs, confer distinct advantages in terms of tax deductions, retirement savings and affordable insurance rates linked to a high-deductible health plan. These plans, known as HDHPs, essentially provide catastrophic-only coverage – although they normally also cover core preventative services and a handful of primary care physician office visits.

Individual contractors can contribute up to several thousand dollars to an HDHP every year, all of it tax-deductible, including any interest and earnings on the contributions. If you need to use the fund for a health emergency, that expense is also usually tax-free. If you are in good health with few major issues, an HSA is a way to pay less while making an investment in your future.

All trade contractors need comprehensive long-term coverage for their health. Don't wait until after you have a $40,000 hospital bill to begin shopping for health insurance. Start considering your options today.