“Boomer Preneurs” Leading Economic Recovery
A Ewing Marion Kauffman Foundation report found that, “In every single year from 1996 to 2007, Americans between the ages of 55 and 64 had a higher rate of entrepreneurial activity than those aged 20-34.” And, a separate report from Small Business Administration that found over five million Americans age 55 or older run their own businesses or are otherwise self-employed.
A 2010 article in the New York Times highlighted one such person; Cinde Dolphin, a Sacramento resident and three-time cancer survivor who started her own business at the age 55. After decades of experience working for Coors, she started a marketing and public relations firm that helps California winemakers.
How Does One Become a “BoomerPreneur?”
Many would-be “boomerpreneurs” are looking for opportunities to start their own businesses, create jobs and help grow our economy. But, getting started is not easy or obvious.
Franchises are one popular option – See a recent article on TheSelfEmployed.com about starting a Franchise Business that tackles issues like; How To Limit Your Financial Risk, Starting Without Employees and Finding a Break Even Point – but the opportunities are limitless.
There is also a great article at TheSelfEmployed that outlines 10 Businesses You Can Start with No Money, and another that teaches you How to Price Your Services when You’re Self-Employed. The key to becoming an entrepreneur at any age is finding something you’re good at, that you enjoy doing, and that people will pay you to do. And, there are a number of resources available these days to help you.
Health Insurance is an Issue
Over a quarter (29%) of eHealthInsurance customers were self-employed, and over the age of 55, in an online survey we conducted with customers who contacted our customer care center over the past four years. And, nearly two-thirds (60%) were earning over $50,000 a year working for themselves.
But, many reported being concerned about qualifying for private insurance or dealing with premium increases, year-after-year. While it may be more difficult for older Americans to qualify for private health insurance, it’s not impossible.
Our licensed agents make the following recommendations for anyone attempting to buy private insurance on their own.
1. Medical Underwriting: Small Group Versus Individual and Family Plans: If you apply for a small group health insurance plan the insurer will medically underwrite your policy, which means they’ll review the health status of everyone on the application order to determine what to charge you each month for your coverage.
Health insurance plans for families and individuals are also medically underwritten, but if the insurer determines that your medical risks are too high they can deny your application for coverage in most states.
The benefit of buying individual or family coverage is that those plans are, on average, approximately sixty-percent less expensive than group plans(2). The downside is that applications for coverage can be denied.
2. Enrollment: Small Group Plans Versus Individual and Family Plans: Family plans are typically designed for one or two adults and any children or “dependants” you may have. Once children turn 26 they’re usually no longer eligible for your family plan.
A small group plan requires at least two people in most states, and the second person can be a spouse, provided they’re an employee of the business. Insurance companies require proof of employment, which means you may have to provide some form of documentation.
There are a few states that are exceptions to this rule. Talk to a licensed agent for details.
3. Tax Implications: Small Group Plans versus Individual Family Plans: While we’re not qualified to provide tax advice, there are few basic things you should know. Individual and family health insurance products aren’t usually tax deductible, even for the self-employed.
But, the money you spend on premiums for yourself, employees and dependants on a small group health insurance plan is typically tax deductible. But, if you have detailed questions about tax policies regarding health insurance it’s also a good idea to consult a tax expert.
4. Business HSAs Versus HSAs: Individual or family Health Savings Accounts (HSA) are tax-advantaged accounts you can use in along with a qualified high-deductible health insurance plan. An HSAs will let you deposit some of your pre-tax income into a savings account. The savings grows tax-free and you can use them funds to pay for qualified medical expenses. There is some good information about HSAs at www.ehealthinsurance.com/hsa.
As a business owner, if you offer employees access to an HSA-eligible small business health insurance plan you’ll be able to offer them an employer-sponsored HSA and contribute money to their HAS to help them fund qualified medical expenses on a tax-free basis.
5. Medicare: If you’re an early boomer (you have already turned 65, or will be turning 65 soon), getting health insurance for a small business creates a new level of complexity. It’s a good idea to talk to a licensed small business agent about how your access to Medicare could impact your small group policy. If you’re on an individual policy, and planning to switch to Medicare when you turn 65, it’s also a good idea to get a basic understanding of how Medicare, Medicare Supplement Insurance, Medicare Advantage and Medicare Part D drug plans all work before you start shopping.
We have a series of videos available on YouTube that explain the basics of Medicare that can get you headed in the right direction.