Does health insurance chain you to your job?
If you are like most people in the United States, you have health insurance through your employer. If you strike out on your own and start your own business, that employer-health insurance will vanish. Of course, that’s not a problem if your spouse’s employer offers a good plan. If not, maybe you should rethink that business startup idea.
If you are a 50 year old male in excellent health (meaning you had no significant health care expenses in the last three years) and you need to purchase individual health insurance, you will have to spend approximately $750 a month to get good coverage without a lot of gaps. If you are married with children that cost could jump as high as $1500 a month.
That’s a big chunk of change for your new venture to cover. And that assumes you will even be able to get insurance. In many states, access to individual health insurance coverage is limited. If you or anyone in your family has a pre-existing condition, it is virtually non-existent.
Competing for a job with someone younger? You will cost an employer more.
Even if your career change plans do not include striking out on your own, the current US health insurance environment will hurt your chances of landing a new job. It is not just about the paycheck. Even at the exact same rate of pay, you will cost your prospective employer more than a younger worker.
Most large employers self-insure their health benefits. This means that the employer pays health insurance claims and administrative costs directly out of its own pockets. Since everyone knows older workers have higher medical bills, that means you have one strike against you before you even step to the plate.
It is often the same for smaller businesses. In a few states, small group health insurance premiums are “community rated”, which means that insurers may not base rates on the health status of the employees. But in most states, insurers may factor in health status and other factors when determining an employer’s premium rates. This means that a company’s premiums are directly tied to the cost of the health insurance claims filed by its employees. Hire an older worker or someone with a pre-existing condition, and costs go up.
An employer who hires older workers is going to pay more to provide health insurance to it’s employees than an employer who hires younger workers.
Of course, you may be thinking that this is not something you need to worry about because it is it illegal to discriminate against prospective employees based on age. Right. I’ll assume you also think you have a fairy-godmother.
Who would design such an unfair system?
Well, the answer is no one would, and no one did. The US health insurance system sort of just happened. It’s not something anyone ever thought was a good idea. Let’s fix it. Otherwise, you might be better off waiting until you are 65 to start on your new career. At least then neither you or your prospective employer will need to worry about where your health insurance will come from.