Locum Tenens: Options for Health Insurance

Locum Tenens Options for Health Insurance

There is a great amount of fear associated with becoming a 1099 contractor.  When you are used to the comfort of a stable paycheck, a growing 401k, and group medical benefits, you may fear losing your benefits package.  This in turn hinders your earning potential by keeping you in a full-time role. But fear not, because those who have crossed over to 1099 often proclaim that they will never go back to working under someone.

For the first time in your professional career, you will be in charge of your hours, the contracts you choose to take, and where you take them.  You may even double your current salary!  It is a simple matter of doing a cost-benefit analysis. Even if you had to pay for your own benefits, you would still be more profitable than staying in your W2 role because of your increased earnings. Luckily, you have options!

Marketplace Plans

You can obtain coverage through the Marketplace plans. This is a good option for people with major pre-existing conditions. Based on your income, you may qualify for a subsidy to offset your premium costs. If you have had any of the following in the last five years, you should definitely consider staying with a Marketplace plan: cancer, heart attack, stroke, transient ischemic attack, rheumatoid arthritis, schizophrenia, bipolar disorder, AIDS/HIV, any recent surgeries which you need coverage for.  You can also continue your current coverage for up to 18 months with COBRA. You will need to consult your HR professional about this. COBRA can be very expensive since you are paying the full premium, without the company subsidy like you are used to.

Indemnity Plans and Term Plans

Individual coverage can be obtained through private insurers. There are two types of plans: indemnity plans and term plans.  

Term plans have different deductible/coinsurance options and usually have policy limits between $1-$5 million during the term. The typical length of a term plan can be anywhere from 1 month to a 3 year plan. Term length options vary by state. At the end of the term, you do have to go through medical underwriting to apply for the next term.  

Indemnity plans typically sport zero deductibles. Unlike term plans where you have a max out of pocket, indemnity plans pay up to a specified benefit amount per procedure and the rest is covered by you. There are many exclusions on these types of plans. These plans also require medical underwriting.

It is important to remember that both term and indemnity plans are private( many of which are not ACA compliant) which means they are not required to cover the minimal essential coverages that are typically covered by marketplace and group plan options including preventive care and pre existing conditions. Private plans are designed for healthy people with low usage of doctors that are more interested in catastrophic coverage. 

My preference is to recommend a term plan because it most closely aligns with a major medical plan; it has fewer gaps in coverage than would an indemnity plan.  Term plans are my most popular option for  locum tenens contractors because the coverage is widespread throughout the US which allows for travel. The premiums are often less than the marketplace alternative if you don’t qualify for subsidies.

Insurance For An LLC

If you have an LLC set up, you can also look at getting group coverage. Typically you will get the best rates if you have 5 or more people in the group. But you can have as little as 2 people in the group. The more people, the more affordable it is going to be. The group plan is ACA compliant, so it will cover all pre-existing conditions. 

If you are new to working locum tenens, or if you are just interested in knowing what your options are, speaking with a licensed professional will help you navigate this somewhat tricky process. Of course be weary of anyone claiming they have the perfect plan for you! There is no perfect plan out there.  

Author: Lyubov Abrams is a licensed health insurance broker that specializes in working with anesthesia professionals that have taken the leap to work locum tenens. Connect with Lyubov at labrams1003@gmail.com or visit her website Healthcare for Contractors for information about health insurance that’s right for you.