Millennial business owners are unique in many ways. Some of these differences are advantages, while others can cause them problems down the road. One of the biggest challenges that millennial business owners face is falling for misconceptions about healthcare.
The Affordable Care Act has helped many business owners. However, some of them don’t understand their obligations to get healthcare.
When you own your own business, you need to be responsible for providing healthcare for yourself and employees. Medical debt is a problem that 41% of Americans face. It is even more prevalent with business owners. You can run into some serious problems if you make the wrong choices.
Avoiding Dangerous Healthcare Mistakes as a Young Business Owner
Healthcare is something that many millennials take for granted. When they start their own businesses, they often don’t give it a second thought until it is too late. You might be able to avoid these issues for yourself and employees by taking certain measures, such as buying virtual health insurance.
Younger adults often think that they don’t need help insurance. They believe that they are invincible, so they often choose to go uninsured.
This is a dangerous mistake. One study by the Urban Institute found that millennials actually accumulate more medical debt than any other age. The study found that 11% of all people with medical debt were exactly 27 years old.
This isn’t a coincidence. This is the year that young adults are no longer covered under their parents’ healthcare plans. They often fail to get health coverage of their own, so they are at a high risk of being blindsided by unexpected medical bills.
Older millennials are also more likely to rack up medical debt than other age groups. This is primarily due to the high uninsured rate of this demographic.
Millennial business owners need to be especially careful to avoid making this mistake. They don’t get health coverage as a benefit from their employer, so they need to make a conscious effort to purchase it on their own. You might be tempted to forgo health insurance as an unnecessary business expense, but you will be sorry if you face a medical emergency.
Myth number two: it always makes sense to underestimate your future income to get the highest possible tax credit on the health exchange
Getting health coverage through the health exchange is tricky. You need to estimate your taxable income for the next year. Your tax credits will be based off of your estimated future earnings.
As a business owner, you are going to have more difficulty predicting your income for the next year, since income as a business owner is going to fluctuate a lot more than it would if you had a day job. You might be tempted to underestimate your business income for the next fiscal year, so that you can qualify for higher tax credits. The problem is that this could leave you in a tough position when you need to file your taxes. If your income is higher than you estimated when signing up for coverage, you are going to need to repay some of your tax credits. You might even go over the subsidy cliff and have to pay all of them back.
Myth number three: you can always count on catastrophic coverage
Young business owners aren’t just tempted to go uninsured. They also are prone to being underinsured. They would rather save money to invest in their business, rather than throwing it away on expensive health insurance premiums.
The Affordable Care Act banned health plans that don’t meet certain coverage requirements. However, it carved out exceptions for some young adults. Millennials can purchase catastrophic coverage if they meet the following requirements:
- They earn less than 250% of the federal poverty line
- They are under 30 years old
- They can’t afford any of the other coverage options on the exchange
Catastrophic coverage might seem tempting. However, there are some very real issues with it. First of all, it is only going to cover extreme emergencies. You probably won’t get coverage for serious, long-term health ailments. Secondly, the deductibles for catastrophic coverage are very high. You might be paying up to $7,900 if you end up in the emergency room.
This can be a very serious problem if you actually need your health insurance. You might be better off paying a higher premium for a silver plan on the exchange.