Single, Self-Employed And Without Insurance? Get Married And Hire The Spouse

As the economy continues to limp along, individuals on the lookout for health insurance don't have a lot of options, especially if they have health problems. Of course, there are the pre-existing condition insurance plans called for in the health overhaul law, but those have restrictions. And some states have plans guaranteeing coverage.

There's another option and it's based on the premise that there's strength in numbers. If individual business owners bring their spouse or another person on board as an employee, insurers may have to issue them health coverage -- a helpful little loophole.

Unlike the individual market, where in most states insurers can deny people coverage, people at companies with 2 to 50 employees are defined as "small groups" under federal law and can’t be turned down for health reasons.

More than 6 million people worked in companies with four employees or fewer in 2007, according to the Small Business Administration.

So a self-employed accountant, for example, might hire his spouse to do the books, says Scott Leavitt, president of the Idaho Association of Health Underwriters. That way they can both get guaranteed coverage. "We’re seeing it happen more and more with mom-and-pop shops," he says.

But just because the coverage is guaranteed, that doesn't mean it's great. Pre-existing conditions may be excluded from coverage for up to a year, and premiums may be high. As Shots reported last month, the federal government has proposed that it should help decide when and if an insurance company’s proposed premium increases are "reasonable."

A group with less than three employees might face premiums 20 percent higher than those of larger small groups, says Gary Claxton, vice president for the Kaiser Family Foundation (KHN is a program of the foundation).

Small groups can be even smaller than two people in a dozen states, where self-employed people can be classifed as a "group of one" for insurance purposes and get guaranteed coverage.

Insurance works on the principle of spreading the risk, and the smaller the group, the less the risk can be spread. "Insurers hate these very small groups," Claxton says.

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