I thought there was a health insurance portability law where if you already have health insurance, another carrier can't deny you coverage (even for pre-existing conditions) as long as there is not a gap in coverage of more than 60 days. The law was passed a few years ago so that people wouldn't have to stay at a job they didn't like for fear of being denied health insurance at their new employer due to a pre-existing condition. When I switched insurance companies, the new company wanted proof of prior health insurance (which my old insurance company did provide to me in the form of a certificate) before they would pay a claim.
Do you pay Health Insurance out of your profits?
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I thought there was a health insurance portability law where if you already have health insurance, another carrier can't deny you coverage (even for pre-existing conditions) as long as there is not a gap in coverage of more than 60 days. The law was passed a few years ago so that people wouldn't have to stay at a job they didn't like for fear of being denied health insurance at their new employer due to a pre-existing condition. When I switched insurance companies, the new company wanted proof of prior health insurance (which my old insurance company did provide to me in the form of a certificate) before they would pay a claim.
Robert, Thank you very much for sharing this information.
I find myself in a position where I may benefit from your advice. I trade for a living and purchase health insurance for my wife and I at around $900 per month.
I have this question: To benefit from the LLC or other entity as you suggest, does the trading account need to be in the entity's name or may it remain as a joint account with my wife?
This is a probably dumb question, but I believe in the old saying, "there are no dumb questions, just inquisitive idiots."
Robert
Vulture, Your employer must be kicking in an extra grand per month. No way in He__ are you paying so low for health insurance. If I'm wrong please clarify because I will switch.
I went from Blue Care when they kept doubling my monthly every year, last I checked they wanted over $800/month, probably more now.
I checked ehealthinsurance and ended up with Golden Rule at about $175/month for me and my wife (2). There is a 3k deductible the rest is 100%. Best I found back then, but there might be better now. If anyone knows of a better price, please post.
Canada's plan is best, IMO.
I am entitled to COBRA for one year only. I will start another small business where I am moving and get new insurance during open enrollment in August 2004. Florida has this guaranteed issue for small businesses of 2 employees even if only one person wants the health insurance coverage. It is my only way to go.
medical savings accounts are one way around this situation. High deductible insurance balanced with savings just in case.
best,
surfer
best,
surfer
Thanks for this piece of advice. However, I am confused regarding taxation of LLC income. As I understand it (I hereby claim I am not an expert) is that it essentially drops to your 1040 unless you pay yourself wages as you suggest to facilitate tax advantaged items such as deducting medical insurance cost, and setting up the mini 401K.
In looking around the WEB for info, I came across this posted on QUICKEN's site, and they attribute it to
"Legal Guide for Starting and Running a Small Business" by Fred S. Steingold
Start quote:
For an S corporation, the rules on the self-employment tax are well established: as an S corporation shareholder, you pay the self-employment tax on money you receive as compensation for servicesâbut not on profits that automatically pass through to you as a shareholder. For example, if your total share of S corporation income is $100,000 in 2000 and you perform services for the corporation reasonably worth $65,000, you will be taxed 15.3% on the $65,000 but not on the remaining $35,000.
By contrast, the rules for members of an LLC are murky. Proposed IRS regulations (which Congress has placed on hold) would impose the self-employment tax on your entire share of LLC profits in any of the following situations:
You participate in the business for more than 500 hours during the LLCâs tax year.
You work in an LLC that provides professional services in the fields of health, law, engineering, architecture, accounting, actuarial science or consulting (no matter how many hours you work).
Youâre empowered to sign contracts on behalf of your LLC.
Until the IRS clarifies the rules on self-employment tax for members of an LLC, you should assume that 100% of an LLC memberâs earnings will be subject to the self-employment tax. Thus, using the figures in the above example, you should assume that the full $100,000 of your businessâs income will be subject to the self-employment tax (although the amount above the current yearâs Social Security tax cut-off figureâ$76,200 in 2000âwill be subject only to the Medicare tax).
The point is that for nowâand until the tax rules are clarifiedâan S corporation shareholder may pay less self-employment tax than an LLC member with similar income. Youâll need to decide if this potential tax saving is enough to offset such LLC advantages as flexibility in management structure and in distributing profits and losses.
End Quote.
This suggests to me all earnings are subject to the self employment tax and seems to contradict your point. I would appreciate it if you would clarify. I'm guessing I may be misreading the above quote.
Thanks,
DS
I am in the Detroit area and happen to be an attorney so I use the State Bar group thing for blue cross - I am paying not quite 400 a month for bc/bs traditional, 1000 annual deductible w/ co-pays and 50% prescriptions covered. single, no kids, no employees. From the little bit of legwork I've done on this issue, you may be able to join a local chamber of commerce, or even the greater Detroit chamber of commerce and get their blue cross group thing. Keep in mind however, that a local chamber group thing may not allow single member (no employee) coverage. I am almost positive that the greater detroit chamber does allow single (no employee) sole proprietors coverage under their group and the membership is (I THINK) over 300/annually. Further, I have also incorporated ( c corp, but not related to lawyering) and that is the entity actually paying the premiums and I pay the corporation for bookeeping/tax and other services.
christine