Independent contractor self-insured HSA/ACA compliant plan

Question

Without delving into the political motivations behind my intent at why I would want to pursue such a plan, I'm looking for some information regarding setting up a self-funded health insurance plan.

This is in the spirit of "solo 401ks", which don't actually exist. There is only the original 401k language with no special rules specifically for the "solo variant" but rather several simplifications by large swaths of compliance rules becoming irrelevant when only having an owner (and possible spouse) as participants.

I'd like to be able to contribute to an account as if I'm paying premiums for a qualified self-funded health insurance plan that will ideally comply with ACA federal mandates in case the penalty is reinstated for being uninsured., but more importantly allow me to make HSA and self-employed health insurance premium deductions. Obviously as healthcare providers are one of the suremost hazards to my health, the premiums won't actually be used for health care and so the funds contributed should still be accessible in some capacity -- think loopholes like HSA wellness purchases for personal emergency medical supplies or a 529 plan expenses for continuing education "tuition."

Answer 1

There are self-insured plans (also known as level funded plans) and there are self-insured plans that are available for small groups but you'd need to look around in your state to see if there are carriers that would let you set up a plan with a group of 1. I've seen plans that go down to groups of 5 but haven't seen anyone go lower than that (which doesn't mean that such a product doesn't exist).

Realistically, though, self-insured plans don't operate the way you seem to hope. You still need to pay premiums to a carrier which acts as a third-party administrator for your self-insured plan. That gets you things like access to the carrier's set of doctors, access to the discounts those doctors have agreed to, and the back office systems to process billing. You still pay out for any services you use so your premiums are lower than with traditional health insurance. But you're sending money to a carrier every month. And you're only going to be able to pay an expense under the plan if it's approved by the third-party administrator. Depending on the plan design, you may be paying the expected claims amount every month to the carrier-- if so, at the end of the year if the actual claims are lower, the company will get a refund of the amount you paid less the insurer's payment for administering the plan. Or you may be only paying the administrative costs every month and paying claims as they come in.

It may still be beneficial to you and the company to be able to pay lower premiums if you're confident that your claims are going to be low over the course of the year. But it's not going to be a bucket of money that you can use for whatever non-health care expenses you want to pay.