Hidden Obstacles: Health Insurance and Home Buying as a Founder
3-minute read covering my experiences navigating health insurance and mortgage applications as an entrepreneur.
Welcome to A Founder’s Life for Me! I’m Alek, and based on my experiences building companies, I provide practical recommendations on developing your company and career.
Hidden Obstacles
Starting and running a company is an exciting journey filled with rewards and, inevitably, a fair share of challenges. Today, I want to shed light on two “personal life” challenges I faced while building my business:
securing insurance coverage
buying a house and securing a mortgage
These challenges are often overlooked in the entrepreneurial narrative, but they are crucial to a founder’s personal and professional stability.
Insurance Coverage: The Unseen Struggle
One of the first major obstacles I encountered was maintaining health insurance coverage after becoming self-employed. As anyone transitioning from a traditional job to self-employment knows, losing employer-provided benefits can be daunting. The cost of individual health insurance plans was never something I’d considered—around $1,000 per month.1 This wasn’t an expense I wanted to continue paying in the long run, especially during the early stages of building my company when cash flow was tight to nonexistent.
To mitigate this, my then-fiancée and I explored alternative solutions. We opted to get a domestic partnership and add me to her employer-provided health insurance plan. We calculated the difference in her post-tax income, and I compensated her for that difference every month—around $500 per month.
The domestic partnership move significantly reduced my monthly insurance expenses. Later, when we were married, the cost dropped even further—to around $200 per month. Finding these alternative ways to obtain health insurance significantly alleviated the financial burden and enabled me to focus on growing the business without worrying about healthcare costs.
Buying a House: The Mortgage Maze
Another significant challenge we faced was purchasing a house. My wife and I were eager to set down roots in 2024, but we quickly realized that my self-employment status complicated the mortgage application process. Mortgage lenders require at least two years of consistent self-employment income to approve a loan, a criterion I had not yet met. My consistent W2 income before becoming self-employed wouldn’t be considered. They’d need to make an exception for my income to help qualify us for a loan, which would add significant risk to the underwriting process. These rules threw a wrench into our plans.
Fortunately, we had an alternative. My wife could qualify for a mortgage independently with her stable employment record. We secured the maximum loan amount based on her income and used our savings to cover the remaining down payment on the home. This approach allowed us to purchase the house we wanted and we close on 7/16/24! 🤞🏽
Lessons Learned and Moving Forward
Navigating health insurance and the mortgage application processes while self-employed was more complicated than I anticipated. Here are some key takeaways:
Plan Financially: I knew health insurance coverage would be an issue, but I was caught off-guard that my income wouldn’t count toward a mortgage application. Know the obstacles and plan for them where you can. Always be prepared for financial hurdles by saving and planning diligently.
Stay Resilient: Building a company comes with unforeseen challenges, so resilience and adaptability are essential. Accept that you can’t plan for everything and stay resilient as surprises come your way.
Find a Great Partner: Having an amazing wife helped me through the challenges I mentioned here (as well as many others!). Find a great partner to go through life with and enjoy some of these side effects.
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By sharing my experiences, I hope to provide insight and advice to entrepreneurs facing similar hurdles. Please leave a comment or email me with any questions.
This was the cost for Empire BlueCross Blue Shield’s “Empire Silver EPO 3250/40%/8550 DP FP” coverage plan.