There are more than a million individual or family-owned businesses in Texas, and more people are contemplating opening their own business every day. For the small business owner, the same subject always comes up - self-employed health insurance. Take a look at what you are up against. As a self-employed individual in Dallas, Houston or anywhere else in Texas and you are not afforded any of the 'breaks'' the big companies receive.

You can be taken advantage of by unscrupulous insurance agents. In many cases, the real tragedy occurs when you use your insurance due to a catastrophic event and you find it lacking. Health insurance - having enough and being able to afford it - is one of the most nagging concerns for those who leave corporate America to run their own business.

Many small businesses have dropped health coverage or reduced it in the past few years because of rising rates. About 24 million American small-business employees and their families are uninsured, according to a recent study by the Kaiser Family Foundation.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that requires employers to allow departing workers to buy health insurance through the employer's group plan. If your former employer is required to offer COBRA you may elect to continue to receive coverage in your employer's group plan at your expense for the first 18 months after you leave.

However, the cost of monthly premiums for COBRA can come as quite a surprise if you're accustomed to you employer picking up most of your health insurance tab via pretax payroll deductions. COBRA coverage for a family can run up to $500 a month or more, and upwards of $200 a month or more for an individual.

COBRA, however, is probably not the best deal for you. Shop around. You will likely find a short-term health insurance plan to be less expensive than continuing your current health insurance under COBRA.

One piece of good news for self-employed individuals: In 2003, the self-employed health insurance federal tax deduction was increased to 100% from the 70% that was deductible in 2002. As a result, if you work as a consultant, freelance worker or other self-employed individual, you will be allowed to deduct all of your health insurance premiums. The self-employed health insurance deduction is especially valuable because it is an above-the-line deduction for Adjusted Gross Income (AGI). This means that you can take advantage of this deduction even if you do not you itemize your deductions on your tax return.

Even when you do have health insurance, the portion of medical expenses that has to come out of your pocket can be more than you imagine. If you have to dip into your retirement savings for certain medical expenses, distributions from your IRA used for that purpose might be exempt from the IRS early withdrawal penalty of 10 percent. However, you still will have to pay taxes on the IRA distribution. Another alternative is to transfer your IRA to a Self-Employed 401(k) plan and take a loan from that plan. Loans from a 401(k) plan are tax-free and penalty free as long as the loans are paid back.