crdle,
Start by working on the books. Cheating on taxes is asur (see Bava Kamma 113) and it is a chilul HaShem when an otherwise frum Jew gets caught.
Regarding health insurance, a lot dependes on where you live. But most private insurance with decent coverage, in most places in the US, will indeed run you $400+/month or even more. Any insurance agent should be able to give you the bad news. And if you have pre-existing conditions, you may not be able to get insurance at all outside of the new high risk pools that are among the first major features of Obamacare to take effect. The Republicans are going to try to end them but at least they could help for awhile.
One possibility is to make aliyah to Israel and take advantage of its excellent health insurance plans. Minimal fees for religious schools, too.
Good luck! I know many self-employed or underemployed people who constantly struggle with health insurance.