Though it may appear challenging, establishing your health insurance can be straightforward with a little help. Many options exist for self-employed workers with a variety of ways to save. Learn more about finding the right plan, understanding the costs involved, and qualifying for a low premium.
Do I Need Self-Employed Health Insurance?
Self-employment covers many types of workers who generate income by providing services but aren’t employed by a company. Self-employed workers who generally need to provide their own health insurance include:
Independent contractors Freelancers Entrepreneurs Consultants Gig workers
As of 2019, you no longer need to enroll in a health insurance plan or have an exemption to avoid a penalty on your federal income taxes (known as the shared responsibility payment). However, some states have mandates in place requiring taxpayers without insurance to pay penalties when filing state taxes. Even if you won’t face penalties, it’s still important to enroll in health insurance. One main reason is to lower medical costs. Without insurance, patients must pay 100% of the cost, which could get expensive. With insurance, some portion of that bill is covered, and health insurance provides free preventative services, such as screenings.
Using the Health Insurance Marketplace
Freelancers and other self-employed people should start with the Health Insurance Marketplace by simply visiting HealthCare.gov. The Marketplace offers many options for individual and family private health insurance enrollment and allows users to shop around for the best coverage. It also provides criteria to help determine qualifications for premium tax credits, the Children’s Health Insurance Program (CHIP), and Medicaid. You can apply online by creating an account on HealthCare.gov. As a freelancer, you’ll need to estimate your self-employment income for the year as accurately as possible, but you can make updates if this changes later on. For the application, you’ll also need to provide several details, including your:
Basic contact informationHealth coverageIdentityHousehold sizeImmigration statusIncome taxesEmployment of members of your householdAll forms of income
What Plan Is Right for You?
You must consider several things when looking into health insurance plans, such as the type of coverage you prefer, the monthly premium amount, and the deductible. Maybe you’re looking for a lower premium and something basic that includes just the essentials; for that, you can consider high-deductible health plans. Perhaps you prefer a comprehensive plan with a lower deductible to cover medical costs. You can compare these options through a marketplace. Association health plans are another option for workers in certain industries. To qualify through an association or professional organization, you’ll need to become a member and meet their criteria. You could also apply for Medicaid and find you qualify for free coverage. You may find many options to fit your preferences, so be sure to conduct research when seeking a new health insurance plan.
What Does Self-Employed Health Insurance Cost?
The nationwide average individual monthly premium in 2022 was $438 for plans compliant with the Affordable Care Act (ACA). The cost of health insurance for self-employed workers can range depending on many factors. Some may qualify for free or low-cost basic medical coverage based on their income levels, while others might opt for comprehensive plans that cost more but provide extra benefits. The type of coverage you choose and your age can both impact your premium. Rates can also differ by location, as states have different set requirements. The type of enrollment options you choose can also have an impact. For example, a family plan can differ in cost from an individual plan.
Understanding Health Insurance Costs
Understanding the different types of health care costs is critical as you conduct your research. Deductible: Your deductible is an amount you owe before the insurance coverage kicks in to pay your medical expenses. For example, if you have a $500 deductible, you must pay the first $500 in medical costs each year before your insurance coverage begins. Out-of-pocket maximum: The out-of-pocket maximum caps the amount you would need to pay within a specified time. For example, if the out-of-pocket maximum is $1,000, your insurance company would cover all other expenses after you’ve spent $1,000. Copayment: A copay is a fee usually paid at the time of an appointment or other medical services after the deductible has been met. For example, a copay might be $30 for a primary doctor appointment. Coinsurance: Coinsurance represents the percentage of the medical costs that you and the insurer share in paying. For example, if your policy has 80/20 coinsurance, you would owe 20% of a medical bill while your insurance would pay 80%. However, not all plans have a coinsurance requirement, but the monthly premium might be higher for those plans that don’t charge coinsurance.
High-Deductible Health Plans
A high-deductible health plan (HDHP) is a type of health plan that offers lower premiums due to its high-deductible level. In other words, the out-of-pocket costs are greater than traditional insurance plans, such as a higher annual deductible. If you are generally healthy, perhaps only needing yearly appointments, this could be a beneficial plan for you. High-deductible health plans also can be helpful for those who have health savings accounts (HSAs). Keep in mind that while you can use the funds in an HSA at any time to pay for qualified medical expenses, you may only contribute to an HSA if you have a health plan of this type. The two work together to help save on medical costs as the funds in the HSA are tax-free.
Qualifying for Medicaid
Medicaid is a program offering health insurance options for individuals and families who meet the income limits. Freelancers who are just starting off and aren’t generating a lot of income yet may qualify for Medicaid. Self-employed workers who don’t qualify based on income might still qualify based on household factors. You can apply for Medicaid online using the Health Insurance Marketplace or through the Medicaid agency for your state. You can apply for Medicaid at any time.
Get Expert Advice
Applying directly with insurance companies may not provide a variety of options because you are limited to one company. Consider using an online marketplace to find a plan that offers the coverage you need that fits within your budget. If you need assistance selecting a health insurance plan, you might consider contacting an independent agent. They are licensed and can help you compare plans as they offer many options with various insurance carriers.
