Health Insurance For Freelancers & Self-Employed

 

As a gig worker, freelancer, independent contractor, or self-employed individual, you may find yourself in the position of having to navigate the process of obtaining health insurance on your own. This can be a challenging task, given the numerous providers, policies, regulations, and expenses involved.

Health insurance for self-employed individuals refers to coverage options available to those who own a business, whether or not they have employees. There are several avenues to explore when seeking health insurance.

One option is to utilize the Affordable Care Act (ACA) health insurance marketplace, which provides comprehensive coverage. If you are self-employed and in need of health insurance, you can visit the SHOP Marketplace specifically designed for small businesses.

The ACA marketplace, also known as Obamacare, is the only type of health coverage that may offer subsidies and tax credits to help reduce the costs of insurance. Eligibility for these benefits is determined based on your household income and family size.

 

Should Self-Employed Individuals Have Health Insurance?

Similar to employees, self-employed individuals can benefit from having health insurance. While it may seem cheaper in the short term to not have insurance, the potential financial consequences of being uninsured can be catastrophic in the event of an illness or injury.

Experts suggest that all adults should have comprehensive health insurance, as paying medical expenses out of pocket can lead to significant debt. For instance, a single night in the hospital can result in a bill of over $10,000 for those without insurance. Additionally, research has shown that individuals without health insurance often make healthcare decisions based on cost and consequently experience worse health outcomes, particularly when they neglect to receive proper preventative care.

 

Who Qualifies as Self-Employed?

Although many working adults in the United States receive health insurance through their employers, this arrangement may be declining due to the increasing costs of healthcare. The group of workers who typically seek their own coverage is diverse and includes individuals who work for large companies or groups but are not technically employees, such as consultants, doctors, real estate agents, and lawyers. It also includes independent workers like freelance writers, tradespeople (electricians, plumbers, etc.) who work as contractors, and individuals who are the sole owners of their businesses.

 

Top Health Insurance Options and Factors to Consider for Self-Employed Individuals

If you do not have access to employer-sponsored insurance or the ability to join a plan through your employed spouse or parent, there are several options to consider. One option is the federal or state marketplace. Established by the Affordable Care Act in 2010, the federal government's health insurance marketplace serves as a central hub for comprehensive insurance for individuals who are unable to obtain coverage through an employer plan or for small businesses. This program allows individuals to shop for and enroll in private health insurance plans through various channels, including websites, call centers, and in-person assistance. The main website associated with this marketplace is HealthCare.gov.

 

To obtain coverage, most states utilize the federal healthcare.gov site. However, certain states and Washington, D.C., have their own separate platforms. To access your state's marketplace site, simply visit the HealthCare.gov site, and you will be redirected to the appropriate state site.

 

States with individual marketplaces include:

- California

- Colorado

- Connecticut

- Idaho

- Kentucky

- Maine

- Maryland

- Massachusetts

- Minnesota

- Nevada

- New Jersey

- New Mexico

- New York

- Pennsylvania

- Rhode Island

- Vermont

- Virginia

- Washington

 

Medicaid

Open enrollment occurs annually from November 1 to January 15 for most of the country. Some states may have slightly different open enrollment periods.

Medicaid, a program that provides assistance based on need, offers free coverage to approximately 83 million Americans. It can serve as a reliable insurance option for self-employed individuals who meet the criteria. Eligibility for Medicaid is primarily determined by income, although disability and children are also considered in most states. To determine eligibility and enroll, individuals can visit healthcare.gov, with enrollment available throughout the year.

 

Medicare

Medicare, on the other hand, is a federally-managed insurance option designed primarily for U.S. adults aged 65 and above. Beneficiaries are typically required to pay monthly premiums based on their specific plan and tax history. However, some of the costs are subsidized through taxpayer funding. Like Medicaid, Medicare is a popular choice for individuals who do not have coverage through an employer. For more detailed information on the different components of Medicare and how to enroll, individuals can visit medicare.gov.

 

For military service members and their families, there is the government's health care program called TRICARE. Plan options and additional resources can be found on TRICARE's website, and eligibility can be checked through the milConnect website. Veterans also have the option to apply for VA coverage programs throughout the year, which can be supplemented by private insurance or federal programs such as TRICARE.

 

In situations where individuals are transitioning into self-employment or experiencing gaps in coverage between plans, short-term medical plans can be beneficial. These plans provide temporary coverage during these periods and can help individuals manage their healthcare needs.

 

Short-term health plans provide less extensive coverage compared to ACA plans. It may be difficult to find a short-term plan that covers prescriptions, mental health, and pregnancies. These plans are most suitable for individuals who are healthy and have a low risk of experiencing health-related events. The duration of a short-term health plan is typically up to one year, with the option to extend coverage for an additional two years. Some states do not allow these plans, while others only permit them for shorter periods, such as three or six months. The Biden administration has proposed limiting short-term plans to three or four months.

 

Limited benefit plans offer reduced coverage at a lower cost. They do not cover all essential health benefits and are best used to supplement existing insurance, particularly plans with high deductibles or minimal coverage. This category includes critical illness insurance or accident plans that cover a predetermined list of health issues, as well as indemnity plans that shift more of the costs to the patient.

Catastrophic Health Insurance

 

Catastrophic health insurance provides affordable and comprehensive coverage for individuals under 30 and those facing severe economic hardship, such as homelessness.

 

Catastrophic health insurance plans are not widely accessible and come with significant expenses. These plans have high deductibles and out-of-pocket costs. To be eligible, you must meet certain criteria. Under a catastrophic health insurance plan, you would have to pay $9,450 for individual coverage before the plan starts covering your healthcare expenses for the year.

 

Speaking with an Agent or Broker

Agents and brokers can provide valuable assistance in helping individuals find the most suitable option from a specific provider. Insurance companies hire agents to sell plans, while brokers aid clients in navigating the market. Both operate on commissions from the insurance companies they represent. To locate agents, brokers, and "navigators" (assistors funded by the Marketplace) in your area, you can use the Find Local Help tool on healthcare.gov.

Direct Enrollment and Private Exchanges

Although not always recommended, it is possible to obtain health insurance directly from an insurance company or through a private online exchange. These "direct enrollment sites" have recently become legal, allowing insurance companies and brokers in many states to enroll customers through private websites. These services emphasize convenience and simplicity in finding a plan, but their benefits for self-employed individuals are not as clear as they are for those with employer-sponsored insurance. Furthermore, private exchanges do not display all Marketplace options and the plans offered may not comply with the Affordable Care Act. Their recommendations may also be influenced by commission rates for salespeople.

How Much Does Health Insurance Cost for Self-Employed Individuals?

 

The monthly cost of a silver ACA health plan varies based on age, ranging from $453 for a 30-year-old to $1,079 for a 60-year-old. Factors such as age, plan type, metal tier, and smoking status influence the rates of ACA plans. Additionally, household income and family size can impact the costs of an ACA plan.

For self-employed individuals, the cost of health insurance can be uncertain and overwhelming. The primary expenses of a plan include the premium, which is the monthly fee for coverage, and the deductible, which is the amount a patient must pay before insurance coverage begins. Typically, when one cost is high, the other is low.

 

Self-employed workers have the advantage of treating health insurance as a business expense. They can deduct premiums from their adjusted gross income, resulting in lower tax bills or potentially increasing their refund. Furthermore, many adults in the United States may be eligible for discounts on Marketplace options. To determine eligibility, individuals can utilize the healthcare.gov calculator. Additionally, healthcare.gov's Plans & Prices tool offers estimates based on income to help individuals assess the costs of different insurance options.

Tips For Self-Employed individuals For Better Health Insurance

Valuable Advice for Self-Employed Individuals Seeking Better Health Insurance Options

The ideal insurance plan for self-employed individuals is one that strikes a harmonious balance between premiums, deductibles, and comprehensive coverage that is tailored to their needs. When in search of such a plan, self-employed individuals should consider the following tips:

 

1. Seek out an insurance provider that offers a wide network of healthcare providers and has a claims process that is user-friendly and efficient.

 

2. Before exploring the services of a broker or a private exchange, it is advisable to research the options available on the Marketplace.

 

3. Explore the possibility of joining an organization that provides group plans, as this can offer advantages in terms of coverage and affordability.

 

4. Determine if they are eligible for premium tax credits and cost sharing reductions, which can have a significant impact on affordability. Additionally, they should check if they qualify for programs such as Medicaid and the Children’s Health Insurance Program (CHIP).

 

5. Instead of waiting until November 1, individuals should check their eligibility for a special enrollment period, which is based on qualifying events, or for year-round enrollment, which is based on income.

 

6. Recognize that insurance is not just an investment in health, but also in financial well-being. While the majority of uninsured adults in the United States cite high costs as the main reason for lacking coverage, it is important to note that out-of-pocket medical expenses are the leading cause of consumer bankruptcy in the country.