Health insurance when you're self-employed

Finding health insurance if you're self-employed is another part of becoming an independent worker, and searching for an insurance company, or comparing health insurance plans, may seem like a time consuming task. Especially when working solo. But, it's actually easier than ever to shop for a healthcare plan, regardless of where you work.

What are my health insurance options when I’m self-employed?

Self-employed means you work for yourself, and you don’t have any employees. Because of this, your healthcare options are different when compared to a person who owns their own business with employees or works for a small business.  Self-employed people, including freelancers, independent contractors, and consultants, have several health insurance options. Let’s take a look:

1. Enroll in health insurance through the Marketplace.

If you’re self-employed, you and your family can enroll in coverage through the Health Insurance Marketplace during the annual Open Enrollment Period. If you miss Open Enrollment, you may be able to sign up during a Special Enrollment Period if you experience a qualifying life event, like losing health coverage due to job loss, having a baby, or aging off of your parent’s insurance. You only have 60 days to do this after your qualifying life event. So if you anticipate becoming self-employed in the near future, it is worth looking into today.

Under the Affordable Care Act (ACA), just about all United States citizens, nationals and legal residents can enroll in Marketplace health insurance. There are only a few exceptions. You cannot enroll if you’re currently incarcerated, enrolled in Medicare, or offered affordable health insurance through your employer. (So this is especially helpful if you’re self-employed!)

How much you can expect to pay depends on your household income. Many people qualify for "subsidies" or savings which can help lower your monthly premium payment and/or your out-of-pocket costs. You can get a quote and find out if you qualify to save here.

2. Apply for Medicaid or Medicare.

Depending on your household income and/or age, you may be eligible for free or low-cost healthcare, such as Medicare or Medicaid. Medicare is a federal program that provides health insurance to people who are 65+ or have certain disabilities. Medicaid provides free or low-cost health insurance for eligible low-income adults, children, pregnant women, seniors, and people with disabilities. You can learn more about your state’s Medicaid program here or find out if you’re eligible for Medicaid here.

3. Go on spouse or domestic partner's health insurance.

If your spouse or domestic partner has a health insurance policy through their employer, you may be able to be added on. Check with their employer to see if family members can be added on during a Special Enrollment Period. Or during their annual Open Enrollment Period.

4. Enroll in COBRA coverage.

If you had a healthcare plan through a previous employer, spouse, or family member, COBRA offers coverage for an additional 18-36 months. For example, if you turn 26 and age off your parent's health insurance plan. Or you lose coverage through a divorce. COBRA is not a great option if you’re looking to avoid higher health care costs. Typically, it’s a more expensive option than purchasing health insurance through the Marketplace.

5. Purchase a group plan through a health insurance company.

Group health insurance plans are typical to larger employers or organizations. However, different states have different rules on who can enroll in a group health plan so you may be eligible. Group health insurance is typically a pretty affordable option so it’s worth looking into.

6. Join an organization for self-employed people that offers health insurance benefits.

There are organizations built just for self-employed people, like The Freelancer's Union. These types of orgs usually offer several health insurance options for people in a variety of self-employment situations.

How much does health insurance cost when I’m self-employed?

If you’re self-employed, the cost of health insurance depends on your age and household income. As well as the health insurance plan you would like to enroll in. If you decide to go with an individual plan through the Marketplace, the Affordable Care Act guarantees that certain preventive care services are completely free, which can lower your healthcare costs. You also might be able to receive certain tax credits and deductions when you’re self-employed.

If you’re eligible for Medicaid, you may receive healthcare for free or at a very low cost. However, if your income goes up, you may lose coverage and need to purchase health insurance through the Marketplace. If this happens, in most cases you should qualify for a Special Enrollment Period. This should allow you to enroll through the Marketplace for 60 days after the first day of your qualifying event.

The cost of Medicare depends on your income and if you enroll in Medicare Part A, B, C, and/or Part D. You can learn more about Medicare costs here.

Is my health insurance tax deductible?

There are several deductions and health insurance premium tax credits available to self-employed people if they are paying for coverage themselves and are not on a spouse or family member's plan. A few expenses you may be able to deduct include a home office, office expenses, Internet, phone bills, travel, mileage, and more. Self-employed people who are looking for deductions and tax credits based on their health insurance must fill out Form 1040.

Does the ACA require that I have health insurance if I’m freelancing or self-employed?

The individual health insurance mandate has been repealed, which means the ACA no longer requires all Americans to have health insurance or face a tax penalty. That said, it is still wise to purchase or enroll in a health insurance plan, as the cost of having health insurance is usually much lower than paying for unexpected or even routine medical bills. In fact, you will likely save money by paying for a health plan and receiving preventive care now. Rather than waiting for an emergency.

What is the best health insurance in 2019?

The best health insurance plan for one person might not be great for someone else, as everyone's needs and finances differ. You’ll want to consider what type of healthcare services you’ll need throughout the year and determine how much you can spend on healthcare costs. Then you’ll want to research and compare plans to identify which one is best for you. HealthSherpa offers resources for comparing plans, as well as HealthCare.gov.

It's also important to take full advantage of your health insurance after you enroll. If you enroll in coverage through HealthSherpa — or even if you don't — you can sign up for a FREE HealthSherpa account. In your account, you can access information about your coverage, find out how much prescriptions cost, search for and choose a new doctor, report life changes to the Marketplace, download tax forms, plus more. You can click here to sign up.

When can I enroll in coverage if I’m self-employed?

Marketplace

If you have a qualifying life event, such as a job loss or aging out of your parent’s health insurance, you may qualify to enroll anytime during a Special Enrollment Period. A typical Special Enrollment Period lasts 60 day. During that time, you can purchase health insurance through the Marketplace or through a private insurance carrier. If you qualify for a Special Enrollment Period, your spouse or domestic partner may be able to add you to their employer-sponsored health insurance plan, pending their company’s rules.

Medicaid

If you meet certain income requirements, you may be eligible for Medicaid. You can apply for Medicaid any time during the year. Children can also be covered through the Children’s Health Insurance Program (CHIP), if their parent or guardian is not eligible for Medicaid and/or a Special Enrollment Period, and missed the Open Enrollment Period. Pregnant women may also be available for CHIP, under certain circumstances.

Medicare

The Medicare program automatically enrolls almost all Americans over 65 in Medicare Part A. And you can enroll in additional Medicare coverage if you qualify for a Special Enrollment Period. Or during Medicare’s Open Enrollment Period.

COBRA

Another coverage option, if you’re facing a job loss or are unexpectedly without insurance, is to enroll in COBRA. This can be set up through your former employer. However, if you enroll in COBRA and wish to change your health insurance and end your COBRA coverage, you may not qualify for a Special Enrollment Period. Most likely you’ll have to wait until the Open Enrollment Period to purchase coverage through the Health Insurance Marketplace.

If you do not qualify for a Special Enrollment Period, Medicaid, or Medicare, and your former employer does not offer COBRA, you must wait until the Open Enrollment Period to purchase health insurance. Open Enrollment begins on November 1, and runs through January 15, in most states.

What about short-term health insurance?

Short-term health insurance is available if you're only going to be self-employed for a short amount of time. However, short-term health insurance plans do not have the same provisions as the ACA. Plus, they can be limiting for some customers. For example, they do not cover pre-existing conditions. And it is very common for people to be denied coverage by short-term plans.

Finding a health insurance plan when you’re self-employed does not have to be a headache. There are plenty of affordable health care options, as well as services available to help make a smart and budget-friendly choice.