When you're self-employed, finding affordable health insurance isn't easy. In 2018, 3.9% of the population in the U.S. were unemployed--which means millions of people were left without insurance. If you're a freelancer, consultant, independent contractor, business owner, or another self-employed worker without employees, you'll have to find your own insurance. But health insurance coverage can come at a price. How can you find your own coverage without breaking the bank?
Here’s a guide to finding and comparing the best options for self-employed health insurance.
Do You Need Self-Employed Health Insurance?
If you don’t work for an employer–and you don’t have any employees–you’ll likely need to seek out self-employed health insurance. As long as you’re earning enough to bring home taxable income, you can seek out an individual or family plan. This usually includes freelancers, consultants, independent contractors, or business owners with no employees. Not only could you still face a penalty in 2019 (depending on your state) for having no coverage, but it could leave you vulnerable to medical emergencies, injuries, or other serious conditions. Investing in self-employed health insurance is crucial to your health, safety, and wellbeing.
What Does Self-Employed Health Insurance Cost?
For many self-employed individuals, the cost of health insurance is a primary concern. In 2017, the average premium for individuals buying health insurance was about $397 per month. However, depending on your income, you could be eligible for government subsidies to make your monthly premiums more affordable. The qualification requirements for subsidies will depend on your household income. Your income should be no more than 400% of the federal poverty level. This is about $49,000 for a single person or $98,000 for a family of four. When you apply for subsidies, you will be asked to estimate your yearly income. Any subsidies will then be based on this number. You’re required to adjust your income if it changes later–and you’re subsidy eligibility will then be adjusted.
Be honest when it comes to your income. Your subsidy eligibility will later be compared to your federal tax returns and you’ll have to pay back some of your subsidies if your estimate is lower than your actual income.
Finding the Right Self-Employed Insurance Plan
If you qualify for self-employed insurance, it’s time to start comparing different plans. Here are some tips to help you find the perfect insurance plan.
1. Don’t Miss Key Deadlines
When it comes to insurance, deadlines are important. For many insurance companies offering Affordable Care Act plans, there is an annual open enrollment period.
If you stay uninsured for more than two months or miss the enrollment window, you may have to pay a fine–and may not be able to get coverage until the next year. The enrollment period typically comes at the end of the year–with a deadline early the next year. In recent years most enrollment periods are November 1st to December 15th of each year. If you have a major qualifying life event, such as losing insurance from a previous employer, getting married or divorced, having a child, or moving to a new location, you can get coverage outside of the regular enrollment period. Just keep in mind that you only have 60 days to do so.
2. Estimate Your Income Accurately
If you’re attempting to get a healthcare subsidy, you need to be careful when you’re reporting your income.
A healthcare subsidy is essentially a tax credit that you get to use in advance. It goes directly to your insurance provider so that you pay a lower premium per month. While it’s nice to get the subsidy as quickly as possible, you’ll have to estimate the money you’ll earn in the following year–not last year’s income.
This can be difficult for freelancers or other self-employed workers. You might not know when work is coming next. Try your best to estimate what your likely income is per month and per year. If you don’t get it right, don’t worry about it. You can adjust your income later in the year if you notice that your estimation might be off. This is normal and expected. Ultimately, if you underestimated your income, be prepared to return a portion of the tax credit.
3. Know Where to Look
The most important part of finding self-employed health insurance is shopping around for the right plan.
You might remember the federal government’s faulty launch of healthcare.gov in 2013. This made it difficult to shop for health insurance through the marketplace, or the health exchange.
Healthcare.gov is still a viable option, but you can also try private exchanges that operate more independently. Both federal and state sites are running smoothly now, but they’re not your only option when you’re looking for health insurance. These other options can often times not only help you apply for any subsidies you may qualify for but they can also help you compare the federal and state options with private plans available in your state. Here are a few other places you can shop around for health insurance.
1. Online Insurance Sites
Private companies can match you to the best possible options that fit your specifications. Then you can compare different plans with different benefits and prices. Many also have customer service employees that can help you through the process with no charge.
2. Local Insurance Agents
Independent companies in your local area can help you compare health plans and submitting an application. Getting advice from a professional in-person can help you make the right decision.
Finding a Plan That Works For You
From artists to accountants, part of being self-employed is finding your own individual or family health insurance. Even though getting health insurance can seem challenging when you’re self-employed, there are options out there that can give you the coverage you need–without breaking the bank.
If you look in the right places and take your time to find the right plan, you can support yourself without relying on an employer for additional benefits. Trying to find the right insurance plan for you? We can help online, on the phone or in person–contact us to book an appointment with a local health insurance agent online.
Our Complete Guide to Self Employed Health Insurance Options
Self-employed health insurance has always been a tricky issue. Before the Affordable Care Act, insurers were allowed to refuse to pay for pre-existing conditions. For freelancers, that often meant being stuck in an expensive scheme. But things have changed, and there are now a variety of options available. Read on to learn more about finding the best health insurance for self-employed people.
Tax Issues for Self-Employed Health Insurance
Before we start looking at different providers, it’s worth just taking a moment to understand the tax situation when it comes to health insurance. There are two main considerations:
If you don’t have health insurance, and you don’t qualify for an exemption, you will incur a tax penalty. The precise amount is calculated on income, but it could be in the region of $1000. This rule won’t be in effect for the 2019 tax year, but it does count for 2018.
On the flip-side, you may qualify for a tax credit towards the cost of your health insurance. This amount is based on what you could be expected to pay for one of your state health care plans (more on those later) and is calculated based on your earnings.
For the self-employed, you will be asked to provide an estimate of the amount you will earn in the coming year. Your tax credits will be based on that estimate and will be checked at the end of the year once the figures are in. If you’ve earned more, or less, than your estimate you may face a bill or a rebate. This penalty is worth keeping in mind as some healthcare solutions are not considered to be insurance and so the cost of the penalty will need to be included in your cost calculations.
Where to Look for Freelancer Health Insurance
If you are just coming off the insurance plan held by someone else (your partner, parent or another family member) then you may be able to continue that coverage for up to three years. Although this may seem like a convenient option, it may not be the most economical, and it’s worth shopping around.
The Healthcare Marketplace
As part of the Affordable Care Act (ACA) states were required to have their own healthcare plan exchange or use the governments federal marketplace, like the federal Indiana insurance exchange.. Here in Indiana and many other states, we also expanded Medicare under the law, that’s the ‘Healthy Indiana Plan’. It is worth looking at this plan and evaluating it against others as it may be the cheapest health insurance option for those at or below the poverty line.
The downside of these plans for freelancers is that it can be hard to calculate the costs ahead of time. Financial assistance is based on income, but if you end up making more than you put on your application you have to pay back the assistance. For those that know they will have a lower income, a lot of the costs only come when you get sick, so if you have a healthy year it’s nice and cheap. If you’re unfortunate enough to use the services then you have either a copay or coinsurance situation to consider.
Private Health Insurance plans
Of course, there are insurance companies offering individual plans. Brace yourself for the cost of these, especially if you have previously only been in group schemes. The costs will be significantly higher, as you will be meeting them all. In more corporate health plans, for example, the employer pays the majority of the fee.
We’ve previously created a list of tips for buying health insurance, which you can read here. You can usually only join a plan during the enrollment period through an exchange. There are exceptions under certain circumstances for example if you relocate to a different state, have just got married or added a new member to your family.
Short-term Health Insurance
If you need cover outside the enrollment period, then short-term health insurance is an option. It is relatively cheap but doesn’t offer the same level of care and shouldn’t be considered alternative health insurance. Some people choose to continue their short-term insurance and save the difference between this and a regular premium in case of health issues.
It’s also worth noting that short-term insurance doesn’t meet the Obama-care standards and so you would also have to pay the tax penalty for 2018. The tax penalty has been repealed for 2019.
If you’re a member of a trade association as a freelancer, then you should check whether they offer a group health insurance scheme. It may even be worth joining an association to access the insurance, but you should crunch the numbers first. Obviously, this insurance is linked to your membership, so you would need to maintain both to keep your insurance current.
Professional Employer Organizations
Do you work through a PEO? Some, like Gusto, Zenefits and Justworks offer access to their group healthcare insurance as a perk. It’s worth checking out the terms and conditions of membership though, in case it ties you to one provider.
Health Cost Sharing
Medical share plans are a relatively new idea. They enable anyone to join a group and take advantage of the associated cost savings. You do need to be in decent health to join, though. These tend to be more basic, but that’s reflected in the price.
Church Based Faith Shares
If you are an active member of a church or a faith minded person, it is worth asking whether there is a faith-based medical share plan that you can apply to. Membership usually requires an undertaking to abide by certain religious-based rulings and sometimes requires you to take part in prayer meetings. However, many of the newer faith health share plans only require the member claim to have faith in a higher power and with medi share rates being much lower than traditional insurance, membership in these plans can save the patient thousands of dollars a year.
For those who anticipate good health, crisis plans can be a good option. These schemes don’t cover the basics, but if anything major happens you are covered. They are usually only available to younger people, where there is less likelihood of a significant event such as a heart attack or stroke.
Choosing your Health Insurance
There is a lot to consider when choosing your health insurance as a freelancer. It is always a balance between cost and benefit and considering what might happen in the future.
It can be helpful to talk about your self-employed health insurance requirements over with a professional who understands all the pros and cons of the various different options. If you’d like to meet up and discuss the best solution for you, then request an appointment today. All our local health insurance agents are up to date with the latest legislation and would love to help you out!