It is not always easy to obtain health insurance when you are self-employed. Unlike traditional employees, freelancers don't have a business owner to help them cover their monthly dues or negotiate lower discounts on their behalf. The most common solution is for the self-employed to obtain coverage through their spouse. But for those who can't join a family member's plan, it can be difficult or expensive to get coverage.
Some people who are self-employed choose to insure themselves through their small businesses. But without employee cost-sharing benefits, there is less incentive to do so. Perhaps that is why 34% of the self-employed have access to health insurance, compared to approximately 84% of traditional employees.
If you need an individual health insurance plan, here are some options to consider and reasons for purchasing insurance.
Self-Employed Health Insurance Options
There are a few options when it comes to purchasing self-employed health insurance. Here are three to keep in mind in your search.
HealthCare.gov
The Affordable Care Act (ACA) created a health insurance marketplace at HealthCare.gov. It's a good first stop for anyone looking for health insurance plans and has resources specifically for the self-employed.
The market regulates insurance plans for metals: bronze, silver, gold and platinum (the fifth option is the "catastrophic plan"). Bronze plans have low monthly payments but deep discounts, which can make treatment more expensive. Platinum plans cost more each month, but have low discounts, so almost all other costs are covered. All plans include some coverage for free preventive care and other free or low-cost services.
One thing to keep in mind is that your spouse's insurance policy may affect your ability to enroll in a plan on the market. If your insurance provides coverage for spouses and dependents, you probably won't qualify for premium tax credits and other savings from the Marketplace plan.
Private medical insurance
Just because you are not a conventional employee does not mean that you cannot enroll with a traditional insurance company. Some insurance companies offer affordable health insurance plans to people.
To see your options, check out companies like UnitedHealthcare, Blue Cross Blue Shield, Cigna, and Humana. Companies like these sometimes offer multiple options, including short-term health insurance and plans that cost less than the ACA offers.
Membership organization
Another option for the self-employed, freelancers, or even unemployed is to join a membership organization that offers a group plan. The idea is similar to obtaining insurance from a business owner. Instead of everyone sharing the same company, they share the same industry, interest, or other common bond. Like employers, affiliate organizations can use many of their affiliates to negotiate better coverage, lower premiums, and discounts.
You may find that you are already part of an organization that offers group health insurance. Organizations like AARP, Freelancers Union, and Writers Guild of America offer membership coverage for health care. In general, unions, unions, alumni associations, and even the local Chamber of Commerce are good places to visit.
Before signing up for coverage from any organization, be sure to compare their offerings with what you can get through the ACA. Some membership regulation plans are inconsistent with the ACA and may not cover pre-existing conditions.
Are health care premiums tax deductible?
Yes, the health insurance premiums for the self-employed are 100% tax deductible. In fact, this has been done since 2003. The self-employed can also deduct other medical expenses. And if they have a health savings account (HSA), they may be able to pay pre-tax dollar expenses. Lastly, the self-employed can reduce their adjusted gross income based on the amount they pay in health insurance premiums.
What if I don't have health insurance?
Not having health insurance coverage has little consequence. Most obviously, you will be responsible for all health care costs if you are injured or ill. You will also have to pay for prescription drugs and preventive treatments like flu shots or personal checks.
Many people may remember a fee called one-time joint liability payments. The government imposed these fees at tax time on the uninsured. This part of the ACA is no longer active, so there are no federal fees for not having health insurance. However, some countries have adopted this practice to encourage coverage. Check your state's website or ask your CPA to see if your state charges a non-insurance fee.
What do you do when you can't afford health insurance?
Before you rule out health insurance based on affordability, consider all of your options.
- Medicaid - generally for low-income people, parents, the elderly, and the disabled.
- Medicare: Generally for the elderly, disabled, and people with end-stage renal disease.
- Subsidized Health Insurance - For low-income individuals and families.
- Catastrophic health insurance: for those under 30, with exemption for financial hardship or affordability.
The bottom line of health insurance
The most common way to obtain health insurance in the United States is through an employer as part of general medical benefits. But while this system works with many full-time employees and many part-time employees, others are left behind. Freelancers who own their own business, freelance contractors, and freelancers struggle to find their own insurance.
Fortunately, there are options that can help. And while some may have higher deductibles or higher premiums, you can't beat the peace of mind that insurance coverage provides.
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