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How Do You Get Health Insurance if You’re Self-Employed?

How Do You Get Health Insurance if You’re Self-Employed?

8 Minute Read

Being your own boss is exciting! You’re in control and doing something you’re really passionate about! But what about the thing that most folks use their employer for: health insurance?

If you’re self-employed, what are your options in the world of health care? We’ll walk you through the different ways to grab some good coverage right here!

How Do You Get Health Insurance If You’re Self-Employed?

Being self-employed could mean anything from owning your own business to working a steady freelance gig. Whatever the deal, you’re walking the tightrope of being your own boss and being in charge of everything including your health insurance!

So, let’s talk about the options if you plan on doing the self-employed gig for a short time or if you know it’s something in your long-term plans.

What will suit you best?

Health Insurance If You’re Self-Employed for a Short Time

The world of work can be unpredictable. You might feel pretty steady on the rung of your career ladder and then boom! Life happens and you’re on a different path for a while.

Let’s pretend we have a friend named Ollie. He just left a job with a company where he was signed up for their group health insurance plan.  But now that he’s left, Ollie has turned to freelance work and boosting his knowledge with a few courses on the side. He plans to get back into the full-time working world as soon as he can.

Do you have the right health insurance coverage? You could be saving hundreds!

What are his short-term solutions for health insurance in between? Let’s take a look!

COBRA

Okay, Ollie could carry on with his previous employer’s group health insurance plan with COBRA health insurance. COBRA lets you temporarily keep the same employer-based health plan you had at your old job (usually for up to 18 months). But Ollie will pay more for it each month because his employer is no longer footing some of the premium.

Short-Term Health Insurance

Another option for Ollie (if he wants to save money on his premium) is short-term health insurance. How short of a term are we talking? Well, it could be anything up to three months.1 Ollie could sign up for a short-term plan outside of the usual enrollment period—which is a plus—and his monthly premiums will be low. But there’s a reason for this! Short-term policies have high out-of-pocket costs and are unlikely to cover Ollie’s pre-existing conditions if he has any. So he should check with the insurance provider before signing up.

Industry-Specific Health Insurance

Let’s say Ollie plans to freelance for a while between jobs. And he’s in luck because he’s found a freelancers union that offers discounted health insurance. There are other industry-specific health insurance plans out there—for everyone from caregivers to college alumni groups. But always read the fine print in these situations to avoid paying more for a plan that gives you less in the way of health care compared to going it alone in the Health Insurance Marketplace.

Health Insurance If You’re Permanently Self-Employed

Now let’s look at folks who are self-employed for the long-haul. There are a few different ways to cover your health care and insurance. It all depending on what you’re looking for, how much income you’ve got coming in, and who needs coverage.

Take Rebecca. She’s in her thirties and works as an independent caregiver. She’s also a single mom of two. Here are her options:

Health Insurance Marketplace

The first stop Rebecca could make is to the government’s Health Insurance Marketplace. It’s where she can find out if she qualifies for Medicaid, tax credits or lower health insurance premiums.2 And it’s also where she can sign up her kids into the Children’s Health Insurance Program (CHIP) if she qualifies for this assistance.3

Private Health Insurance

Some insurance providers have plans aimed at people just like Rebecca—folks who are self-employed and need health care with good coverage at an affordable rate. Rebecca’s life is busy! She needs a plan that offers up a wide range of benefits (from access to in-network providers and hospitals to annual checkups and preventative care) for her and her children at no extra cost. Rebecca’s best bet? To speak to an independent insurance agent who can help her find the best plan for the best price!

Health Care Sharing Ministries

Rebecca’s just heard about another way to cover her health care costs: sharing ministries. First of all, a health care sharing ministry is not technically “health insurance.” It’s more like a group of people who belong to an organization like a church or ministry and pool their money together into a fund. They use this fund to pay for major health care costs for the members in the group.

This might sound like a good option if you’re healthy with no dependents, but there are downsides. Namely, there are restrictions on what the ministry might agree to pay for. And ministries are not regulated by the Affordable Care Act, which means they’re not required to cover your pre-existing conditions.4

Self-Employed Health Insurance Tips

Okay, as someone who’s self-employed, you’re also doubling up as your own Human Resources director! There’s no one to call with questions about your benefits. But fear not! We’ve stepped in to give you a few pointers if you’re self-employed and shopping for health insurance.

1. Consider Agencies That Could Help

Our friends Ollie and Rebecca might feel alone and out of the loop in the world of the self-employed. There isn’t a feeling of security that comes with working for a large business. So that’s why it’s a good idea to connect with organizations that offer something similar—like the Association for the Self-Employed.5  Membership could give you access to discounted health insurance plans, Health Savings Accounts (HSAs) and other support.   

2. Remember the Self-Employed Health Insurance Tax Deduction

We’re talking about money, folks! Being your own boss also means taking the knocks if business is slow. That’s why it’s important to know how to make your money work harder when you’re buying health insurance. And you can do that with the health insurance tax deduction for the self-employed.

If you qualify for this deduction, it means you’re allowed to deduct 100% of your health insurance premiums from your adjusted gross income every year.6 This is a deduction for self-employed individuals and their dependentsnot for small businesses.

Here are a couple of things you need to do to qualify:

  • Show no other forms of health insurance coverage. You’ll need to prove you have your own personal health insurance coverage and aren’t still covered by an employer’s group plan or named in someone else’s policy—like your spouse’s policy. What’s more, you can’t claim the deduction if you qualify for coverage from your spouse’s group plan but choose not to take it up.
     
  • Prove your income from being self-employed. You need to have some income coming in to apply for a deduction. And if you have a few different streams of self-employed income, you can only claim the deduction against one of those streams. The one with the highest income is probably your best bet!

3. A High Deductible Health Plan Makes Financial Sense

If your health insurance plan has a high deductible, that means lower monthly premiums. And we like those! It’s also great for self-employed folks like Ollie and Rebecca because it reduces their monthly expenses. They just need to make sure they can foot the higher deductible when they need to. And that’s where the Health Savings Account comes in.

To summarize: An HSA is a tax-advantaged savings account linked to a high deductible health plan (HDHP). It’s a savings account for you and your dependents to pay for qualifying medical expenses. The interest you earn in your HSA is tax-deferred, and the withdrawals you make to pay for medical expenses are tax-free too.

If your health insurance plan has a high deductible, that means lower monthly premiums. And we like those!

4. Get Expert Advice From an Independent Insurance Agent

When you’re in charge of finding health insurance that’s worth more than the paper it’s written on, don’t leave it to chance or the internet to find the best one for you!

An independent insurance agent—like the ones you’ll find in our Endorsed Local Providers (ELP) program—are the experts to turn to.  

You can find local agents who are ready to walk you through your health care options and track down the best health insurance quotes in the exciting world of being your own boss!  

Find an independent agent today!

Do You Have the Right Coverage? 

Do You Have the Right Coverage? 

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Do You Have the Right Coverage?  

Find out with our free 5-Minute Coverage Checkup!
Take the Coverage Checkup