How To Get Health Insurance When You’re Self-Employed

According to the Kaiser Family Foundation (KFF) 2020 Employer Health Benefits Survey, the average premiums for family health insurance coverage rose to $21,342 in 2020. Employers paid 74% of those premiums, while employees picked up the tab for the other 26%.

But self-employed workers are responsible to pay the full cost of health insurance themselves. And that can make health insurance difficult to afford for self-employed business owners, especially since many won’t qualify for group insurance discounts.

What can you do to get quality self-employed health insurance at an affordable price? In today’s guide, we break down your best options to get health insurance when you’re self-employed.

7 Ways To Get Self-Employed Health Insurance

Whether you’re a freelancer, sole proprietor, or even have a few employees of your own, here are seven ways to get self-employed health insurance without breaking the bank.

1. Enroll In Marketplace Coverage

Self-employed men and women do qualify for individual coverage on the Health Insurance Marketplace. And if you happen to have employees, you may also qualify to use the SHOP Marketplace for small businesses.

Choosing Your Plan

Currently, the Marketplace splits all of the health plan on its exchange into four metal categories: Bronze, Silver, Gold, and Platinum. Here’s the percentage of your health expenses that you can expect to pay out-of-pocket with each plan:

  • Bronze: 60%
  • Silver: 70%
  • Gold: 80%
  • Platinum: 90%

The Platinum plans are the best in terms of what you pay when you need care. However, these plans also have the highest premiums. On the other end of the spectrum, Bronze plans cost the most when you need care but also offer the lowest monthly premiums.

How To Qualify For A Special Enrollment Period (SEP)

In most states, Open Enrollment for 2021 Marketplace coverage runs from November 1st to December 15th, 2020. But even if it’s not currently the Open Enrollment Period, you may qualify for a Special Enrollment Period (SEP) if you recently became self-employed.

To qualify for an SEP, you would need to be someone who lost health coverage within the last 60 days (which may have happened when you left your employer). Other qualifying SEP events include having a baby, moving, getting married, or adopting a child. Learn more about Special Enrollment Periods (SEP).

Estimating Your Self-Employment Income

Whether you’re applying during Open Enrollment or an SEP, you’ll need to estimate your net self-employment income for the year you’ll be covered (not last year’s income). Depending on your income level, you may qualify for a premium tax credit.

However, don’t purposely underestimate your net income for the coverage year on your application to lower your premiums. If your actual income ends up being higher than your estimate, you may be forced to repay some or all of the premiums credits you received.

2. Get Coverage Through A Family Member

If your parents or spouse have health insurance through their employer, it may be cheaper to have them add you to their plan than to take out a separate plan on your own. In general, children can stay on a parent’s health insurance until age 26.

In addition to potentially lower premiums, family plans could also help you save in years where you have a lot of healthcare costs. Why? Because you’ll only have to reach one policy’s out-of-pocket limit before your co-pays go away instead of two or more.

3. Qualify For Group Coverage Through Association Or Union Membership

Don’t work for a big company? That’s ok. You could still get self-employed health insurance that takes advantage of group discounts. Several associations and unions offer group health insurance coverage to their members. Examples include:

The Freelancer’s Union, for example, offers Essential Plans which have deductibles as low as $0 and the ability to enroll at any time through the year. They also offer PPO Health Insurance for freelancers in select states. And they even have Medicare Advantage Plans for freelancers over age 65.

self-employed health insurance

The National Association for the Self-Employed (NASE), meanwhile, offers health coverage through USHEALTH Group insurance subsidiaries, such as MetLife, Assurant, and Golden Rule. Plus, members get access to dental, vision, and drug discount plans and a Health Savings Account (HSA).

4. Apply For Medicaid Or Medicare

Self-employed workers that meet the income or age requirements, may qualify for subsidized health insurance through the Medicaid or Medicare programs. In 35 states, anyone making less than 133% of the federal poverty line will qualify for Medicaid. The other 15 states set different limits but generally fall within 100% to 200% of the federal poverty level.

Even if you don’t meet these income requirements, you may qualify for Medicaid if you’re disabled, elderly, a parent, or pregnant.  Unless you have a disability, you won’t qualify for Medicare until you reach age 65. Note: You can have both Medicaid and Medicare coverage if you meet the eligibility requirements for both programs.

If you have children, they may qualify for Medicaid coverage through your state’s Children’s Health Insurance Program (CHIP). In many states, the income requirements are less restrictive for CHIP coverage than adult Medicaid plans. In fact, nearly 10 million children are currently enrolled in their state’s CHIP program. Learn more about CHIP.

5. Buy A “Stop-Gap” Health Insurance Policy

If you don’t qualify for a Special Enrollment period, your best option may be to just buy a policy to get you by until the next Open Enrollment period. If you recently lost your job, you may qualify for continuing coverage through COBRA. COBRA coverage can often be expensive. But it could keep you insured until you’re able to buy a more affordable plan.

If you don’t qualify for COBRA, you could also buy a short-term health insurance policy from a private insurer. Just keep in mind that some short-term insurance plans offered by private insurance companies may not meet the minimum essential coverage requirements of the Affordable Care Act.

Related: The Many Types of Business Insurance And When You Need Them

6. Join A Healthcare Sharing Program

Many healthcare sharing programs like Liberty Healthshare or CMH are organized around a common religious faith. But others aren’t. For example, Knew Health is a popular health care sharing program that is open to anyone, regardless of religious preference.

Healthcare sharing programs are not traditional insurance companies. They may not meet all the ACA minimum essential coverage requirements. And you may not be able to join one of these programs if you have pre-existing conditions. Each program decides for itself which medical costs are eligible to be shared.

However, for healthy individuals and families, these programs can offer many of the same benefits of traditional health insurance at a significant premium discount.  According to Policygenius, healthcare sharing plans are often significantly more affordable than ACA coverage. In fact, they can save members 50% or more.

Some programs offer a strong selection of ancillary benefits too. Knew Health, for instance, offers all of its members free health coaching, 24/7 telemedicine service, discounted lab work and supplements, and more.

self-employed health insurance

7. Take On Part-Time Work

While most employers only offer health benefits to full-time employees, some outstanding companies actually offer health insurance coverage to part-time workers. A few examples include:

  • Cosco: Part-time employees become eligible for health insurance coverage once they’ve worked at least 180 days or 600 hours. Health benefits include medical, vision, and dental plans, and prescription medication discount. Plus part-time workers get access to the company 401(k) plan and receive free Cosco Executive Membership.
  • Chipotle: All hourly wage workers are eligible for the Anthem Preventive Plus, Delta Dental PPO plan, and EyeMed PPO vision plan in addition to getting free access to Health Advocacy and telemedicine services. Plus all crew remembers qualify for a bevy of other valuable benefits. See the full list.
  • Starbucks: The behemoth coffee chain offers its part-time employees medical, dental, and vision health insurance plans in addition to other benefits such as 401(k) plans, college tuition reimbursement, and adoption assistance. Learn more about Starbucks’ benefits package.
  • UPS: Part-time employees get access to an expansive health program that includes basic medical and hospital coverage, vision and dental benefits, plus short-term disability and life insurance coverage.

If you have about 20 to 25 hours per week available, working part-time for one of these companies could be a smart move. You’d get access to solid health insurance while keeping the rest of your week open to pursue your personal business ventures.

Save Big By Claiming The Self-Employed Health Insurance Deduction

As long as you don’t qualify for employer-sponsored health insurance and you earned a net profit from your business, you can deduct 100% of your self-employed health insurance premiums from your taxable income.

This is a HUGE benefit that could save you thousands of dollars on your taxes and reduce the out-of-pocket cost of your self-employed health insurance. Even with heavily discounted coverage, you could easily spend $15,000 or more on health insurance premiums per year. Deducting those costs could significantly lower your adjusted gross income (AGI).

However, it’s important to point out that you can’t deduct more per year than your business earned. So if your business’s net profit was $10,000, that would also be your self-employed health insurance deduction limit. And if you happened to qualify for premium tax credits on Marketplace coverage, can only deduct the portion of your insurance plan that you personally paid.

Claim Every Self-Employed Deduction You Deserve

Looking for more ideas on how to save money as a self-employed business owner? The highly qualified professionals at Cloud Friday could help.

Cloud Friday’s Accounting Services team understands the unique tax challenges and opportunities that come with being self-employed. And they can help you take full advantage of the self-employed health insurance deduction as well as other valuable deductions for small business owners. Learn more about Cloud Friday’s services.

How To Get Health Insurance When You're Self-Employed

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top