.svg)
A self-employed individual likely either runs their own business or works as a freelancer. If that individual is not eligible through a spouse or family member, self-employed individuals have several options to choose from to obtain health insurance.
The Bureau of Labor Statistics states that 1 in 10 American workers are self-employed, an estimate that includes both small and large business owners and freelancers in the U.S.
For many years, self-employed professionals were not offered a wide variety of health insurance plan options. As such, individuals who were fortunate to have a spouse or family member with a full-time job became part of their plan. Otherwise, the only way to apply for coverage was to pay for a pricey private insurance plan. Self-employed individuals could reduce the overall cost to a small extent by going for a high-deductible plan with lower coverage. However, they would still have to pay the entire amount themselves, making it difficult to continue with the plan.
However, since the passage of the Affordable Care Act (ACA), also known as Obamacare, there are multiple options for self-employed individuals. It is now much easier to choose your insurance plan and get a subsidy to cover part of the cost.
Any self-employed individual can qualify for small business health insurance if they employ an additional person. This individual should not be your family member.
If you are eligible for small business health insurance, there is a probability that you will also become eligible for the small business health care tax credit. This credit saves you almost 50% of the costs that you pay for all employees’ premiums.
However, you must meet the following criteria to qualify:
This does not mean that you cannot provide coverage to employees who work fewer than 30 hours per week, but your small business should offer the appropriate coverage options to your full-time employees. Even when you are not eligible for the small business health insurance tax, you may be eligible for other tax breaks.
Moreover, small business health insurance is generally more affordable per individual, so be sure to check and see if you qualify as a small business–even if you have just a single employee.
If you do not qualify for small business health insurance, additional health coverage options are available for self-employed individuals or entrepreneurs.
The central place to purchase an individual health insurance plan is the Health Insurance Marketplace. Self-employed individuals who obtain health insurance can use the marketplace to shop for health plans, compare different options, and enroll in coverage.
In most states, the federal government runs the marketplace, and individuals use healthcare.gov to enroll in a health plan. However, some states operate marketplaces specific to their state. Residents of these states will not use healthcare.gov to shop for and enroll in a health plan but will use the state-specific marketplace instead.
These states include:
Individuals must choose a plan during open enrollment unless they qualify by experiencing certain life events, such as getting married, having a baby, moving to a new home, or losing their current health insurance coverage.
Healthcare.gov plans can also cover other household members, such as children or spouses.
In some cases, purchasing short-term health insurance can be beneficial for self-employed individuals. Also called temporary health insurance, this helps individuals experiencing a coverage gap.
For example, an uninsured individual waiting for the open enrollment period to begin can use short-term health insurance to get basic health coverage in case of an emergency. They can then choose a more permanent and comprehensive plan during open enrollment.
While the cost of short-term health insurance is relatively low, it does not cover much. If you have chronic conditions, you may fail to qualify for this type of coverage.
Therefore, short-term health insurance is an excellent temporary option for many people, especially if you are uninsured and do not qualify for a particular enrollment period in the marketplace. However, obtaining more comprehensive coverage once available is the best long-term option for self-employed individuals.
Another option for self-employed people is the Consolidated Omnibus Budget Reconciliation Act, or COBRA. If you have access to a health plan from a parent, a spouse, or a former employer, you may continue that coverage for up to three years.
For example, if you leave your job to start your own business but like your current health insurance, you can use COBRA to remain covered under the same plan.
However, COBRA is usually more expensive than other alternatives because individuals typically must pay the entire premium, which could add up to 102% of the plan’s cost.
Professional Employer Organizations (PEOs) refer to companies outsourcing management tasks such as accounting and payroll. But, since they offer healthcare as a benefit, self-employed individuals who sign-up with these companies can get group health insurance for a nominal monthly fee.
Many associations like the National Association for the Self-Employed (NASE) provide health insurance as a reward for joining. The associated fee cost can be more than the benefit you receive, so research correctly.
Several companies and faith-based communities are creating health cost-sharing programs. These programs help provide affordable healthcare options to individuals, including self-employed ones.
Health cost-sharing programs work on a model in which members regularly pay into a shared fund. When medical expenses arise, members can pull from this fund to cover the costs.
This healthcare option is emerging in response to the increasing costs of health insurance premiums and out-of-pocket expenses. Healthcare cost-sharing programs may present a cost-effective option for obtaining health coverage for many self-employed individuals.
As the number of small business owners and self-employed individuals continues to rise each year, there are many health insurance options to help provide coverage. Since you are in business for yourself, the health insurance plan you choose can make a significant difference.
To ensure you select the best health insurance plan for your situation, consider your unique needs.
Do you want a plan that protects against worst-case scenarios? If so, you may choose to go with a plan that has low monthly premiums but a high deductible. These types of plans usually cover primary, preventive care, such as annual screenings and exams and offer peace of mind in case a catastrophic event occurs.
On the other hand, if you see the doctor frequently, it may be best to choose a plan with higher premiums but a lower deductible and a wider breadth of coverage.
In the end, what’s right for you comes down to your specific wants and needs.
To learn more about your options and evaluate the best health insurance plans, work with a health insurance broker and search for top-rated brokers near you today with Mployer Advisor.
Looking for more exclusive content? Be sure to check out the latest content on the Mployer Advsior blog, and read on for other articles in our Insurance 101 series.
.png)
.png){kind=small}
.png){kind=small}
%20(1).png){kind=small}
.png)
.png){kind=small}
.png){kind=small}
.png){kind=small}
.svg)
.svg)