Your Guide To The Best Health Insurance As A Self-Employed Person – Forbes Advisor

Your Guide To The Best Health Insurance As A Self-Employed Person
ADVERTISEMENT

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.

Whether you’re a gig worker, a freelancer, an independent contractor or simply self-employed, you’ll likely need to navigate the process of enrolling in health insurance coverage independently at some point. With so many providers, policies, rules and payment options to consider, finding the best health insurance as a self-employed person can be tricky. Read on to learn how to make your health insurance enrollment experience easier.

Do Self-Employed People Need Health Insurance?

Just like employees, self-employed people stand to benefit from health insurance coverage. Of course, not paying for insurance can be less expensive in the short term, but uninsured people are just an illness or injury away from catastrophic financial consequences.

Experts recommend comprehensive health insurance for all adults, as paying out of pocket can lead to medical debt. By spending a single night in a hospital, for example, patients without insurance can owe upward of $10,000. What’s more, studies show people without health insurance tend to make important health care decisions based on money and often face poorer health outcomes as a result, particularly when they forgo adequate preventative care.

Who Is Considered Self Employed?

While a majority of working US adults receive health insurance through their employers, this arrangement may be waning due to rising health care costs. The types of workers who typically seek coverage on their own is also a broad group, including (but not limited to):

  • People who work for large companies or groups but aren’t technically employees, such as consultants, doctors, real estate agents and lawyers
  • Independent workers, such as freelance writers, contractor tradespeople (electricians, plumbers, etc.) and sole proprietors of businesses

Top Health Insurance Options and Considerations for Self-Employed People

If you don’t have employer-sponsored insurance (ESI) or access to an employed spouse’s or parent’s plan, consider the options below.

Federal or State Marketplace

Created by the Affordable Care Act in 2010, the federal government’s Health Insurance Marketplace is a central hub for comprehensive, non-ESI insurance. While the broader program facilitates shopping and enrollment for private plans through websites, call centers and in-person help, most people identify it by its main web portal: healthcare.gov. All Marketplace plans are “qualified health plans” (QHPs), meaning they must cover medical services the government deems “essential” and can’t place annual or lifetime caps on coverage.

Meanwhile, each state features one official health insurance exchange for its residents. In most states, the federal healthcare.gov site fills this role, but some states operate separate platforms. This healthcare.gov page provides an up-to-date list of the exchange websites for each state. Open enrollment begins each year on November 1, with the upcoming period extending to January 15, 2023, for most of the country. Certain states expand this enrollment period.

Federal Programs for Qualifying Applicants

Medicaid

This needs-based assistance program provides free coverage for about 74 million Americans and can be a solid insurance option for self-employed workers who qualify. Participation is based largely on income—in most states, Medicaid is available to those living below 138% of the federal poverty level—though disability and children are factors as well. Anyone can explore eligibility through healthcare.gov, and enrollment is open year-round.

Medicare

Medicare is a federally-managed insurance option primarily for US adults ages 65 and older. Beneficiaries usually pay monthly premiums based on their individual plan and tax history, but some costs are offset by taxpayer funding. Like Medicaid, Medicare is a common way for qualifying people to get coverage without an employer. Medicare.gov offers more information on the program’s components and enrollment instructions.

Military Programs

TRICARE is the government’s health care program for military service members and their families. Applicants can find plan options and other resources on TRICARE’s website and can check eligibility through the milConnect website. Veterans can also apply to enroll in VA coverage programs year-round, which can be supplemented by private insurance or federal programs including TRICARE.

Short-Term Medical Plans

Short-term medical plans can be helpful for transitions into self-employment and managing gaps between plans. They offer affordable but less comprehensive coverage and work best for healthy people with low risk of experiencing a health-related event. Recent changes to STM plan policies increased their potential length from a few months to more than a year.

STM plans aren’t required to cover the ACA’s essential health benefits, commonly excluding coverage for preventative care, mental health care and prescription drugs. Considered “junk insurance” by some, these plans are criticized for low levels of protection, restrictive maximum coverage limits and discrimination against those with preexisting conditions. STM plan regulations differ by state, with 12 states outright prohibiting them.

ADVERTISEMENT

Limited Benefit Plans

Limited benefit plans also offer pared-down coverage at a lower price. These plans don’t cover all essential health benefits, making them best for supplementing existing insurance—especially plans with high deductibles or minimal coverage. This category includes critical illness or accident plans, which cover a predetermined list of health issues, and compensation plans, which share costs more significantly with the patient. Meanwhile, high-deductible catastrophic health plans do cover essential benefits but still offer more limited coverage in exchange for low monthly premiums.

Other Avenues for Finding Coverage

Membership Organizations

Professional or trade organizations like unions and guilds often provide group shots for members, which can be an effective low-cost option for independent workers. Membership organizations like AARP also offer access to specific plans, as do many colleges and universities for students. Group plan access through an organization tends to function very similarly to many ESI plans.

Talking to an Agent or Broker

Agents and brokers can be helpful resources and can direct individuals to the best-fitting option from a particular provider. Insurance companies hire or rely on independent agents to sell plans while brokers assist clients with navigating the market. Both tend to operate on commissions from the insurance companies whose product they sell. This Find Local Help tool from healthcare.gov can help you locate agents, brokers and “navigators” (Marketplace-funded assistors) in your area.

Direct Enrollment and Private Exchanges

C’est possible, though not always recommended, to purchase a plan directly from an insurance company or from a private online exchange. These types of “direct enrollment sites” were only recently made legal, allowing insurance companies and brokers in many states to enroll customers via private websites. These services all ease and simplicity in finding a plan, but their benefit to self-employed people is less clear than the benefit to people with ESI. What’s more, private exchanges don’t display all options that might exist on the Marketplace, and the plans don’t have to be ACA-compliant. Their recommendations may also be influenced by commission rates for those making the sales.

COBRA

The Consolidated Omnibus Budget Reconciliation Act, or COBRA, allows workers and their families to stay on an employer-sponsored group plan for up to 18 months after it would have otherwise lapsed. It’s expensive but can help in certain situations—including transitioning from a job with ESI to self-employment. To qualify, the lapse plan must already be covered by COBRA and the insured party must experience a change in eligibility that meets certain criteriasuch as the death, divorce or job loss of the covered employee.

Health Care Sharing Ministries (HCSMs)

HCSMs purport to help cover health care costs for members of a faith-based organization who lack ESI. These services aren’t actually insurance and have significant limitations. Paying in doesn’t guarantee coverage, and HCSMs aren’t obligated to cover essential benefits or people with preexisting conditions. Many plans also require adherence to certain “lifestyle requirements” to participate, such as abstaining from alcohol, tobacco or other activities deemed “high risk.”

How Much Does Health Insurance Cost for Self-Employed People?

Tea cost of health insurance can be daunting and hard to predict, especially for the self-employed. A plan’s main costs include its premium (the monthly charge for coverage) and its deductible (how much a patient covers before insurance kicks in). When one is high, the other tends to be low. Location, age and tobacco use play a role in how costs are assessed by providers, but health status and medical history are not grounds to be charged more under ACA-compliant plans.

Self-employed workers can treat health insurance as a business expense and deduct premiums from adjusted gross income, reducing tax bills or increasing their refund. Many US adults also qualify for discounts on Marketplace options and can use this healthcare.gov calculator to gauge eligibility. Meanwhile, healthcare.gov’s Plans &; Price tool provides estimates based on one’s income for the costs of different insurance options.

Tips for Self-Employed People to Find Better Health Insurance Coverage

The best policy is one that strikes a balance among premiums, deductibles and coverage that makes sense for the individual. When searching for such a plan, self-employed people should:

  • Look for an insurer with a large provider network and a customer-friendly claims process.
  • Research Marketplace options before considering a broker or a private exchange.
  • Consider joining an organization that offers group plans.
  • See if they qualify for premium tax credits and cost sharing reductions, which can make a huge difference in affordability, and for programs like Medicaid and the Children’s Health Insurance Program (CHIP).
  • Check their eligibility for a special enrollment period (based on qualifying events) or for year-round enrollment (based on income) rather than waiting until November 1.
  • Treat insurance as an investment in financial well-being—not just health. While the vast majority of uninsured US adults cite high costs as the main reason for lacking coverage, out-of-pocket medical bills are the leading cause of American consumer bankruptcy.

Sources

ADVERTISEMENT

Leave a Reply

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