Transitioning from corporate to self-employment stirs a blend of emotions. Excitement and nerves intertwine as I embark on this new journey, including the vital step of securing a health insurance plan. Following thorough research, I managed to enroll in a healthcare plan successfully. Over my three-year self-employed venture, I’ve gathered valuable insights. If you’re navigating health insurance as a self-employed individual, I’m here to help you through the process.
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Health insurance for self-employed individuals: What sets it apart?
Self-employed health insurance differs from traditional employer coverage. While employers typically offer health insurance as a benefit to part-time or full-time employees, self-employed individuals must navigate the process independently. Unlike employer-subsidized plans, self-employed workers are responsible for the full premium cost, making coverage more expensive. However, self-employed health insurance premiums are tax-deductible, which can reduce taxable income and IRS obligations.
Where to get self-employed health insurance
Are you new to self-employment and looking for health insurance? Here’s good news – there are numerous coverage options available. While some options may be more cost-effective than others, not all may qualify you. Conducting research to find the best-fit option is crucial. Discover common ways self-employed individuals can access health insurance below.
HealthCare.gov
The Affordable Care Act (ACA) enables self-employed individuals to access health insurance through the Health Insurance Marketplace, available on HealthCare.gov. This government-sponsored platform allows you to browse, compare, and purchase health care plans, a popular option for self-employed professionals.
To enroll in Marketplace coverage, you will need to provide your location, personal details, and income information. Depending on your state, you may use either the state-specific Marketplace website or the federal one to select a plan.
After submitting your online application, you will receive plan options from providers like Blue Shield or Aetna. The Marketplace allows you to filter results by plan type, tier, insurance company, premiums, and out-of-pocket costs for easy comparison.
A key advantage of the Marketplace is the potential for income-based subsidies. These tax credits can reduce your premium or out-of-pocket expenses, depending on your chosen plan.
To secure Marketplace health insurance, timing is crucial. You can enroll during the annual Open Enrollment period or within 60 days of a Qualifying Life Event for coverage through a Special Enrollment Period.
Open Enrollment versus Special Enrollment Period
Health Insurance Marketplace Open Enrollment runs annually from November 1st to January 15th. During this period, you can enroll in a new Marketplace plan or switch plans. Missing Open Enrollment means waiting until the next year, unless you qualify for a Special Enrollment Period. This special period lets you enroll in a Marketplace health insurance plan within 60 days of a Qualifying Life Event, such as job loss, birth/adoption, relocation, or divorce.
Medicaid
Medicaid, a government-sponsored health insurance program for low-income individuals and families, offers a viable option for newly self-employed individuals with limited income. Unlike Open Enrollment, you can obtain Medicaid coverage at any time. However, eligibility requirements vary by state. To assess your eligibility for Medicaid, navigate to HealthCare.gov, choose your state, and find detailed information on enrollment and eligibility criteria.
Private health insurance plan
Consider private health insurance if the Health Insurance Marketplace isn’t suitable for you. Some insurers offer comprehensive plans tailored for self-employed individuals. However, private health insurance can be costly and lacks tax credits for low-income earners unlike Marketplace plans. To secure private health coverage, you can either research providers independently or engage an independent insurance broker. Brokers can offer both on-exchange (Marketplace) and off-exchange (private) plans, giving you more options for better coverage or rates. Utilizing a broker for private health insurance doesn’t incur costs until you purchase a plan, saving you time and effort, especially when establishing a new business.
Online insurance marketplace
Online insurance marketplaces have become a popular choice for self-employed individuals seeking health care. These platforms simplify plan and provider comparisons through a single application process. Using an online marketplace can lead to finding a cost-effective plan, particularly if you do not qualify for a tax credit via Healthcare.gov. When applying for health coverage online, you’ll provide basic details like age, location, tobacco use, household income, and dependents. Your responses will match you with various local coverage providers, making it simple to identify the most affordable option for your desired health plan. Online health insurance marketplaces offer easy access to expert advice through features like live chat on websites such as Policygenius, ensuring quick assistance throughout the application process.
Your parents, spouse, or partner
When you’re under 26, sticking with your parents’ health insurance can save you money. Self-employed? Check if you can join your spouse’s group health plan. Learn how domestic partners can also get coverage. Understand enrollment options for family policies and Special Enrollment Periods for Qualifying Life Events.
Membership associations
Consider obtaining a health plan through a professional association based on your industry. Membership benefits often include access to cost-effective health insurance plans with added perks. Explore these associations for health coverage options, but be aware of limited carrier and plan choices. Research thoroughly before deciding.
COBRA
Considering self-employment or a side hustle? Temporary health insurance like COBRA could be the right fit. COBRA allows you to maintain your employer-sponsored plan for 18–36 months post full-time job exit, but premiums increase. Remember, you must opt-in within 60 days of leaving your job.
What if I can’t afford health insurance when I’m self-employed?
Being self-employed can be incredibly lucrative. After all, there are no salary caps like in a 9-5 job. But the truth is, the cost of health coverage for self-employed individuals can be pretty high.
Read more: The cost of having health insurance – is it worth it?
So, what happens if you can’t afford coverage?
Health insurance is no longer mandatory by law, but staying uninsured has its drawbacks. While there are no penalties for lacking coverage, considering the financial aspects is crucial. Assess the expenses of having insurance versus going without. If you’re generally healthy and rarely visit the doctor, paying for a plan you might not use could be costly. On the flip side, if you have ongoing medical needs, the benefits of health insurance outweigh the cost. The decision on whether to get health insurance goes beyond just your health status; it involves assessing your risk tolerance. For instance, imagine needing stitches for a kitchen accident or facing a costly surgery due to an injury. Understanding the financial implications is key before opting out of self-employed health insurance for cost-saving reasons.
Other (cheaper) health plans to consider
If you wish to acquire health insurance but are facing challenges in affording a standard policy, exploring several alternatives could be beneficial. One viable option is opting for a high-deductible health plan (HDHP). While HDHPs offer lower premiums, they entail a significantly higher deductible for medical treatments. Moreover, these plans might involve increased out-of-pocket expenses in the form of copayments or coinsurance.
By choosing an HDHP, you gain access to a health savings account (HSA), which allows you to set aside pre-tax funds designated for qualified medical expenses. Although HSA funds cannot be utilized for premium payments, they can effectively reduce your overall healthcare expenditures. Additionally, any unspent HSA funds carry over to the subsequent year, ensuring continued financial flexibility.
Summary
Being self-employed can present challenges akin to navigating uncharted territory, particularly in complex areas like individual health insurance. I trust that my guidance has steered you in the right direction, aiding you in identifying a plan that aligns with your requirements.
When it concerns health insurance, meticulous research is imperative. It is prudent to dedicate time to scrutinize your alternatives, assess costs, and opt for a plan that caters to both your health needs and financial constraints.
Reflecting on my experience as a self-employed small business proprietor, I emphasize the significance of having health coverage (a worthwhile investment, in my view). Even in youth and good health, unforeseen circumstances can arise.
Health insurance provides a sense of security and acts as a safeguard against substantial financial setbacks down the line. By safeguarding your health, you can continue to nurture your business endeavors.