Haris Ashley
If you're self-employed, it's important to consider your options for medical insurance. While it's not mandatory to have insurance when you're self-employed, it's a good idea to have coverage in case of any unexpected medical emergencies. There are various options available for self-employed individuals, including purchasing insurance through the individual Health Insurance Marketplace, where you may be eligible for premium tax credits and other savings. You can also look into industry-specific health insurance plans offered by membership organizations or unions, or consider a health insurance plan from companies like Cigna, Blue Cross Blue Shield, or Kaiser Permanente, which are recommended for self-employed individuals.
| Characteristics | Values |
|---|---|
| Self-employed with no employees | Not considered an employer |
| Self-employed with no employees | Can use the Health Insurance Marketplace to find health coverage |
| Self-employed with no employees | Not eligible for SHOP plans |
| Self-employed with no employees | Can purchase qualified health coverage through the Marketplace for individuals and families |
| Self-employed with no employees | May qualify for premium tax credits and other savings on a Marketplace plan |
| Self-employed with no employees | May qualify for free or low-cost coverage through the Medicaid and CHIP programs in your state |
| Self-employed with no employees | Can choose from several categories of coverage on the Marketplace |
| Self-employed with no employees | Can get more savings and lower costs on Marketplace health insurance coverage due to the American Rescue Plan Act of 2021 |
| Self-employed with no employees | May be eligible to deduct premiums that you pay for medical, dental and qualifying long-term care insurance coverage for yourself, your spouse and your dependents |
| Self-employed with no employees | May qualify for an affordability exemption |
| Self-employed with no employees | Can connect with organizations that offer discounted health insurance plans, Health Savings Accounts (HSAs), and other support |
| Self-employed with no employees | Can keep the same employer-based health plan from your old job for up to 36 months with COBRA |
| Self-employed with no employees | Can join a health care sharing ministry |
| Self-employed with no employees | Can get coverage through the Affordable Care Act (ACA) marketplace or directly from a health insurance company |
| Self-employed with no employees | Can get coverage from companies like Cigna Healthcare, Blue Cross Blue Shield, and Kaiser Permanente |
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What You'll Learn
Self-employed health insurance options
If you're self-employed, you can use the individual Health Insurance Marketplace to enrol in flexible, high-quality health coverage. This marketplace is established by the Affordable Care Act (ACA) and offers a variety of individual and family plans. You can also use the Health Insurance Marketplace to find out if you qualify for premium tax credits and other savings on a health plan, based on your income and household size.
If you're self-employed with no employees, you're not considered an employer. In this case, you can apply for a short-term health insurance plan, which can provide coverage for up to four months while you consider longer-term options. You may also be able to get savings and lower costs on Marketplace health insurance coverage due to the American Rescue Plan Act of 2021.
If you're a member of an organization like the National Association for the Self-Employed, you may be able to access discounted health insurance plans and Health Savings Accounts (HSAs). Similarly, freelancer unions or other membership organizations may offer discounted health insurance plans.
If you lose job-based coverage, you qualify for a Special Enrollment Period, which means you can enrol in a health plan outside the annual Open Enrollment period. COBRA lets you keep your previous employer-based health plan for up to 36 months, but you'll pay more because your employer won't contribute to the premium.
Health care sharing ministries are groups of people who pool their money to pay for major health care costs for members. These setups are not considered "health insurance" and are not regulated by the ACA, but they can save you money on premiums.
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Tax breaks and savings
If you are self-employed, you may be eligible for tax breaks and savings on health insurance. Firstly, you can purchase health coverage through the individual Health Insurance Marketplace, which offers flexible, quality coverage for individuals and families. The Health Insurance Marketplace will allow you to find out if you qualify for premium tax credits and other savings on a health plan, based on your income, household size, and other factors.
Additionally, if you are self-employed, you may be able to deduct premiums that you pay for medical, dental, and qualifying long-term care insurance coverage for yourself, your spouse, and your dependents. This deduction is entered on Part II of Schedule 1 as an adjustment to income and is then transferred to page 1 of Form 1040. This deduction lowers your adjusted gross income (AGI), which can reduce the likelihood of being affected by unfavourable phase-out rules that can cut back or eliminate various tax breaks. It is important to note that you can only claim this deduction for months when neither you nor your spouse were eligible for an employer-subsidized health plan.
Furthermore, if your health insurance plan has a high deductible, you can save on premiums. In this case, you can utilise a Health Savings Account (HSA), which is a tax-advantaged savings account linked to a high-deductible health plan. The money saved in your HSA can be used to pay for qualifying medical expenses, such as your deductible, tax-free.
If you are transitioning into self-employment and leaving an employer-based health plan, you may be able to temporarily keep your previous health insurance plan through COBRA for up to 36 months, although you will have to pay the full premium yourself. Alternatively, you could consider a health care sharing ministry, which is a group of people who pool their money to pay for major health care costs for members. These plans are typically cheaper on premiums but are not regulated by the ACA and may not cover pre-existing conditions.
Lastly, you may be able to find discounted health insurance plans through organisations such as the National Association for the Self-Employed or freelancer unions and other membership organisations. These industry-specific health insurance plans can provide coverage at an affordable rate.
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Health Insurance Marketplace
If you are self-employed, it is important to get health insurance to protect yourself and your family from unforeseen medical emergencies. While it is not mandatory, you can purchase health insurance through the Health Insurance Marketplace.
The Health Insurance Marketplace is a platform that offers a wide range of health insurance plans for individuals and families. It is facilitated by the Affordable Care Act (ACA), which gives more people access to health insurance. The Marketplace provides flexible and quality coverage options, including medical, dental, and vision care.
To be eligible to enroll in the Marketplace, you must be a U.S. citizen or national, or be lawfully present, with no income limit. When filling out a Marketplace application, you will find out if you qualify for premium tax credits and other savings based on your income and household size. You may also be eligible for free or low-cost coverage through Medicaid and CHIP programs, depending on your state.
Additionally, you can explore other options like COBRA, which allows you to keep your previous employer-based health plan for a limited time, or health care sharing ministries, where groups pool their money to cover major health care costs. Remember to consider your specific needs and compare the coverage and costs of different plans before making a decision.
The Health Insurance Marketplace provides valuable resources to help you stay informed about your health care options and make the best choices for your well-being.
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Employer-based health plans
If you are self-employed, you can use the Health Insurance Marketplace to find health coverage for yourself. You are considered self-employed if you run a business that produces income and has no employees. In this case, your business won't qualify for group coverage. However, you can purchase qualified health coverage through the Marketplace for individuals and families.
Now, let's talk about employer-based health plans in detail.
The Affordable Care Act, also known as Obamacare, requires employers with at least 50 full-time employees or "full-time equivalents" to provide health coverage to their workers. In this case, full-time is considered 30+ hours per week. Employers who fail to do so may be subject to penalties. The average employer-sponsored health plan had a total monthly premium of $703 for a single employee and $1,997 for family coverage in 2023. Typically, the employer pays the majority of the cost, and employees contribute a portion of the premiums through payroll deduction.
Employers can purchase small-group or large-group coverage based on the number of employees they have. Alternatively, they can self-insure, which means they pay the medical claims of their employees out of their own funds rather than purchasing coverage from an insurance company. Employers also have the option of offering an ICHRA (Individual Coverage Health Reimbursement Arrangement), where they reimburse employees for some or all of the costs of individual market coverage.
Under the ACA, group health plans must be guaranteed issue, meaning they must cover all enrollees whose employment qualifies them for coverage. Additionally, employers cannot impose a waiting period of more than 90 days before new employees are eligible for their health benefits, assuming they meet other eligibility criteria such as working a minimum number of hours.
It's important to note that in rare cases, an employer's coverage may not be considered affordable or meet minimum standards. In such situations, employees may qualify for premium tax credits and other savings on a Marketplace plan based on their income.
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Health care sharing ministries
If you are self-employed, you can use the Health Insurance Marketplace to find health coverage for yourself. You can choose from several categories of coverage, ranging from plans with low premiums that protect you in worst-case scenarios to plans where you pay more each month but less when you receive healthcare services. Depending on your income, household size, and other factors, you may qualify for premium tax credits and other savings on a health plan or free or low-cost coverage through Medicaid and CHIP programs in your state.
One option for health coverage that you may come across is a health care sharing ministry (HCSM). HCSMs are non-insurance entities that are not regulated by the ACA. Members of HCSMs share a common set of ethical or religious beliefs and agree to a variety of rules for a "Godly lifestyle", such as avoiding tobacco, extramarital sex, and alcohol abuse. Members pool their money into a fund that is used to pay for major healthcare costs for members in the group. HCSMs will usually save you money on premiums, but they are not required to cover pre-existing conditions. As of 2024, there were 107 health care sharing ministries certified by the federal Department of Health and Human Services, with at least 1.7 million people in the US using them.
An example of an HCSM is Medi-Share, a federally recognized non-profit group with over 350,000 members across all 50 states. Medi-Share members voluntarily share each other's medical expenses in accordance with guidelines adopted by the members and administered by the Christian Care Ministry, Inc. ("CCM"). Members of Medi-Share have shared over $8 billion in medical bills since 1993.
While HCSMs can be a good option for saving money on healthcare, it is important to keep in mind that they are not insurance and do not provide the same level of coverage as traditional health insurance plans. HCSMs are not required to cover pre-existing conditions and do not have the same legally binding requirements to pay members' claims as health insurance plans. Therefore, it is essential to carefully consider your options and choose the coverage that best suits your needs.
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Frequently asked questions
Self-employed people are not mandated to have medical insurance, but it is highly recommended. Without insurance, you are one medical emergency away from a financial disaster.
There are several ways to get health insurance as a self-employed person. You can:
- Use the Health Insurance Marketplace to find health coverage for yourself.
- Purchase qualified health coverage through the Marketplace for individuals and families.
- Get coverage through the Affordable Care Act (ACA) marketplace.
- Buy directly from a health insurance company.
- Join a freelancer's union or membership organisation that offers discounted health insurance.
Yes, you may be able to get savings and lower costs on Marketplace health insurance coverage due to the American Rescue Plan Act of 2021. You may also qualify for premium tax credits and other savings on a Marketplace plan based on your income and household size.
A good health insurance plan should offer quality coverage and good value. You should consider the cost of the plan, the number of people being covered, and whether the plan includes in-network healthcare providers and hospitals in your area.
Yes, you may be able to deduct up to 100% of your health insurance premiums, depending on your healthcare spending in a year. If your healthcare spending exceeds 7.5% of your adjusted gross income, you can deduct medical expenses if you itemize deductions.
