Building Your Business Health Insurance Options for the Self-Employed The Ins and Outs of Self-Employed Health Insurance By Kristen Rogers Kristen Rogers Kristen works as a freelance writer for The Balance covering small business topics and terms pertaining to entrepreneurship, business finance, and more. She is certified in SEO and has a background in business management, marketing, and news media. Kristen also writes lessons for an education company and has prior experience as a manager for a Fortune 100 company, with experience writing and editing various content for education, news, and business websites. learn about our editorial policies Updated on October 22, 2022 Reviewed by Khadija Khartit Reviewed by Khadija Khartit Twitter Website Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder. learn about our financial review board Fact checked by David Rubin Fact checked by David Rubin Facebook Instagram Twitter David J. Rubin is a fact checker for The Balance with more than 30 years in editing and publishing. The majority of his experience lies within the legal and financial spaces. At legal publisher Matthew Bender & Co./LexisNexis, he was a manager of R&D, programmer analyst, and senior copy editor. learn about our editorial policies In This Article View All In This Article Do I Need Health Insurance? The Health Insurance Marketplace What Plan Is Right for You? Self-Employed Health Insurance Cost High-Deductible Health Plans Qualifying for Medicaid Get Expert Advice Frequently Asked Questions Photo: Maskot / Getty Images Being self-employed has many benefits, including making your own schedule and working from home, but one major drawback is having to buy your own health insurance. Workers employed by a company generally have access to insurance provided by the employer. However, the self-employed must set up their own health insurance. Though it may appear challenging, establishing your health insurance can be straightforward with a little help. Many options exist for self-employed workers with a variety of ways to save. Learn more about finding the right plan, understanding the costs involved, and qualifying for a low premium. Key Takeaways Self-employed individuals have various insurance options, including traditional health insurance, Medicaid, and high-deductible health plans.If you are self-employed, you can obtain insurance through the Health Insurance Marketplace.The cost of health insurance for self-employed workers can vary depending on location, age, and the level of coverage.An online marketplace or an independent agent can provide more options, helping you find the specific coverage you need within your budget. Do I Need Self-Employed Health Insurance? Self-employment covers many types of workers who generate income by providing services but aren’t employed by a company. Self-employed workers who generally need to provide their own health insurance include: Independent contractors Freelancers Entrepreneurs Consultants Gig workers As of 2019, you no longer need to enroll in a health insurance plan or have an exemption to avoid a penalty on your federal income taxes (known as the shared responsibility payment). However, some states have mandates in place requiring taxpayers without insurance to pay penalties when filing state taxes. Even if you won’t face penalties, it’s still important to enroll in health insurance. One main reason is to lower medical costs. Without insurance, patients must pay 100% of the cost, which could get expensive. With insurance, some portion of that bill is covered, and health insurance provides free preventative services, such as screenings. Using the Health Insurance Marketplace Freelancers and other self-employed people should start with the Health Insurance Marketplace by simply visiting HealthCare.gov. The Marketplace offers many options for individual and family private health insurance enrollment and allows users to shop around for the best coverage. It also provides criteria to help determine qualifications for premium tax credits, the Children’s Health Insurance Program (CHIP), and Medicaid. You can apply online by creating an account on HealthCare.gov. As a freelancer, you’ll need to estimate your self-employment income for the year as accurately as possible, but you can make updates if this changes later on. For the application, you’ll also need to provide several details, including your: Basic contact informationHealth coverageIdentityHousehold sizeImmigration statusIncome taxesEmployment of members of your householdAll forms of income What Plan Is Right for You? You must consider several things when looking into health insurance plans, such as the type of coverage you prefer, the monthly premium amount, and the deductible. Maybe you’re looking for a lower premium and something basic that includes just the essentials; for that, you can consider high-deductible health plans. Perhaps you prefer a comprehensive plan with a lower deductible to cover medical costs. You can compare these options through a marketplace. Association health plans are another option for workers in certain industries. To qualify through an association or professional organization, you’ll need to become a member and meet their criteria. You could also apply for Medicaid and find you qualify for free coverage. You may find many options to fit your preferences, so be sure to conduct research when seeking a new health insurance plan. What Does Self-Employed Health Insurance Cost? The nationwide average individual monthly premium in 2022 was $438 for plans compliant with the Affordable Care Act (ACA). The cost of health insurance for self-employed workers can range depending on many factors. Some may qualify for free or low-cost basic medical coverage based on their income levels, while others might opt for comprehensive plans that cost more but provide extra benefits. The type of coverage you choose and your age can both impact your premium. Rates can also differ by location, as states have different set requirements. The type of enrollment options you choose can also have an impact. For example, a family plan can differ in cost from an individual plan. Note Self-employed workers must pay the premium in full unless they qualify for premium tax credits through the Health Insurance Marketplace. But you can claim premium payments as a deduction when you file your taxes. Make sure to look into the self-employed health insurance deduction to see if you qualify. Understanding Health Insurance Costs Understanding the different types of health care costs is critical as you conduct your research. Deductible: Your deductible is an amount you owe before the insurance coverage kicks in to pay your medical expenses. For example, if you have a $500 deductible, you must pay the first $500 in medical costs each year before your insurance coverage begins. Out-of-pocket maximum: The out-of-pocket maximum caps the amount you would need to pay within a specified time. For example, if the out-of-pocket maximum is $1,000, your insurance company would cover all other expenses after you've spent $1,000. Copayment: A copay is a fee usually paid at the time of an appointment or other medical services after the deductible has been met. For example, a copay might be $30 for a primary doctor appointment. Coinsurance: Coinsurance represents the percentage of the medical costs that you and the insurer share in paying. For example, if your policy has 80/20 coinsurance, you would owe 20% of a medical bill while your insurance would pay 80%. However, not all plans have a coinsurance requirement, but the monthly premium might be higher for those plans that don't charge coinsurance. High-Deductible Health Plans A high-deductible health plan (HDHP) is a type of health plan that offers lower premiums due to its high-deductible level. In other words, the out-of-pocket costs are greater than traditional insurance plans, such as a higher annual deductible. If you are generally healthy, perhaps only needing yearly appointments, this could be a beneficial plan for you. High-deductible health plans also can be helpful for those who have health savings accounts (HSAs). Keep in mind that while you can use the funds in an HSA at any time to pay for qualified medical expenses, you may only contribute to an HSA if you have a health plan of this type. The two work together to help save on medical costs as the funds in the HSA are tax-free. Qualifying for Medicaid Medicaid is a program offering health insurance options for individuals and families who meet the income limits. Freelancers who are just starting off and aren’t generating a lot of income yet may qualify for Medicaid. Self-employed workers who don’t qualify based on income might still qualify based on household factors. You can apply for Medicaid online using the Health Insurance Marketplace or through the Medicaid agency for your state. You can apply for Medicaid at any time. Note Even if you are unsure of what your self-employment income will be, you can apply with an estimated amount of income you expect to earn. Your premium will be based on that amount, which may be adjusted later if your income changes. Get Expert Advice Applying directly with insurance companies may not provide a variety of options because you are limited to one company. Consider using an online marketplace to find a plan that offers the coverage you need that fits within your budget. If you need assistance selecting a health insurance plan, you might consider contacting an independent agent. They are licensed and can help you compare plans as they offer many options with various insurance carriers. Frequently Asked Questions Can you claim health insurance as a deduction if you are self-employed? Self-employed taxpayers can generally claim health insurance as a deduction on their taxes. Depending on how your business is structured, there are some limitations, and different tax forms may be required. Is there special insurance if I plan on being self-employed only for a short time? Self-employed workers who only need insurance temporarily can consider short-term health insurance. But finding a plan at HealthCare.gov is probably a better option. Short-term plans typically include basic coverage, and costs vary depending on the insurance company and other factors. Self-employed workers can cancel this insurance at any point but generally incur higher deductibles while paying for it. What is group insurance? Group plans are those offered by businesses and organizations to cover the workers they employ as well as their family members. Employers are responsible for selecting and maintaining the insurance plan. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Internal Revenue Service. "Individual Shared Responsibility Provision." eHealth. "Which States Require Health Insurance?" HealthCare.gov. 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