Health insurance coverage for freelancers is among the top worries for those thinking about a freelance career.
What are your healthcare options for yourself and your loved ones, especially if you’ve grown accustomed to working for an employer who offers good coverage?
This is a significant concern when considering working as an independent contractor. Think again if you believe that working as a freelancer means you will no longer have health insurance or high copays.
Although it can be difficult, getting health insurance as a freelancer is possible. For freelancers, there are numerous options for health insurance, all with reasonable premiums.
Begin with the Affordable Care Act
In 2010, the Affordable Care Act (ACA) was enacted. There are three objectives of the law, but the one that most people are likely familiar with is that it increases access to affordable health insurance.
In accordance with the Act, insurance marketplaces were established to assist consumers in locating the most affordable health insurance options for themselves and their families.
You can probably purchase health insurance through the insurance exchange in your state if you work as a freelancer.
Any applicant must be accepted by a plan under the ACA, regardless of any pre-existing conditions, including pregnancy.
As a result, you can no longer be denied coverage due to a medical condition, such as diabetes or asthma, and your coverage cannot be terminated because of it.
All ACA plans are required to provide coverage for ten specific topics. This comprises:
- Outpatient supervision
- Emergency assistance
- Pregnancy, maternity, and newborn supervision
- Mental health and substance abuse medication (including counseling and psychotherapy)
- Prescription medications
- Rehabilitative assistance
- Lab assistance
- Preventive and wellness checks, including chronic illness management
- Pediatric services that contain oral and vision care
Additionally, all ACA plans must deliver the following benefits:
- Birth control coverage
- Breastfeeding coverage
In addition to the above minimums, some ACA plans may present additional benefits such as:
- Dental coverage
- Vision coverage
- Medical management programs (for instance, diabetes care)
Understand Your State’s Marketplace
The state marketplaces offer four insurance tiers for purchase. These levels, which range from bronze to platinum, each have monthly premiums that are capped at an exact percentage of the annual income of the subscriber.
The higher your out-of-pocket expenses, despite the fact that there are many factors to take into account when selecting a level of coverage, the lower your premium.
The breakdown of the percentage you pay for each plan is provided below. However, the market in your state will determine the precise dollar amount you pay.
- Bronze plans (the cheapest): The insurance spends 60%, while you pay 40%
- Silver plans: The insurance spends 70%, and you pay 30%
- Gold plans: The insurance spends80%, while you pay 20%
- Platinum plans: The insurance spends 90%, and you pay 10%
The Individual Mandate
The ACA also established an individual mandate requiring everyone to have health insurance. Individual business owners and independent contractors had to have health insurance or risk a fine.
The penalty initially cost $95 but, as of 2016, it was indexed for inflation. That meant that in 2016 if you were an individual without health insurance, you would have to pay $695 per adult or 2.5% of your income, whichever was higher.
Additionally, the fine would eventually increase with inflation. If you decide to stop having health insurance after 2019, you will no longer be subject to the individual penalty.
Nevertheless, some states have unique requirements for their citizens. Therefore, even though there won’t be a federal penalty for dropping your health insurance, there might be a state penalty.
Contact a qualified tax professional if you’re unsure whether working as a freelancer will subject you to a fine for not having insurance in your state.
Consider getting health insurance even if there are no financial consequences for doing so. Even the smallest medical problems can cause a financial emergency, so it’s usually preferable to have some insurance than none.
Get Tax Credits
Many Americans are concerned that the cost of ACA plans will be too high for them to afford.
The government provides tax credits to people under the age of 65 with incomes that are between 100% and 400% above the Federal Poverty Line (FPL) in order to allay this concern.
Your income, the number of dependents listed on your tax returns, and your marital status all affect the number of credits you are eligible to receive.
Visit the Kaiser Family Foundation’s Subsidy Calculator to see where you stand if you’re curious about potential savings.
Medicaid coverage was also increased by the ACA. You might not think Medicaid is an option for you, but if your income is under 138% of the FPL, you might be qualified for the program.
Medicaid, however, might not be an option where you live as states were not required to expand their Medicaid coverage. Check out this interactive map to see if Medicaid has been expanded in your state.
Consider COBRA Coverage
Check to see if you qualify for COBRA continuation health coverage through your former employer if you’re leaving a traditional job to pursue freelancing.
Your employer is required by law to continue providing your health benefits at the group rate at which the business purchased them. If you were fired or quit, your length of coverage could last up to 18 months.
However, this should only be a short-term fix. The cost of COBRA premiums can be high compared to what you might have been paying as an employee and is probably higher than the cost of an ACA plan.
Why not get a head start on it now since you’ll need your own plan in 18 months anyway?
Consider Professional, Business, and Trade Group Coverage
Getting health insurance as a freelancer under a group plan through trade associations and professional organizations, like the Freelancers Union, can be a great option.
Organizations where people with similar interests or professions gather can offer healthcare plans, as can chambers of commerce or other business associations.
Piggyback to Your Spouse’s Plan
If you have coverage through your spouse’s plan even after leaving a job where you had employer-provided insurance, you might want to enroll in that plan.
However, a lot of employer-sponsored plans charge extra for including spouses. You may be better off on your own plan due to those fees.
Additional Options for Freelance Health Insurance
Self-employed people can purchase health insurance in addition to ACA plans through the health insurance marketplace by enrolling in a family member’s plan, qualifying for Medicaid, or signing up for a group health insurance plan through a professional association.
1. Join a Family Member’s Plan
It can be cost-effective to enroll in a health insurance plan provided by their employer if you’re married, cohabiting, or qualified for coverage through a parent.
Since the employer typically contributes to the cost of health insurance, adding a family member to an existing policy may only cost $200 per month.
By employer, costs and coverage differ. Additionally, because you’ll be incorporated into an existing plan, you won’t have as much freedom in selecting your plan.
2. Associational Contributions
Through a company connected to your line of work, you might be qualified for medical assistance or health insurance. For instance, the Freelancers Union provides its members with group health insurance plans.
Additionally, drivers for Uber or Lyft in Washington have access to telemedicine, prescriptions, and guidance when selecting health insurance thanks to Drivers Union.
It might cost money to join a professional organization. So be sure to account for any membership fees.
Check how this group health insurance option compares to purchasing an individual plan on the market because coverage and costs vary.
3. Utilize an Insurance Agent
In order to find the coverage you actually require, independent health insurance agents can help you focus your search. Your premium might go up because brokers are frequently compensated by the insurance provider you select.
If you’re looking for individualized attention from someone who can help you through the entire process, a hired insurance agent is a good choice.
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4. Get a Health Savings Account
A Health Savings Account, also known as an HSA, is a great option for anyone in the workforce looking for a tax-free way to save money to help cover healthcare costs. It’s not just for freelancers, though.
HSAs were created in 2003 as an alternative for people whose healthcare plans have high deductibles; under federal regulations, the money you set aside for these medical expenses can receive tax-preferred treatment.
5. Make Freelancing More Certain
There are numerous risks associated with freelancing.
However, having a trustworthy and reasonably priced self-employed healthcare plan aids in budgeting your monthly expenses and, more importantly, safeguards you and your family in the event of an emergency.
Joining freelancers’ platforms can assist if you’re a freelancer looking for new clients. Their database, which includes freelance work and is updated daily with new opportunities across more than 50 career categories, is only available to members.
Learn more about how FlexJobs can help your freelance career by taking the tour!
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