Self Employed Health Insurance Tips and FAQs
June 6, 2023
Everything you need to know about self-employed health insurance
Shopping for health insurance when self-employed can be difficult. While it can seem that everyone gets a plan from their employer, you are left to sort through the healthcare marketplace on your own. But in reality, you’re not alone. In fact, recent estimates claim that at least 36% of the US labor force currently participates in some kind of freelance work. Both the Bureau of Labor and the St. Louis Federal Reserve estimate full-time self-employed workers make up about 11% of the labor force.
Naturally, as the self-employed workforce has increased, so has the number of people on self-employed health insurance plans. If you’re looking for the best self-employed health insurance plan to cover you or your family in 2023, read this post before shopping. It has tips on how to obtain a self-employed health insurance deduction on your taxes, as well as advice on how to find the best health insurance for self-employed individuals.
How do I know if I need self-employed health insurance?
If you bring home a taxable income but don’t have an employer or employees, then you probably qualify for self-employed health insurance. Also known as independent contractor health insurance, self-employed health insurance comes in both individual and family plans. If you work in any of the following capacities, you probably need self-employed health insurance:
- Gig worker (like an Uber driver, Taskrabbit, or Fiver worker)
- Independent contractor
- Private practitioner (e.g. in law, accounting, or medicine)
If you think any of these descriptions might apply to you, it’s probably worth exploring your options for self-employed health insurance. Some coverage is better than no coverage, especially because self-employed workers usually don’t receive paid time off. If you’re self-employed and decide not to get health insurance, you could be at serious financial risk when illness or injury strikes.
Not only will you have to pay the medical costs out of pocket, you’ll be stuck without an income while you can’t work. Play it safe and avoid this debt trap by insuring yourself. It can feel costly, but it will be worth it in an emergency. And, you may be surprised by how much the self-employed health insurance deduction can save you on your taxes.
Note: Please keep in mind that self-employed health insurance only applies to workers without employees. If you have even one employee working for you, you might want to explore small business group health insurance. Also, for more general advice, check out our primer on how to choose the health insurance plan that’s right for you.
What is the best health insurance for self-employed workers?
While there’s no single best self-employed health insurance plan, we’re happy to lay out some options for you. Because self-employed health insurance is a relatively vague insurance category, a lot of people want to know, “what kind of health insurance would someone who is self-employed usually have?” The short answer is the same kind of health insurance as everyone else—the difference lies in how you get it.
No need to panic. It is not quite as complicated as it may seem. Your main options for health insurance when you’re self-employed include:
- A spouse, partner, or parent’s group health plans
- Affordable Care Act (ACA) individual and family health insurance plans
- COBRA coverage
- Short-term health insurance plans
1. Self-employed health insurance with a group plan
Generally, the most cost-effective way to insure yourself is on a group plan. This is because the group buys in bulk, and employers and/or unions subsidize part of the cost. If your partner or spouse has insurance through their employer’s group plan, see if you can be added as a dependent. If you are under 26 years of age and one of your parents has insurance through their employer’s group plan, you should qualify as their dependent. If neither case applies to you, move on to option 2.
2. Self-employed health insurance with an ACA plan
As a freelancer, consultant, or independent contractor, there’s a good chance you’re eligible for a discounted plan through the Affordable Care Act. The place to shop for ACA individual and family plans is the Health Insurance Marketplace. There, you can see if you qualify for Medicaid, tax credits, reduced premiums, or open enrollment.
Note: As of November 1, 2022, open enrollment for ACA plans has officially begun. Open enrollment will last until mid-December and take effect January 1, 2023. Read our post on open enrollment for more information.
3. Self-employed health insurance through COBRA
COBRA, or the Consolidated Omnibus Budget Reconciliation Act, lets people keep the insurance plan they had under a former employer for 18 months (and sometimes longer, depending on the state). If you recently left a full-time job with a group insurance plan, COBRA is a solid option while you transition into freelance work. You’ll get to keep your insurance, but you’ll have to pay the full premium each month, instead of splitting it with your employer.
4. Short-term health insurance for self-employed workers
If you can’t find a plan on the Health Insurance Marketplace or you don’t anticipate needing health insurance for the entire year, you can always purchase short-term health insurance. Short-term health insurance is most often used to fill gaps in coverage. If, for instance, you’re waiting a month for a partner’s group plan to kick in, it might be a good idea to buy short-term health insurance to cover you in the meantime.
Beware: you won’t always get the best bang for your buck with short-term health insurance. Short-term plans often have higher monthly premiums than annual plans, so only use them when necessary.
What does self-employed health insurance cost?
The cost of health insurance for self-employed workers varies with age, location, health, plan type, subsidies, and more. Though we can’t provide an estimate for your specific costs, we can give you the average cost. For a 40-year-old, the average national monthly health insurance premium for one individual on an ACA Silver plan is $541 per month, or $200 if you qualify for a tax subsidy.
Clearly, ACA subsidies can save you a lot of money. If you’re self-employed, there’s a good chance you qualify for a tax subsidy. It primarily depends on your income and healthcare provider you choose. When you apply for subsidies, you have to estimate your income for the year. If you’re not sure what your annual income will be, you can give a rough estimate and update your income as things change.
Note: Your costs will depend on the type of plan you buy. For help understanding Bronze, Silver, Gold, and Platinum plans, as well the difference between HMO, PPO, POS, and EPO plans, read our post on How to Choose a Health Insurance Plan. Self-employed health insurance costs will also vary with your out-of-network coverage and usage. To learn how to get the most of your out-of-network benefits, read The Complete Guide to OON Reimbursement. And lastly, if you’re buying insurance for your family, check out our post on Managing Your Family’s Out-of-Network Claims.
Is health insurance tax deductible for self-employed individuals?
If you’re self-employed, you can likely get a tax write-off for your health insurance. If you meet the requirements, the deduction will apply whether or not you itemize. Eligibility is determined month by month, and you will not be eligible if you or your spouse have access to an employer-sponsored group plan.
As always, if you want more help navigating your self-employed health insurance benefits, SuperBill has your back. We file and track your out-of-network insurance claims so you don’t have to.
To see how much money you could get back for your out-of-network insurance claims, try SuperBill's free benefits calculator! And to learn more about how to save time and money with our service, read Getting Started with SuperBill.