Self-employment has its benefits, such as the freedom to set your own schedule and be your own boss. However, one of the downsides of being self-employed is finding affordable health insurance.
Without an employer-sponsored plan, self-employed individuals must navigate the complex and often costly world of health coverage on their own. But don’t worry; there are affordable health coverage options available for self-employed individuals. Let’s look at some.
The Affordable Care Act (ACA)
The Affordable Care Act (ACA), also known as Obamacare, provides health insurance options for self-employed individuals through the Health Insurance Marketplace. You can shop for and compare plans online, and depending on your income, you may be eligible for premium tax credits that can lower your monthly premium.
Short-Term Health Insurance
Short-term medical insurance is another option for self-employed individuals who need coverage for a limited period, such as while between jobs or waiting for other coverage to begin. These plans typically offer less coverage than traditional health insurance plans, but they are often more affordable.
Health Savings Accounts (HSAs)
Health savings accounts (HSAs) are another option for self-employed individuals who want to save money on healthcare costs. HSAs are tax-advantaged accounts that allow you to set aside pre-tax dollars to pay for qualified medical expenses. You can use the funds in your HSA to pay for deductibles, copayments, and other out-of-pocket costs.
Group Health Insurance
Self-employed individuals may also be eligible for group medical insurance through professional associations, trade groups, or other organizations. These plans can be more affordable than individual life and health insurance plans, but they may have more limited coverage options.
Consider a High Deductible Health Plan (HDHP)
A High Deductible Health Plan (HDHP) can be a great option for self-employed individuals who are looking for affordable medical insurance. An HDHP typically has lower monthly premiums than traditional medical insurance plans but higher deductibles. However, if you are generally healthy and don’t anticipate a lot of medical expenses, an HDHP could be a good choice for you.
One of the benefits of an HDHP is that it is compatible with a Health Savings Account (HSA). An HSA is a tax-advantaged savings account that allows you to set aside pre-tax dollars to pay for qualified medical expenses. If you have an HDHP, you can contribute to an HSA to help cover your deductible and other out-of-pocket costs.
Shop Around and Compare Plans
When you are self-employed, it can be tempting to choose the first medical coverage plan you come across. However, taking the time to shop around and compare plans can save you money in the long run.
Start by researching different health insurance companies and plans online. Look at the coverage options, deductibles, copays, and premiums for each plan. Make a list of the plans that meet your needs and budget, and then compare them side-by-side to determine which one is the best fit for you.
Take Advantage of Tax Credits
Self-employed individuals may be eligible for tax credits that can help reduce the cost of health insurance. The tax credits are based on your income, and they can be used to lower your monthly premiums.
To qualify for the tax credits, you must purchase affordable health insurance through the Health Insurance Marketplace. When you apply for coverage, you will be asked to provide information about your income and household size. The Marketplace will then determine if you are eligible for tax credits and how much you can receive.
Consider Bundling Insurance Policies
Some insurance companies offer discounts to customers who bundle multiple insurance policies together. For example, you may be able to bundle your medical insurance with your auto insurance or homeowner’s insurance to save money on both policies.
If you are interested in bundling insurance policies, talk to your insurance agent or do some research online to see what options are available to you.
Consider Supplemental Medical Insurance
Supplemental medical insurance can be a good option for self-employed individuals who want additional coverage for specific medical expenses. For example, you may want to consider supplemental insurance for dental care, vision care, or maternity care.
Supplemental insurance plans typically have lower premiums than traditional health insurance plans, but they also have more limited coverage options. Before purchasing a supplemental insurance plan, make sure to read the policy carefully to understand what is covered and what is not.
Q: Can I get medical insurance through my spouse’s employer if I’m self-employed?
A: It depends on the employer’s policies. Some employers allow self-employed spouses to enroll in their group secondary health insurance plans, while others do not. Check with your spouse’s employer to see if this is an option for you.
Q: How do I qualify for premium tax credits through the Health Insurance Marketplace?
A: To qualify for premium tax credits, you must meet certain income requirements and not have access to affordable, employer-sponsored health insurance. You can check your eligibility and apply for coverage through the Health Insurance Marketplace.
Q: Can I deduct health coverage premiums on my taxes as a self-employed individual?
A: Yes, self-employed individuals can deduct health coverage premiums on their taxes. The deduction is taken on Form 1040, and it is available even if you don’t itemize deductions.
Being self-employed doesn’t mean you have to go without health insurance or break the bank to get coverage. The Affordable Care Act, short-term health insurance, HSAs, and group health insurance are all affordable health insurance options for self-employed individuals. By comparing your options and shopping around for the best coverage and rates, you can find an affordable health insurance plan that fits your needs and budget.