What You Should Know About Health Insurance for Self-Employed Individuals
One of the greatest advantages of self-employment is the flexibility and independence. Yet, one of the biggest trade-offs is the lack of employer-sponsored health insurance. Without a company plan to depend on, health insurance coverage becomes a personal responsibility—and a vitally important one. Navigating the health insurance landscape and finding a plan that ensures adequate coverage can be overwhelming. Below is our guide on self-employed health insurance.
Understanding the Importance of Health Insurance When You're Self-Employed
Health insurance plays a vital role in financial and personal well-being. Without an employer covering a portion of the costs or organizing enrollment, self-employed workers must plan ahead to ensure continued access to essential health services.
More than just a safety net for emergencies, health insurance also provides access to preventive care—routine checkups, screenings, vaccinations, and other services that help maintain health. Maintaining health and early intervention is key to preventing more costly and dangerous medical issues down the line.
Health insurance can also provide peace of mind and financial stability. Unforeseen medical expenses can be financially devastating, especially when a single hospital visit or procedure might cost thousands of dollars. Having coverage can help protect both long-term financial stability offering peace of mind. For self-employed individuals whose income may fluctuate month to month, this is vital.
Health Insurance Options for Self-Employed Individuals
When it comes to health insurance, self-employed individuals and families have several options. Each comes with its own set of advantages and limitations. Below are the most common options available to self-employed individuals:
Marketplace Plans (Healthcare.gov)
Available through the Affordable Care Act (ACA), Marketplace Plans are income-based and may offer subsidies to help offset costs. They guarantee coverage regardless of pre-existing conditions. In most states, the Open Enrollment Period is usually between November 1 and January 15. There are four coverage tiers available:
Bronze, Silver, Gold, and Platinum Tiers
These ACA Marketplace plans vary based on costs shared between the insurer and the insured. The Bronze tier plans have the highest deductibles but the lowest monthly premium. As the levels go up, the monthly premiums do as well, while the deductibles decrease.
Private Health Insurances Plans
Offered outside of the ACA Marketplace, private health insurance plans can provide additional flexibility and benefits. A major limitation of private plans is that subsidies and consumer protections are often not available.
Health Sharing Ministries or Co-ops
Although an alternative insurance plan, health sharing ministries and co-ops function, on a practical level, similarly. Medical costs are shared among a community, often with shared beliefs. While usually more affordable, these plans have limited coverage and are not subject to ACA regulations. These plans are also ineligible for tax credits and subsidies.
Spouse’s Employer-Sponsored plan (If Applicable)
If a spouse has access to health coverage through their job, it may be possible to join their plan, often at a lower cost than individual, self-employed plans.
COBRA (If Recently Left a Job)
COBRA allows individuals to keep their previous employer's insurance plan for a limited time (usually up to 18 months). Individuals usually have to pay the entire monthly premium, including what previous employer’s contributions. For more details on COBRA, see our post on health insurance for unemployed individuals.
Carefully consider a plans’ premiums, deductibles, and benefits, when choosing a health insurance plan as a self-employed individual or family.
Key Factors to Consider When Choosing a Plan
Choosing a health insurance plan involves more than just picking the lowest monthly premium. Several key factors should be considered to ensure that the chosen plan provides both affordability and adequate coverage.
Monthly premiums vs. out-of-pocket costs
A lower premium may seem appealing, but it often comes with higher deductibles (the out-of-pocket costs) or limited coverage. It is essential to compare what is paid each month with the potential costs in the event of a doctor visit, illness or injury.
Deductibles, copays, and coinsurance
Understanding how much must be paid before insurance kicks in (deductibles), the fixed amounts for services (copays), and the percentage of costs shared after the deductible (coinsurance) helps in estimating the total cost of care.
Network restrictions and provider access
Some plans have limited provider networks, which can restrict which doctors or hospitals are covered by insurance. Be sure to ensure that your preferred providers are included as in-network providers in order to avoid unexpected expenses.
Prescription drug coverage
For those who take regular medications, it is critical to check how a plan covers prescription drugs. Sometimes prescription coverage is a separate add on to plans. Formularies vary, and some drugs may not be covered or may require higher out-of-pocket costs.
To clarify health insurance terms and policy language, see our blog Health Insurance Demystified: Navigating the Complex Landscape. Carefully comparing and evaluating plan options wisely requires an honest look at your personal needs, budget, and eligibility.
How Informed Choice Can Help Self-Employed Individuals Find the Right Plan
For expert recommendations and personalized plan comparison, connect with one of our agents. We will help you navigate the intricate landscape health insurance and help you make an informed choice about health insurance as a self-employed individual.