As someone who’s been my own boss full-time for nearly 4 years, I am responsible for finding my own health insurance. Due to the healthcare laws and Affordable Care Act, this is makes it even more difficult to get health insurance for self-employed taxpayers.
What’s the best route for freelancers to take when getting health insurance? How can we still afford good coverage without breaking the bank?
On January 1, 2014, the Affordable Care Act became fully implemented where individuals and employers alike were mandated to have health insurance coverage — or forced to pay a fine.
In 2015, when I filed my income taxes the tax program estimated that I had to pay a $1,000+ fee if I didn’t have health insurance. That’s quite a large chunk of money for opting out of Obamacare.
So I decided to do some research, and I found some of the best solutions for health insurance for the self-employed — that are also budget-friendly.
1. Health Savings Account (HSA)
Whether you’re self-employed or not, it’s my opinion that everyone should have a HSA. It’s an account that allows you to have much more self-control over health insurance and tax-free funds. Plus, you get a tax deduction for contributing into it.
So what is a Health Savings Account exactly? An HSA is an account that’s linked to a high-deductible health plan (HDHP). It allows you and your family to pay for qualified medical expenses using a separate account.
Normally you get a debit card with the account, so you can easily pay for everything from prescriptions, to Lasik eye surgery and other surgical procedures. It’s an individually owned account that could potentially save you 20-30% on your medical expenses.
And the good news is, you own the account! The money you contribute into an HSA belongs to you and your family to do with as you wish. The only rule is that you must spend it on qualified medical expenses to avoid paying taxes or a penalty.
You start by calculating your contributions, based whether you have single or family health insurance coverage, your age, and your paycheck. Then you can fund your account through tax-deductible contributions.
Any interest earned on the funds is tax-deferred and any withdrawals from the account are tax-free, when spent on approved medical expenses. No matter how long the money remains in the account, you’ll never lose it.
Unlike flexible spending accounts, any money you don’t use in your HSA will remain in your account from year to year, and continue to accrue interest until pay for medical expenses.
Once the balance in your HSA reaches $2,000 or more, you’re eligible to open an HSA Investment Account, where your funds can grow more rapidly than the interest on the savings account.
You can choose from a variety of mutual funds, all supporting a range of investment goals. Then after you turn 65, you can use the funds in your HSA on a taxable basis for anything, not just qualified medical expenses.
This is a simple way to supplement your investing and retirement savings goals — all while protecting you with health insurance coverage! See why I said everyone should have a Health Savings Account?
2. Healthcare sharing ministry
In the event that you have strong beliefs against government-sanctioned programs, like Obamacare, then you should check out a healthcare sharing ministry. Even if you don’t have strong religious beliefs and simply want to stop paying the ridiculous open market health insurance prices, this sharing program is a great alternative.
This is something that my husband and I (who are both self-employed) starting using this past year and have loved the program so far. As a member of a healthcare sharing ministry, you get access to a “shared box” where you contribute a monthly premium to help fund yours, and other members’ health care costs.
With Liberty Healthshare, the program that my husband and I are involved in, we only pay $135 annual fee plus our $307 per month share portion. That’s a heck of a lot cheaper than our $455 per month coverage with Obamacare, and we didn’t even have dental or vision coverage discounts like we do with Liberty Healthshare.
Here are the three main plans that come with Liberty Healthshare.
- Liberty Share – Great for the budget-conscious family, this plan offers 70% coverage of medical bills up to $25,000 per incident. Annual membership cost is $125 for the first year then $75 each year after that. Plans start at $107 for single individuals under age 30.
- Liberty Plus – This plan is what my family has, and covers 100% of medical bills up to $25,000 per incident. Annual membership cost is $135 for the first year then $75 each year after that. Plans start at $131 for single individuals under age 30 and also includes SavNet pharmacy, dental and vision enrollment savings card.
- Liberty Complete – There are no restrictions with this plan as it covers 100% of medical bills up to $1,000,000 per incident. Annual membership cost is $135 for the first year then $75 each year after that. Plans start at $149 for single individuals under age 30 and also includes SavNet pharmacy, dental and vision enrollment savings card.
In the event you want to compare costs, there are other healthshare caring ministries out there, including:
3. Health insurance exchange plans
The Health Benefit Exchange Plan is created under the Afforable Care Act’s regulations where families, individuals and small businesses can shop for affordable health insurance — specifically in the New York area.
“If a sole proprietor doesn’t have the option of being part a group plan such as spousal insurance and they reside in a state that has created its own health insurance exchange, I would suggest they investigate the newly created exchange plans. The exchanges will be open November 1st, for the January 1, 2017 enrollment date. It will give the sole-proprietor plenty of time to compare options,” states Simon Bukai, CEO of Vista Health Solutions.
What makes the health insurance exchanges attractive, is that it has opened up competition for insurance companies to compete on the same playing field and make comparison shopping much easier for the shopper.
Additionally if a self-employed taxpayer’s total income is between 122- 400% of the federal poverty level, then they will likely qualify for a subsidy which will likely reduce their premium to less than 10% of the gross income.
“Most importantly freelancers should be aware that they always have the ability to drop their health insurance plans — without penalty — and can change to a plan that better suits their needs and income,” reminds Simon.
4. eHealth Insurance
Thanks to the recommendation of several Freelancer’s Club members, eHealth Insurance is one of the best health insurance options for self-employed freelancers.
You can compare different health plans available for yourself or your family in the area you currently live. After putting in my information in (Denver, CO, 2 adults), it gave me over 100 options and the cheapest price of about $198 a month.
If you’re in the pre-existing condition pool, no worries, some states offer health plans through a high-risk pool. The government also offers a Pre-Existing Condition Insurance Plan, but enrollment is currently suspended.
Depending on the severity of the pre-existing condition, a regular insurance company may not automatically decline (although I’m sure the rates reflect it).
Unfortunately, conditions such as cancer, heart disease, and diabetes are likely to result in an automatic decline. That’s when the high-risk pool plans and PCIP come in handy.
5. National Association for the Self-Employed
NASE is an organization that provides day-to-day support for the self-employed. Besides access to legal and tax professionals, discounts on financial software and payroll services, NASE also gives its members access to affordable health insurance.
Some member benefits give you access to Health Savings Accounts and life insurance policies. Annual memberships cost $25 for students and a max of $120 for general members. The cost includes health insurance premiums, which varies based on state and your personal plan.
As a freelance business owner you also get access to big savings as stores like Office Depot, LegalZoom, QuickBooks, TurboTax and more. Check out their website for more information on member benefits or request a form for insurance.
6. The Freelancers Union
Depending on your state, the Freelancers Union also has excellent health insurance options, as well as loads of other benefits for members. They group members together in order to keep costs much lower than on the individual market. (For example, 30% lower in NY.)
One of the main things that I like about The Freelancers Union is that it’s completely free to join and start browsing their resources, health insurance costs and other insurance needs. To start simply enter your zip code on their website for group rates on health insurance.
7. National Association of Health Underwriters
NAHU represents over 100,000 health insurance agents within the United States. It directs you to local agents that will help find the best plan for your situation as a self-employed freelancer, all while promoting affordable health care.
Much like NASE, NAHU is an organization that helps anyone from large fortune 500 companies to freelancers who prefer an individual experience, or are overwhelmed by all the options. An agent can make the process less confusing and more personable.
In addition, you’ll get access to many of the same benefits and savings as you would with other organizations. There are business and marketing tools, personal development and training, client management apps and even wellness programs to help you gain access to many much-needed benefits.
To learn more, check out the NAHU site and seek out an agent.
COBRA is an option for those considering leaving full-time work to freelance and might be a good thing to note if you’re considering full-time freelancing in the future. Remember, health insurance rates and coverage are heavily dependent on resident state and family size.
COBRA is also great for college students who can find discount insurance programs through their school. I know my university offered some pretty low-cost plans with the option to add a spouse or children for a higher rate.
One last note! Approximately 16% of employers offer health insurance offer coverage to part-time employees. It’s a very small group, but freelancers who are willing to work part time for a company, to supplement income, can explore that option.
As seen in USA Today, CNBC and FOX News, this resource is very similar to eHealthInsurance.com in what it offers. With GoHealth you just enter your state, you and your family member’s ages and genders, then answer if you’re a smoker/nonsmoker. It then displays a list of providers with different rates and deductibles.
They also have more than 10,000 licensed insurance agents who are available to help match you with the best, and more affordable health care option. Think of GoHealth as your personal matchmaker and platform to help navigate your health insurance plans and costs.
And the best part is they specifically offer self-employed health insurance for those of us who own our own businesses. For more info head over to the GoHealth website.
10. Telemedicine services
Another budget-friendly health insurance alternative that’s gaining popularity are Telemedicine services. Telemedicine services are just like they sound, it’s a medical service that allows you to speak to a qualified doctor via the telephone or video call.
You simply register as a patient and then provide your medical history to a popular telemedicine company. Whenever you have a small medical emergency or need to ask questions, you’ll be connected to a licensed doctor.
Then, depending on your specifics, they can make an educated diagnosis, provide treatment recommendations and even write a prescription if needed. They can also refer you to a primary care physician.
And the best part is that they have access to all of your medical records, which helps them tailor their advice. Since this service is all done over the phone, or virtually, the cost of a checkup or consultation is drastically reduced.
Companies that offer telemedicine services include:
Obviously each company has their own set of pricing and perks, but the core benefit is the same. You can speak to a licensed doctor about any questions or illness you have, virtually at any time.
Using a telemedicine service could save you thousands of dollars on yearly medical visits and checkups, as well as prevent small medical issues from rapidly becoming worse.
Budget-friendly health insurance
The main point of all of this is that it REALLY depends on where you live and who you are covering. These resources should give you a good starting point for finding affordable health insurance coverage as a freelancer.
It will also keep your mind at ease knowing that you and your family are protected if a medical emergency arises. And you won’t have to pay a high penalty on your taxes next year!