Health Insurance for Self-Employed: Find Coverage

If you're self-employed, you can get flexible and quality health insurance through the Health Insurance Marketplace. This is great for freelancers, consultants, or independent contractors. Over 15 million workers in the U.S. are self-employed¹. The Marketplace has many individual health plans for those running their own businesses.

When you apply to the Marketplace, you'll see if you can get tax credits and other savings on health plans. These are based on your income and household size. Affordable Care Act subsidies can lower your monthly premiums, making health insurance for self-employed more affordable. You might also get free or low-cost coverage through Medicaid and CHIP in your state².

If you're under 26, you can stay on your parents' health insurance. But for most self-employed people, the individual Health Insurance Marketplace is the best choice. You can pick a plan that fits your budget and health needs. This way, you get the medical services you need without spending too much.

Key Takeaways

• Self-employed individuals can find flexible and high-quality health insurance through the individual Health Insurance Marketplace.
• Completing a Marketplace application reveals eligibility for premium tax credits and other savings based on income and household size.
• Affordable Care Act subsidies can significantly reduce monthly premiums for self-employed individuals.
• Medicaid and CHIP programs may provide free or low-cost coverage depending on income, household size, and other factors.
• Self-employed individuals under 26 can remain on their parent's health insurance plan, but most will benefit from exploring the individual Health Insurance Marketplace.

Understanding Health Insurance Options for the Self-Employed

As a self-employed person, finding health insurance can be tough. But knowing your options is key to getting the right coverage. The Health Insurance Marketplace offers plans made for freelancers and entrepreneurs³⁴.

Individual Health Insurance Marketplace

The individual Health Insurance Marketplace is a great place for self-employed people to find health insurance. It doesn't matter if you're a freelancer, consultant, or run your own business with no employees. You can pick from many plans⁴. These plans cover important health benefits like doctor visits, hospital care, and prescription drugs⁴.

When you sign up for a Marketplace plan, you'll need to guess your household income for the year. This helps figure out if you can get tax credits or cost-sharing reductions. These can make your premiums and out-of-pocket costs lower³⁴. Remember, these savings depend on your net self-employment income, not what you made last year³.

Qualifying for Premium Tax Credits and Cost-Sharing Reductions

To get premium tax credits and cost-sharing reductions, you must meet certain requirements. Your income and household size matter³. If your income changes during the year, tell the Marketplace right away to avoid extra payments⁴.

Self-employed people might be able to deduct health insurance premiums from their taxes⁵. This can make your insurance cheaper. But you need to have a profit from your work and meet certain rules⁵.

Understanding your options and using tax deductions can help you get the health insurance you need. Look into the Health Insurance Marketplace, estimate your income well, and know about special enrollment times⁴.

Exploring the Individual Health Insurance Marketplace

As a self-employed person, finding health insurance can be tough. Luckily, the Health Insurance Marketplace, created by the Affordable Care Act (ACA), offers many options for your needs⁶. With 64 million Americans freelancing in 2023, making up 38% of the U.S. workforce, the Marketplace is key for those needing good coverage⁷.

Flexible, High-Quality Coverage Options

The Marketplace has plans in metal levels: Bronze, Silver, Gold, and Platinum. Bronze plans have low monthly costs but high deductibles. Higher levels have lower deductibles but cost more each month⁶. This lets you pick a plan that fits your health needs and budget.

For saving money, subsidies can lower your monthly premiums if you qualify⁶. Cost-Sharing Reductions (CSRs) can also cut your out-of-pocket costs for care with a Silver plan⁶. These help make good coverage more affordable for self-employed folks.

Essential Health Benefits Covered

All Marketplace plans cover 10 key health benefits, pre-existing conditions, and free preventive services⁸. This means you get the care you need without worrying about your medical history.

These benefits include emergency care, hospital stays, prescription drugs, and mental health services. With telemedicine services becoming more popular, many plans now offer remote doctor visits. This is great for busy self-employed people.

Choosing Between Plans with Different Premiums and Cost-Sharing

Think about your health needs and money situation when picking a plan. If you visit the doctor often or need regular meds, a plan with higher costs but lower cost-sharing might be best. If you're mostly healthy and don't visit the doctor much, a high-deductible health plan with lower costs could work for you.

Consider combining a high-deductible health plan with a health savings account (HSA). HSAs let you save pre-tax money for medical costs. This can give you tax benefits and save you money over time.

Remember, you can sign up for Marketplace plans from November 1 to January 15⁸. This is your chance to look at different plans, think about what you need, and choose the best health insurance for you.

Qualifying for Marketplace Savings

If you're self-employed, you might get premium tax credits and cost-sharing reductions with health coverage from the Health Insurance Marketplace³. These savings depend on your income and how many people live with you, helping you find affordable health insurance³.

To get these savings, you'll need to guess your household's income for the year you're getting coverage³. Remember, the savings are based on your expected self-employment income for that year, not last year's³.

If your income changes during the year, update your Marketplace info right away. This makes sure you get the right premium tax credits and cost-sharing reductions all year.

But, if you earn more than you told the Marketplace, you might owe back some or all of the tax credits. On the other hand, if you earn less, you could get more tax credits when you file taxes.

Tax subsidies and cost-sharing reductions are only for ACA-compliant health insurance plans. They offer big savings for self-employed people.

When looking at health insurance on the Marketplace, check out Aetna. It's known for being eligible for premium tax credits on all Marketplace plans. This means big savings for those who qualify⁹.

By guessing your income correctly and updating it when needed, you can get the most Marketplace savings. This makes health insurance more affordable and reachable for self-employed folks.

Estimating Your Income as a Self-Employed Individual

As a self-employed person, it's key to know how much you'll make for health insurance. Your income for the coverage year matters, not last year's¹⁰. This helps figure out if you get tax credits or cost-sharing reductions.

Challenges in Estimating Income for the Self-Employed

Self-employed folks often struggle to guess their income for the future¹⁰. Your earnings can change a lot, like with business ups and downs, market shifts, or seasonal work. When applying for Marketplace coverage, give your best guess.

Using Industry Trends and Past Experience as a Guide

To guess your income, look at industry trends and your past earnings¹⁰. Check your earnings from before and see if there are patterns. Think about any changes in your business, like more clients or new services, that could affect your money.

When you apply to the Marketplace, describe your self-employment¹⁰. Be ready to show your income and expenses details¹⁰. Include all household income, like your spouse's or dependents'¹⁰.

Updating Your Estimated Income Throughout the Year

Update your Marketplace application if your income changes a lot from what you first thought¹⁰. Changes in your business, like more or fewer clients, can really change your earnings. Tell the Marketplace about these changes quickly to get the right financial help¹⁰.

Your net income from self-employment, as seen on Schedule C of your tax return, affects your Marketplace eligibility¹⁰. Most self-employed people can deduct health insurance premiums for themselves and their family¹¹. This goes on Part II of Schedule 1 and then to Form 1040¹¹.

Getting your self-employment income right is key to getting the right financial help with health insurance through the Marketplace.

By keeping an eye on your income and updating your estimates, you can keep your health insurance affordable and full as a self-employed person.

Special Enrollment Periods for the Self-Employed

If you're self-employed, you might worry about keeping health insurance when your work or life changes. Luckily, the Affordable Care Act (ACA) lets you sign up for health plans outside the usual Open Enrollment Period through Special Enrollment Periods (SEPs).

The Open Enrollment Period for health coverage usually happens from November 1 to January 15 in most states¹². But, if you go through a big life change, like starting your own business, you might get a Special Enrollment Period. This lets you sign up for a health plan even when it's not the usual time¹².

Losing Job-Based Coverage

Lost your job-based health insurance? You can get a Special Enrollment Period. This lets you sign up for a health plan, even if it's not during the usual Open Enrollment¹². You also have the option to get COBRA coverage for up to 18 or 36 months. But, COBRA comes with an extra fee of up to 2% on top of the plan's cost¹².

Significant Life Events

Big life events can make you eligible for a Special Enrollment Period. This includes moving, going to school, or living as a seasonal worker¹³. You must have had some kind of health coverage for at least one day before the event to qualify¹³.

Getting married, having a baby, adopting, or gaining a dependent through a court order can also qualify you for a Special Enrollment Period¹³. You usually need to have had health coverage for at least one day before the event to qualify¹³.

Other events that might make you eligible for a Special Enrollment Period include losing health coverage, changes in your Marketplace coverage, or having a low income¹³. Being a victim of domestic abuse, submitting documents to prove eligibility, or facing an exceptional situation during enrollment can also qualify you¹³.

Health Insurance for Self-Employed

As a self-employed person, getting the right health insurance is key to keeping you healthy and financially secure. If you're a freelancer, consultant, or work on your own with no team, the Individual Marketplace has plans made just for you⁶.

Freelancers, Consultants, and Independent Contractors

Freelancers, consultants, and independent contractors can sign up for health insurance through the Marketplace¹⁴. Thanks to the Affordable Care Act, health insurance is now easier and cheaper for those who work for themselves. You'll find plans that fit your budget and health needs². If your income and family size are low, you might get help with your premiums and out-of-pocket costs through subsidies⁶.

Sole Proprietors with No Employees

If you're a sole proprietor with no staff, the Individual Marketplace has health coverage for you and your family¹⁴. Your business might not get group insurance, but you can buy plans for yourself¹⁴. The Marketplace has many plans, from Bronze to Platinum, so you can pick what's best for your health and wallet⁶.

When looking at health insurance as a self-employed person, think about your premium, deductible, copayments, and out-of-pocket max. Independent agents can guide you through the marketplace to find coverage that fits your budget¹⁴. Getting good health insurance means you can focus on your business and your dreams without worrying about health costs.

SHOP Marketplace Eligibility for Small Businesses

If your business has at least one employee (not including yourself, your spouse, family members, or owners), you can use the SHOP marketplace for small business health insurance. This is to cover you and your employees. The Small Business Health Options Program (SHOP) is for businesses and non-profits with 1 to 50 employees¹⁵.

To get SHOP, you need 1-50 employees, with at least one not being an owner or their spouse. If you have no employees, you can't get SHOP plans.

Small businesses with 24 or fewer full-time workers might get a tax credit by signing up for SHOP insurance¹⁵. This credit helps cover insurance costs. It's 50% for businesses and 35% for non-profits¹⁶. This credit is for two years and depends on your company size and wages¹⁶.

Starting in 2014, the tax credit's average wage starts at $51,000 and goes up to $53,000 in 2017¹⁶.

When counting for the tax credit, some workers don't count, like sole proprietors and partners¹⁶. A full-time employee is 2,080 hours a year. Part-time workers add up to full-time¹⁶. To find average wages, add up all wages and divide by the FTEs¹⁶.

Use Form 8941 to figure out the credit. There are rules for businesses and non-profits¹⁶. The credit can be refunded for non-profits with no taxes, but there are limits¹⁶.

Businesses with 50 or more employees face different rules, like the Employer Shared Responsibility Payment¹⁵. New hires can wait up to 90 days for coverage¹⁵.

Call the SHOP Call Center at 1-800-706-7893 for help with signing up¹⁵.

Number of Employees SHOP Eligibility Tax Credit Eligibility 0 (sole proprietor) Not eligible Not eligible 1-24 Eligible Eligible if average wages ≤ $56,000 25-50 Eligible Not eligible 51+ Not eligible (subject to Employer Shared Responsibility) Not eligible

Working with Health Insurance Agents and Brokers

As a self-employed person, finding health insurance can seem tough. But, you don't have to face it alone. Health insurance agents and brokers can help you find the right coverage for your needs. They are licensed and certified, so they can offer personalized advice and help¹⁷.

Expertise in Finding the Right Coverage

Agents and brokers know a lot about health insurance options. They can help you compare different plans to find the best one for you¹⁷. They look at your needs and budget to suggest the best plan¹⁷.

Many self-employed people and small business owners use brokers because they don't have insurance from work¹⁸. Brokers are key in finding a policy that fits your needs and budget¹⁸. Finding the right health insurance can be hard without a broker's help¹⁸.

Assistance at No Extra Cost

Working with agents and brokers is often free for you. They get paid by the insurance companies, so it doesn't cost you more¹⁷. You don't pay extra for their help because the cost is already in the insurance price¹⁸.

Brokers also help with questions about your policy and claims, all for free¹⁷. They support you after you buy insurance, solving any problems that come up¹⁸.

Health Insurance Company	Coverage Area	Network Size	Physician Copays
Aetna	All 50 states and Washington, D.C.	Approximately 1.2 million providers	Starting at $20
Blue Cross Blue Shield	All 50 states and Washington, D.C.	About 1.7 million providers	Starting at $10
Cigna	All 50 states and Washington, D.C.	Around 1.5 million providers	Starting at $0

Trust and good communication are important for a good relationship with brokers¹⁸. With a skilled and experienced agent or broker, you can get the right insurance for your needs and budget. They offer expert advice and support every step of the way.

Tax Implications of Health Insurance for the Self-Employed

As a self-employed person, understanding health insurance taxes can be tricky. When you buy coverage through the Marketplace, knowing how your income and premium tax credits work together is key. Self-employed folks can deduct 100% of their health insurance premiums when filing taxes¹⁹. Since 2003, health insurance premiums for the self-employed have been fully deductible²⁰. By deducting what you pay in health insurance premiums, you can lower your adjusted gross income²⁰.

Reporting Income to the Marketplace

To get premium tax credits or cost-sharing reductions, you must give an income estimate to the Marketplace for the year you want coverage. For self-employed folks with changing income, this can be tough. Give your best guess and talk to a tax expert to help figure out your household income. If your income changes during the year, update your estimate with the Marketplace right away.

Reconciling Premium Tax Credits at Year-End

At year's end, if your actual income is more than what you told the Marketplace, you might owe back some or all of the premium tax credits you got in advance. But, if your income is less than expected, you could get more premium tax credits when you file your taxes. The Affordable Care Act's tax credits have made health insurance more affordable for self-employed folks²⁰. These credits got bigger and more people can get them thanks to the American Rescue Plan²⁰. By keeping up with self-employed tax deductions and correctly reconciling advance premium tax credits, you can save more while keeping good health coverage.

FAQ

Can self-employed individuals get health insurance through the Marketplace?

Yes, self-employed people with no employees can get health insurance through the Marketplace. This is for those who run their own businesses and need flexible, high-quality health coverage.

How do I know if I qualify for premium tax credits or cost-sharing reductions?

Fill out a Marketplace application to see if you qualify for premium tax credits and other savings. This depends on your income and household size. You might also get free or low-cost coverage through Medicaid and CHIP, based on your state's rules.

What types of health plans are available in the individual Health Insurance Marketplace?

The Marketplace offers various health plans. You can pick from low-cost plans that mainly cover you in emergencies to higher-cost plans with lower out-of-pocket costs when you need care. All plans cover the same basic health benefits and can't deny treatment because of past health issues.

How do I estimate my income as a self-employed individual when applying for Marketplace coverage?

It can be tough to guess your income as a self-employed person. Use past earnings and industry trends as a guide. If your actual income changes, log into your account to update your previous report.

What if I lose my job-based coverage as a self-employed individual?

Losing job-based coverage means you can get a Special Enrollment Period. This lets you sign up for a health plan through the Marketplace, even if it's not during the usual Open Enrollment.

Can I use the SHOP Marketplace if I'm self-employed with no employees?

Usually, if you're self-employed with no employees, your business won't get group coverage through the SHOP Marketplace. Instead, you can buy health insurance for yourself and your family through the Marketplace.

Can a health insurance agent or broker help me find coverage as a self-employed individual?

Yes, agents and brokers who are registered with the Marketplace can help you find the right coverage. They are experts in health insurance and can assist you at no extra cost.

What happens if my income changes during the year and I'm receiving premium tax credits?

If you get premium tax credits and your income changes, update your information with the Marketplace as soon as you can. If you earn more, you might owe back some or all of the credits. If you earn less, you could get more credits when you file taxes.

Source Links

1. https://www.healthpartners.com/blog/insurance-for-self-employed/
2. https://www.mclarenhealthplan.org/mclaren-health-plan/news/insurance-for-freelancers-a-selfemployment-guide-t-4931
3. https://www.healthcare.gov/self-employed/
4. https://www.healthcare.gov/small-businesses/learn-more/self-employed/
5. https://tfx.tax/articles/tax-deductions/self-employed-health-insurance-deduction
6. https://www.anthem.com/individual-and-family/insurance-basics/health-insurance/health-insurance-for-self-employed
7. https://www.ehealthinsurance.com/resources/individual-and-family/self-employed-health-insurance
8. https://www.healthcare.gov/quick-guide/one-page-guide-to-the-marketplace/
9. https://www.investopedia.com/best-health-insurance-for-self-employed-5078989
10. https://www.healthcare.gov/self-employed/income/
11. https://turbotax.intuit.com/tax-tips/home-ownership/deducting-health-insurance-premiums-if-youre-self-employed/L6bRhLaVE
12. https://www.healthinsurance.org/health-insurance-for-the-self-employed/
13. https://www.cms.gov/marketplace/outreach-and-education/special-enrollment-periods-available-to-consumers.pdf
14. https://www.ramseysolutions.com/insurance/self-employed-health-insurance?srsltid=AfmBOoozyK0STiN9nWoLFp-lMZ5hAqSBOg4gYR2MlUD1Hj_Cc65VWvOf
15. https://www.healthcare.gov/small-businesses/choose-and-enroll/shop-marketplace-overview/
16. https://www.irs.gov/affordable-care-act/employers/small-business-health-care-tax-credit-and-the-shop-marketplace
17. https://www.healthinsurance.org/faqs/im-self-employed-is-it-better-for-me-to-buy-health-insurance-through-a-broker-or-through-the-exchange/
18. https://www.forbes.com/advisor/health-insurance/health-insurance-broker/
19. https://www.ehealthinsurance.com/resources/individual-and-family/qualify-self-employed-health-insurance-deduction
20. https://www.healthinsurance.org/obamacare/self-employed-health-insurance-deduction/