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Do I Need Self-Employed Health Insurance? | eHealth

If you are self-employed or freelance, you are not alone. in fact, today there are more freelancers than ever. A 2019 study by Upwork and the Freelancers Union shows that 57 million Americans were self-employed in 2019. According to the same study, 53% of workers ages 18-22 are self-employed.

The appeal of working as an independent contractor or freelancer includes flexibility and work-life balance. but you also have to manage all aspects of your work and life. Health care coverage is an important consideration if you are an independent contractor or consultant, as you may have multiple insurance options. Let eHealth help you navigate those options today at no additional cost!

Reading: How much is self employed health insurance

How do I know if I need self-employment health insurance?

If you don’t have an employer or employees, but you bring home taxable income, you’ll most likely need to find independent contractor health insurance through an individual or family plan. Some examples of people who might be able to sign up for health insurance on their own:

  • independent contractor
  • independent worker
  • consultant
  • consignment worker
  • private practitioner in medicine, law, accounting, etc.
  • If this description seems to apply to you, it’s important to explore your self-employed health insurance options. Getting coverage for yourself, regardless of your employment status, can help you avoid paying a penalty for not having coverage. Keep in mind that beginning with the 2019 plan year, you will no longer have to pay a federal tax penalty if you can afford health coverage and decide not to get it. however, states may have different rules and you may owe a state fee for not having coverage. If you’re not sure how the rules apply where you live, check out our article on whether your state requires health insurance. A licensed ehealth insurance agent will also be happy to go over the individual mandate rules for your state and your options.

    Note that if you have only one employee besides yourself, you may be eligible for small business group health insurance, which works well for people who are responsible for insuring their employees in addition to themselves.

    Do small business owners need to insure the self-employed and independent contractors?

    Some people work for employers as freelancers. If you own a small business that employs self-employed workers, you may be wondering if you need to provide health coverage.

    Under the Affordable Care Act, businesses with fewer than 50 full-time workers are not required to offer health coverage. however, some small businesses may still choose to voluntarily offer health coverage to full-time employees. To learn more, take a look at this page on eHealth Small Business Health Plans.

    When it comes to self-employment, rules can vary by location, state, and insurance carrier. In general, small businesses are not required to offer self-employment health coverage. however, in some cases, employers may extend group health coverage to their self-employed workers.

    If you are a small business owner and decide to offer group health coverage to your self-employed:

    • You are not required to pay part of the premium.
    • If you choose to contribute to the premium costs, the self-employed person may need to report these contributions as taxable income.
    • self-employed workers who pay their own premiums can deduct the cost from their income taxes.
    • If you’re an independent contractor, which means you’re self-employed, learn more about self-employment coverage options.

      independent or freelance contractor: does it make a difference?

      according to the irs, “a person is an independent contractor if the payer has the right to control or direct only the outcome of the work and not what will be done and how it will be done.” the payer may be a client organization with which the individual contracts or the general public. but there is no employer-employee relationship. Doctors, accountants, and lawyers in private practice are generally classified as independent contractors.

      See also: Coverage for Hepatitis C Drugs in Medicare Part D – PMC

      A freelancer is a temporary self-employed professional who provides products and services to multiple organizations. Freelancers often work for many clients and take on as many projects as their schedule allows. freelancers include journalists, copywriters, graphic designers, and web programmers.

      Whether you consider yourself an independent contractor, self-employed person, or other self-employed person, chances are you’re on your own to get your health insurance coverage. Health insurance for freelancers and independent contractors is a must. when you are sick or injured, you are not working and you are not paid sick days. you are facing potentially staggering medical expenses.

      Health Insurance Options for Self-Employed and Independent Contractors

      You can find health insurance through one of several possible avenues as an independent contractor, freelancer, or consultant. These options include:

      • group health plan of parent, spouse or domestic partner
      • individual and family health insurance plan under the Affordable Care Act
      • short-term health insurance
      • cobra hedge
      • Each of these options has pros and cons, as well as different factors that will determine if you qualify. Let’s take a look at each plan type to see which one works best for you.

        parent, spouse, or domestic partner group health plan

        You may be eligible to enroll as a dependent in a working parent, spouse, or domestic partner’s employer-sponsored group health plan.

        Pros: Group health coverage is often less expensive than individual health coverage because employers and unions often subsidize a portion of the cost. In addition, group health coverage may include additional benefits, such as vision, dental, and prescription drug coverage.

        Disadvantages: If you are single and living alone or age 26 or older, you are not eligible for group coverage through a spouse, domestic partner, or parent, respectively. The employer also cannot subsidize dependent coverage under the group health insurance plan, which could make coverage expensive. Also, you can’t select the coverage you need; accept the coverage offered by the employer or union.

        affordable care act individual and family health insurance plan

        As a consultant or independent contractor, you may be able to shop for health insurance here, and if this is right for you, eHealth can help you find the right individual health insurance plan. Open enrollment for ECA plans begins in November and typically ends in mid-December. plans sold during that time generally begin coverage on January 1 of the following year. so if you joined a plan in November 2020, your coverage would start in January. January 1, 2021. If you lose open enrollment, you may qualify for special enrollment due to life circumstances. Learn more about plans here and enrollment here.

        advantages: when you buy an aca plan, you are guaranteed aca coverage and consumer protections. It’s also relatively easy to compare “metal” coverage levels (bronze, silver, gold, and platinum) to determine which meets your personal needs for affordable coverage. Your out-of-pocket costs may also be lower, especially if you qualify for a tax subsidy.

        Cons: If you don’t qualify for a tax subsidy, coverage under the ACA plan may cost more than you can comfortably afford. you can learn more about the aca plan subsidy and income levels here.

        short-term medical insurance

        You may be able to purchase a short-term health insurance policy as temporary coverage. You can learn more about short-term health insurance with ehealth and view plans in your area.

        Pros: You can buy a short-term health policy at any time since there is no open enrollment period. short-term policies are also often less expensive than comprehensive health plans offered by private insurers and on the government exchange.

        See also: How To Pay Less For Pet Insurance | Money

        Disadvantages: Short-term policies generally provide coverage for less than 1 year and there is no guarantee that you will be able to renew the coverage. Short-term policies may not cover the benefits you need, as they don’t have the same minimum required coverage as ACA plans. some states place restrictions on short-term policies or prohibit their sales as well.

        cobra hedge

        If you recently left an employer as a full-time employee, you may be able to continue your employer’s group health coverage for 18 to 36 months, depending on the circumstances. learn more about collect health insurance here

        Advantages: You have the protection of continuous health insurance coverage while you establish yourself as an independent or self-employed contractor. it’s essentially continuing the same coverage you had with your previous employer.

        Disadvantages: Cobra coverage is likely to be more expensive than purchasing health insurance from an independent contractor. will run out of coverage, usually in 18 to 36 months.

        medicaid

        This needs-based assistance program provides free coverage to approximately 74 million Americans and can be a strong insurance option for qualified self-employed workers. participation is largely based on income; In most states, Medicaid is available to those living below 138% of the federal poverty level, although disability and children are also factors. you can check eligibility through healthcare.gov.

        Pros: Benefit provisions vary from state program to state, but federal guidelines require all states to provide a minimum benefit package, including inpatient and outpatient care, medical care, and many other services. out-of-pocket costs for health care are substantially lower than private health insurance. Enrollment is open all year.

        Cons: Access to health care providers that accept Medicaid may be limited. eligibility rules may vary by state. Medicaid coverage ends when the insured no longer meets the criteria or eligibility.

        How much does self-employment health insurance cost?

        In 2020, the national average monthly health insurance premium for someone on a benchmark plan (i.e., the “silver” plan) is $456 per month, or $199 if you qualify for a tax subsidy. If you’re shopping for health insurance for your family, the average cost is $1,134 in 2020. You can learn more in our article, “How Much Does Self-Employed Health Insurance Cost?”.

        If you qualify for subsidies, what you pay for your coverage will vary based on your household income and the number of family members covered by the health plan. With a family income of no more than 400% of the federal poverty level ($49,960 for a single person in the contiguous United States, or $103,000 for a family of 4), you may qualify for tax subsidies that can significantly reduce what you pay each month coverage.

        When you apply for benefits, you will be asked to estimate your income for the year. you can give an estimate of your income and adjust it later if it changes. your initial eligibility for a subsidy will be based on this estimate. Any change in your income and subsidy eligibility will be reconciled when you file your federal income tax return, if you do not report the change in income when it occurs. If your estimated income is less than your actual income, you may have to repay part of your subsidy when you pay your taxes.

        find a self-employed health insurance plan that works for you

        Comparing health insurance options as an independent or self-employed contractor can be confusing. At ehealth we want to make this experience as easy as possible for you. our easy-to-use site and licensed insurance agents are here to help you find the right coverage at the right price. Please note that eHealth assistance is free and you will not pay more for a plan purchased through eHealth than you would if purchased elsewhere. You can start comparing individual health insurance plans by entering your zip code and finding the best plans in your area.

        This article is for general information and may not be updated after publication. consult your own tax, accounting, or legal advisor rather than relying on this article as tax, accounting, or legal advice.

        See also: Aircraft Physical Damage Hull Insurance: Protecting Your Aircraft | EAA

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