How to Shop for Health Insurance When You’re Self-Employed
Dan Levenson October 24, 2017
Being self-employed certainly has its perks. You essentially get to be your own boss, make your own decisions, and more or less set your own work schedule.
At the same time, there are some inherent drawbacks to being self-employed. Not only do you pay more in taxes (ahem, hello, self-employment tax), but you also miss out on employer-provided benefits like retirement contribution matching and even group health insurance.
Fortunately, finding quality (yet affordable) health insurance coverage when you’re self-employed isn’t impossible by any means. All it takes is a little bit of research and shopping around on your part.
Why Do You Need Coverage?
First of all, don’t make the mistake of foregoing health insurance coverage while you’re self-employed. Not only will you face a hefty penalty when it comes time to file your taxes (as long as the ACA is still around, anyway), but you’ll also be in a world of hurt should you actually require medical attention.
The only exception to this is a situation where your spouse or domestic partner (depending on the state in which you live) has insurance coverage and is able to add you to his or her policy. Otherwise, you need to purchase your own coverage; it’s as simple as that.
See if You’re Eligible for a Subsidy
The first step to take if you need to purchase your own health insurance is to check the federal marketplace and determine whether you’re eligible for a subsidy or not.
These subsidies are provided by the federal government to help alleviate some of the costs associated with buying your own health insurance. They are typically based on your annual income, and your subsidy will be determined by income and several other factors. You can find out about your eligibility by simply filling out a quick application online.
Be Realistic About Your Coverage Needs
If you aren’t eligible for a subsidy but have limited funds to pay for health insurance, take some time to carefully weigh your coverage needs and be realistic. While it’s impossible to predict if you’ll get injured or fall ill in the near future, you can get a general ideal of your coverage needs by assessing your medical history.
If you know you have several diagnosed medical problems that require regular care and treatment by, say, a specialist, then you’ll probably want to opt for more coverage and a policy that allows you to see a wide network of doctors.
On the other hand, if you have been relatively healthy throughout your life, you may be able to save money on a plan with a higher deductible and a more limited network of doctors.
Don’t Overlook a Health Savings Account
When you’re self-employed, a high-deductible health plan can sometimes make sense—and these plans come with a health savings account (HSA) that allows you to accrue interest and defer taxes on any contributions. Furthermore, when you do use the account to pay for approved medical expenses, these withdrawals are tax-free.
This is a great option to consider if you end up with a high-deductible plan, as your out-of-pocket costs will be greater and an HSA can help you cover them. Furthermore, even if you end up becoming employed in a “traditional” job down the road, the money left in your HSA remains yours.
Shopping for health insurance coverage while you’re self-employed can be a little time-consuming, but by following these tips, you’ll be well on your way to a plan that works for you.