In the age of the "side hustle," more and more individuals are giving self-employment a try.
Being your own boss can be a great feeling: setting your schedule and working from anywhere in the world can feel highly liberating. Especially for those used to a rigid 9-5 and a designated office.
As of March 2023, nearly 10 million U.S. workers are self-employed. With so much of the nation's workforce turning away from traditional employment—and the employer-sponsored healthcare plans that come with it—we recommend staying on top of the available self-employment healthcare insurance options to protect you and your family if you're going out on your own.
Secure an Individual Plan Through the Health Insurance Marketplace
The Marketplace is intended for consultants, freelancers, independent contractors, and other self-employed individuals without employees. (If you have employees, read on for additional options.) Within the menu of Marketplace plan offerings, you can find a variety of price points, cost-sharing options, and levels of medical support for you and your family, depending on your needs.
When you fill out your Health Insurance Marketplace application, you'll be guided through a series of questions to help determine the following:
If you're eligible for health insurance coverage through the Marketplace
If you qualify for healthcare tax credits or other subsidies that may offset your monthly premium costs (this is determined using the information you provide about your household size and estimated income)
If household income or other factors make you eligible for Medicaid, CHIP, or other free or low-cost government-backed programs
Pro Tip #1: When you complete your Marketplace application, you’ll be asked to include your estimated net self-employment income.
Note that you must estimate your projected net income for the year you seek healthcare coverage, NOT for the previous year. The good news is that you should get a quick response regarding whether or not the Marketplace has approved your application. And once you receive this approval notification, you can shop for your healthcare plan within the platform's list of policies and carriers.
Pro Tip #2: It’s important to remember that while you’ll receive initial eligibility approval from the Marketplace, you will ultimately need to select a plan through an individual insurance provider.
You'll also need to keep track of important documents and correspondence from the Marketplace and the healthcare provider from whom you purchase your policy. Your insurance carrier will ultimately send you your insurance cards and plan information, so be sure to keep track of the necessary account logins, passwords, and payment information you'll need to maintain your plan coverage.
Purchase a Small-Group Health Insurance Plan
You can now access group health insurance plans if you're self-employed and have at least one employee (not including yourself, your spouse, business partners, or independent contractors). Small-group insurance plans can be purchased through a licensed insurance agent, broker, or directly from an insurance company.
This could be a good option for self-employed individuals with a small team or who wish to offer competitive incentive packages for new hires. Small-group insurance plans have numerous options, like managed care or high-deductible health plans.
Like any solution, there are perks and disadvantages to this method of receiving health care coverage. While tax-free, this option can also be expensive and subject to wildly fluctuating annual health insurance premiums.
Explore the Small Business Health Options Program
Business owners who employ between 1 and 50 full-time equivalent employees (FTE) may be eligible for the Small Business Health Options Program (SHOP) through healthcare.gov, which also administers the Health Insurance Marketplace for individual plans.
Business owners eligible for SHOP can typically enroll year-round without waiting for an open enrollment period. And if you have fewer than 25 employees, you may qualify for a Small Business Healthcare Tax Credit to offset your portion of your employees' premiums.
SHOP insurance aims to provide employers the flexibility to:
Offer a single plan or a menu of options for employees to choose from
Provide general healthcare plans, dental plans, or both
Choose the number of employer contributions to employee premiums and whether dependents can be offered coverage
Choose how long new hires must wait before they're eligible to enroll in a covered plan
You can inquire about and enroll with SHOP directly through an insurance company. Still, we recommend working with a licensed, trustworthy insurance agent registered with SHOP for super-tailored consultations and services.
Consider a Short-Term Insurance or a Catastrophic Plan
At its core, catastrophic health insurance is designed to help cover the costs of major medical events. It protects against accidents or serious illnesses requiring intensive medical care or hospitalization.
Typically, a catastrophic plan may fit younger individuals who do not need frequent primary care visits and only need coverage for rare or extreme injuries. Catastrophic insurance is meant to provide a failsafe against life's major curveballs and may be better than nothing, but make no mistake - coverage is very minimal and, therefore, not intended for everyone.
Short-term insurance is designed to offer quick, flexible coverage to bridge gaps and cover you for a limited period, typically a year maximum. While short-term policies tend to be less expensive than longer-term plans, there's no guarantee that your insurance provider will renew it, so while you may rely on it initially while getting your business started or trying to save some money early on, it's not intended as a long-term healthcare solution.
Go Without Self-Employment Health Insurance
We get it. Self-employment is one of the most challenging paths out there. With rising costs and potentially unpredictable income streams, we know it can be hard to commit to yet another monthly expense in
But please don't risk your long-term physical or financial health by skipping health insurance. If you have trouble allocating funds to meet a monthly premium, consult a licensed health insurance agent to see if there are government programs or tax credits you may be unaware of; or they can guide you through options for short-term or catastrophic plans that can at least offer some minimal coverage.
Find (Free) Expert Support
Still, trying to figure out the right path for you? We get it. Health insurance is one of the most complex topics out there today. Even if you have a general understanding of healthcare networks and how they apply to your situation, there are many other factors to consider before you finalize your plan.
Luckily, you don't have to do this alone.
We're not health insurance agents; we're the matchmakers who are passionate about connecting consumers with the experts you can trust. When you work with a licensed health insurance agent committed to understanding and educating their clients, you can receive guidance tailored to your situation and needs. And if you need help finding an agent you can trust, that's our specialty.
Find out how to secure the coverage you need for your healthiest life.