Health insurance can be tricky to navigate, even when you’re gainfully employed by a company that provides its own health plans. For the self-employed, health insurance options can be much more limited and difficult to find. This guide will help you navigate the health insurance industry if you’re self-employed. Here’s everything you need to know about self-employed health insurance.
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Things to know about Health Insurance coverage for Self-Employed individuals.
You Have 60 Days
If your health insurance ends abruptly, you have 60 days to find a new plan; otherwise, you’ll have to wait for the open enrollment period in November to search for health coverage. This can leave you without essential coverage for months at a time, so if you’ve recently become self-employed, try to find coverage within the required time span.
You’ll Need an Accurate Estimate of Your Earnings
If you have income that can be unpredictable, you’ll have to give your new insurance provider an accurate estimate of your earnings. If you are paid by invoices, you can provide a rough estimate based on your last month’s invoices.
Many health plans don’t even offer coverage for the self-employed or are notoriously hard to obtain with self-employment income. Luckily, however, there are certain plans that are specifically tailored to meet the needs of self-employed citizens.
You Can Search the Federal Marketplace
The Affordable Care Act saw the creation of the federal government’s online health insurance marketplace, where you can search for plans to suit your lifestyle and financial situation. Healthcare.gov has many resources and connections to hundreds of providers and is one of the largest online resources for health plans.
The marketplace is operated by the Federal government so you can be sure that your information is safe and the health providers are held accountable. Searching the marketplace is easy, and there is even information available in many situations such as self-employment.
Qualified Individuals Can Get a Tax Deduction
Self-employed health coverage usually qualifies as a tax deduction when you file your return, and you can claim up to 100% of the cost of your coverage. This is a very large deduction, so you’ll definitely want to remember to claim it on your next tax return. If you have questions and need help filing your taxes, you can get access to an online CPA if you file your taxes in Washington, D.C, or any other US city.
Unfortunately, if you’re eligible for a health plan via your spouse’s employer, you cannot claim this deduction. Essentially, you have to be ineligible for any health plans and have paid for your own coverage throughout the year to qualify for the deduction.
Check With Major Providers
If you don’t want to utilize the Federal Marketplace to find health coverage, many large providers like United Healthcare have options for self-employed individuals. An online broker or licensed insurance agent may be helpful as well to help you find coverage.
A broker will assist you by connecting your details with hundreds of plans across different providers, and can even help you customize plans to better suit your self-employment needs. Using a broker can help alleviate some of the stress of your search, as they have access to information you otherwise may not have been able to find.
You Can Opt For Short-Term Insurance
Short term coverage can be a better option for shorter timespans, but if you already have a pre-existing condition, there’s a good chance you’ll be declined. The advantages are that short-term plans usually don’t have an enrollment period, and allow you to choose doctors and hospitals.
The Consolidated Omnibus Reconciliation Act, or COBRA, allows those leaving their employer to extend their health insurance plans for a specific period of time, and usually for much more than you were paying while employed.
You’ll be responsible for the entire portion of your health coverage, so if your previous employer was responsible for covering a portion of your premiums, you’ll have to pay for their portion as well. COBRA is really a last resort, as the premiums can prove to be incredibly expensive.
HSA (Health Savings Account)
Health savings account act as private savings accounts specifically for medical expenses. You can add as much money as you like, and it’s entirely untaxable as long as you’re using the money only for qualifying medical expenses.
This is available to those enrolled in an HDHP, of high-deductible health plan, like self-employed individuals often are. These extra funds can help to fill any gaps in coverage or pay for medical expenses your health plan may not cover.
Be Sure You Can Afford Your Premiums
When you’re choosing a health plan with self-employment income, it’s important to base your health budget on the lowest cost you can afford, so if your income becomes unpredictable or drops, you can still afford your plan.
If you decide to include family members in your plan, you’ll be increasing premiums and likely your copays, so be sure that your spouse’s employer doesn’t offer a better plan before enrolling.
Searching for health coverage when you’re self-employed can be a stressful and often frustrating process. Partnering with a broker or licensed agent can help you gain access to customized plans that you may not have been aware of, and eliminates the need to spend hours searching for the right coverage.
Be sure you provide a rough estimate of your finances, and account for any unpredictable income by choosing a plan that is well within your budget. If you find yourself in a pinch, you can opt for a short term plan, or search the federal marketplace for the right plan for your situation.
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