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How to Get Health Insurance When You’re Self-Employed

Being your own boss is exciting! You’re in control and doing work you’re really passionate about. But what about health insurance? Most folks rely on their employer for coverage. But if you’re the employer, what are your options?

Don’t worry! You’ve still got plenty. Whether you own your own business, have a steady freelance gig or are a consultant, we’ll walk you through the best ways to set up your own health insurance.

What Is Self-Employed Health Insurance?

Self-employed health insurance is simply individual (or private) health care coverage you can buy for yourself (and your family) on the government’s health insurance marketplace. Self-employed means you have income from a business but don’t have any employees. (If you do have employees, check out these tips on small-business health insurance plans.)

If I’m Self-Employed, Do I Really Need It?

Everyone needs health insurance. Just because you’re going it alone with your business, doesn’t mean you should go it alone without health insurance. (Also keep in mind that health insurance isn’t the only kind of insurance you’ll need to pick up if you’re self-employed.)

Do you have the right health insurance coverage? Connect with a Trusted pro today.

If you don’t have health insurance, you and your family could be one medical emergency away from a financial disaster. It’s not worth the risk. Make sure you’re covered.

Now let’s take a look at your self-employed health insurance options.

How to Get Health Insurance When Self-Employed

Health Insurance Marketplace

The best place to start if you’re permanently self-employed is to check the government’s health insurance marketplace. The marketplace is where you can find out if you qualify for Medicaid, tax credits or lower health insurance premiums. And if you have kids, it’s also where you can enroll them into the Children’s Health Insurance Program (CHIP) if you qualify.

Private Health Insurance

Some insurance providers have plans customized for self-starters just like you—folks who are self-employed and need good health care coverage at an affordable rate. You’re probably looking for a plan that offers a wide range of benefits (from access to in-network providers and hospitals to annual checkups and preventative care) for you and your family at no extra cost. Start by speaking to an independent insurance agent who can help you find the best plan for the best price!

Health Care Sharing Ministries

You might have heard of something called health care sharing ministries. First, understand that these are not technically “health insurance.” It’s more like a group of people who belong to an organization like a church or ministry who pool their money together into a fund. They use this fund to pay for major health care costs for members in the group.

This might sound like a good option if you’re healthy with no dependents, but there are downsides. There are restrictions on what the ministry might agree to pay for. And ministries are not regulated by the Affordable Care Act, which means they’re not required to cover your pre-existing conditions.

Health Insurance if You’re Self-Employed for a Short Time

What do you do if you’re only going to be self-employed for a little while? Let’s say you were just laid off from your full-time job and it had a really good group health insurance plan. Maybe you’re turning to freelance work in the meantime as you search for a full-time gig again. (And if you’re not freelancing, and you’re officially unemployed, check out these health insurance tips.)

Well, here are a few options.

COBRA

You could keep your previous employer’s health insurance plan with COBRA health insurance. COBRA stands for Consolidated Omnibus Budget Reconciliation Act (that’s a mouthful!). COBRA allows you to temporarily keep the same employer-based health plan you had at your old job (for up to 36 months but usually around 18 months).1 But while this may be a great option for you, keep in mind that you’ll pay more each month because your employer won’t be pitching in on the premium anymore.

Short-Term Health Insurance

You could also get short-term health insurance that usually covers you up to three months. Two benefits of short-term coverage are that you can 1) sign up outside of the usual enrollment period, and 2) your monthly premiums will be lower than you’d pay with COBRA. The downside is that you’ll have high out-of-pocket costs and pre-existing conditions (if you have any) usually aren’t covered.

Industry-Specific Health Insurance

You’ve lucked out and found a freelancers union that offers discounted health insurance. Nice! These industry-specific health insurance plans are available for certain groups (from caregivers to college alumni). But with these plans, read the fine print before signing that dotted line. You don’t want to pay more for a plan that gives you less coverage compared to a marketplace plan you just buy on your own.

How Much Is Health Insurance for the Self-Employed?

You want good coverage—but also don’t want to pay an arm and a leg for it. Let’s take a quick look at how much you can expect to pay for health insurance if you’re self-employed.

A ton of factors go into the cost of health insurance: who you need to cover (spouse, kids?), the level of coverage you need, whether you smoke, your age, where you live, and more. But if you’re purchasing a health insurance plan on the marketplace, the average person will pay $438 a month.2 The average family pays about $1,779 per month.3 But, if you qualify for tax subsidies, you might not have to pay as much. Check out Healthcare.gov to see if you might qualify for help.

Self-Employed Health Insurance Tips

Okay, as someone who’s self-employed, you’re also doubling up as your own Human Resources director! There’s no one to call with questions about your benefits. No need to panic! We’ve got a few pointers if you’re shopping for self-employed health insurance.

1. Consider Agencies That Could Help

It’s easy to feel alone and out of the loop in the world of the self-employed. There isn’t a feeling of security that comes with working for a large business. That’s why it’s a good idea to connect with organizations that offer something similar—like the Association for the Self-Employed. Membership could give you access to discounted health insurance plans, Health Savings Accounts (HSAs) and other support.   

2. Use the Self-Employed Health Insurance Tax Deduction

We’re talking about money, folks! Being your own boss also means dealing with times when business is slow. That’s why it’s important to know how to make your money work harder when you’re buying health insurance. You can do that with the self-employed health insurance income tax deduction. It’s just one of the many self-employed tax deductions you can use.

If you qualify for this deduction, it means you’re allowed to deduct 100% of your health insurance premiums from your adjusted gross income when you file your income taxes every year.4 But keep in mind that this is a self-employed health insurance deduction for individuals and their dependentsnot for small businesses.

Here are a couple of things you need to do to qualify:

  • Show no other forms of health insurance coverage. You’ll need to prove you have your own personal health insurance coverage and aren’t still covered by an employer’s group plan or named in someone else’s policy—like your spouse’s policy. You also can’t claim the deduction if you qualify for coverage from your spouse’s group plan but choose not to take it up. 
     
  • Prove your income from being self-employed. You need to have some income coming in to apply for a deduction. And if you have a few different streams of self-employed income, you can only claim the deduction against one of those streams. The one with the highest income is probably your best bet!

And if you’re pulling your hair out trying to figure out how to file taxes as someone who is self-employed, don’t sweat it. Check out these tips on how to file freelance taxes, along with the ins and outs of filing quarterly taxes.

3. Find a High-Deductible Health Plan

If your health insurance plan has a high deductible, that means lower monthly premiums. And we like that because it reduces your monthly expenses! You just need to make sure you can foot the higher deductible when you need to. And that’s where the Health Savings Account (HSA) comes in. An HSA is a tax-advantaged savings account linked to a high-deductible health plan (HDHP). The money you save in your HSA can be used to pay for qualifying medical expenses tax-free! You can also get a break on your income taxes for putting money into your HSA.

4. Get Expert Advice From an Independent Insurance Agent

When you’re in charge of finding health insurance that’s worth more than the paper it’s written on, don’t leave it to chance or the internet to find the best one for you!

An independent insurance agent—like the ones you’ll find in our Endorsed Local Providers (ELP) program—are the experts to turn to.  

You can find local agents who are ready to walk you through your health care options and track down the best health insurance quotes in the exciting world of being your own boss! And they’re RamseyTrusted, so you know you’ll be working with top insurance agents who really know their stuff. 

Find an insurance agent today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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