Navigating self-employed health insurance: Types, costs & tips

Getting health insurance when you’re self-employed isn’t always easy. Unlike traditional employees, self-employed workers don’t have an employer who provides employee benefits to help cover their monthly premiums or negotiate for lower deductibles on their behalf. 

Some self-employed individuals get coverage through their spouse. But for those who don’t have that option, it can be difficult or costly to attain coverage. But paying out of pocket for medical needs can be even more costly.

If you’re self-employed and need health insurance, here are some options to consider and tips for choosing the best plan for you. 

Types of health insurance for self-employed individuals

There are a few options for purchasing health insurance for self-employed people. When choosing the best option for you, consider: 

• Price: Determine a budget for health insurance and find an option that fits this budget. 
• Coverage: Identify what type of coverage and quality of care is important to you and how many options of in-network doctors and hospitals they provide.  
• Platform: Understand if the platform is easy to use, find care and costs, and make claims. 
• Customer service: Research ratings for customer service and their availability for questions.
• Preventive care: Try to find for plans that offer preventive care and annual checkups at no additional cost. 

With these in mind, here are some self-employed insurance options to consider in your search:

Marketplace plans

A good first stop for anyone shopping for health insurance plans is the marketplace on HealthCare.gov, which was established by the Affordable Care Act (ACA). This service helps you compare and enroll in health insurance plans. As a bonus, they have specific resources for self-employed workers.

The marketplace organizes insurance plans by metal: 

• Bronze: Low monthly premiums but high deductibles, making treatment expensive. 
• Silver: Moderate monthly premium and moderate costs when you need care. 
• Gold: High monthly premium and lower costs when you need care. 
• Platinum: Highest monthly premium but low deductibles, so nearly all other costs are covered.  

There’s also a fifth option, somewhat alarmingly called the Catastrophic plan, which has low monthly premiums but very high deductibles, making it an affordable way to protect yourself from worst-case scenarios. Additionally, all plans include free preventive care coverage and other free or reduced-cost services.

One thing to note is that your spouse’s insurance policy may affect your ability to sign up for a plan on the marketplace. If their insurance covers spouses and dependents, you likely won’t qualify for premium tax deductions and credits or other savings on a marketplace plan.

Private health insurance plans

Even if you’re not a traditional employee, you can still sign up with a traditional insurance provider. Some insurance companies offer affordable health insurance plans for individuals.

Check out companies like UnitedHealthcare, Blue Cross Blue Shield, Cigna, and Humana to compare plans. Such insurers sometimes offer multiple options, including short-term health insurance and plans that cost less than what the ACA offers.

Short-term plans are beneficial for anyone who plans to change their employment status in the near future. You can register for short-term health insurance outside the open enrollment period, with some coverage lasting a month or up to six months. Always be sure to read the fine print on any plan you consider, especially the “exclusions and limitations.”

Federal programs

Federal government's health insurance programs are another option if you can’t afford other health insurance options. You may qualify for these based on your age, income, or military service. 

These options include: 

• Medicaid: Typically for low-income individuals, parents, seniors, and disabled persons.
• Medicare: Typically for seniors over the age of 65, disabled persons, and people with end-stage renal disease.
• Subsidized health insurance: For low-income individuals and family members.
• Military programs: TRICARE offers health insurance for military service members, National Guard/Reserve members, and retired service members and their families. 

Before you rule out health insurance on the basis of affordability, consider if you’re qualified for any of these programs. 

Membership organizations

Another option for freelancers, self-employed workers, or even those who are unemployed is to join a membership organization that offers a group plan. The idea is similar to getting insurance through an employer. Instead of everyone sharing the same company, they share the same industry, interest, or another common tie. Like employers, membership organizations can use their many members to negotiate for better coverage and lower premiums and deductibles.

You may find you’re already part of an organization that offers group health insurance. Organizations like AARP, the Freelancers Union, and the Writers Guild of America all offer membership health care coverage. In general, unions, guilds, alumni associations, and even your local chamber of commerce are good places to check.

Before signing up for any organization’s coverage, compare their offering with what you can get through the ACA. Some membership organization plans are not ACA-compliant and may not cover preexisting conditions.

How much does self-employed health insurance cost? 

The costs of health insurance for the self-employed will vary depending on several factors, making it difficult to predict the average costs. But according to MoneyGeek, the average cost of health insurance is $593 per month.

Although your health, medical history, and gender don’t affect your health insurance premium, there are still five factors that can affect your monthly costs: 

• Age: Typically premiums are higher for older people compared to younger. 
• Location: State and local rules and the cost of living can also affect your premium. 
• Tobacco use: Typically, insurers will charge tobacco users more than those who don’t use it.
• Individual vs. family enrollment: If you have a spouse or dependents, insurers may also charge more for coverage. 
• Plan category: Each plan will have different monthly premiums and deductibles. 

Additionally, some people may qualify for discounts on the Marketplace or other insurance programs. The best way to understand how much health insurance will cost is to browse different plans and programs and determine your eligibility for discounts. 

Other options for finding coverage

While there are multiple health insurance options you can pick from, there are also other ways to find health coverage. 

Here are some other options to consider: 

• Spouse’s employer-sponsored plans: If your spouse has coverage through an employer, you may qualify to join their health insurance plan. 
• COBRA continuation coverage: If you were previously covered through an employer, COBRA allows you to stay on your employer’s plan for up to 18 months. 
• Health savings account (HSA): If you have a high-deductible health plan, consider a health savings account to accumulate money for qualified health care expenses. 
• Limited benefit plans: Consider a limited benefits plan, which will have lower premiums but much lower and more restricted benefits. 

Although you may not qualify for all these options or they won’t cover you long-term, they can help you transition, especially if you’re going from a full-time employee to self-employed. 

Tips for choosing self-employed medical insurance

If you’re self-employed, choosing the right health insurance plan that fits your preferences and budget takes time and research. Since you’re not getting coverage directly from an employer, you have to consider the options.

Here are some tips for choosing self-employed health insurance: 

• Assess your needs: Understand what you’ll need from the health insurance plan, including doctor networks, prescription coverage, and specialist care. 
• Set a budget: Identify your health insurance budget before researching plans to balance affordability with the necessary coverage. 
• Compare plans: Consider different health insurance options and compare features, coverage details, and costs before deciding.
• Use resources: Consult with a financial advisor or insurance broker, or use an online calculator to find the perfect plan. 
• Find discounts: Check if you qualify for premium tax credits to lower your monthly costs or for cost-sharing reductions. 

Lastly, consider a health insurance plan as an investment in your health and financial well-being to avoid paying out of pocket in case of emergencies. 

Next steps for self-employment success

The most common way to get health insurance is through an employer as part of employee benefits. But while that system works for full-time and many part-time employees, others can be left behind. Self-employed persons who own their own businesses, independent contractors, and freelancers may all struggle to find insurance.

Fortunately, there are still self-employed health insurance options to choose from. And while some may come with higher deductibles or higher premiums, you can’t beat the peace of mind that comes with insurance coverage.