How to Get Health Insurance when You’re Self-employed

Securing health insurance is an essential step for any self-employed professional. Without access to an employer-sponsored plan, you are responsible for finding and funding your own coverage. This guide explains how self-employed people get health insurance in the United States, including your coverage options, how to handle family health insurance, and how to take advantage of valuable tax benefits.

Why Health Insurance Is Essential for the Self-Employed

When you work for yourself, health insurance is a critical safety net. It protects your personal finances from unexpected medical bills, ensures you have access to preventive care to stay healthy, and provides peace of mind so you can focus on growing your business. Whether you are a freelancer, consultant, independent contractor, or sole proprietor, finding the right health insurance coverage for self-employed individuals is a key part of your business plan.

Health Insurance Coverage Options for the Self-Employed

As a self-employed person, you have several avenues for securing health coverage.

• Health Insurance Marketplace: The Marketplace, created by the Affordable Care Act (ACA), is the most common source of health insurance for self-employed individuals. All plans sold on the Marketplace must cover essential health benefits, and you cannot be denied coverage or charged more due to pre-existing conditions.
• Medicaid: If your income falls below a certain level, you or your family may qualify for Medicaid. This program provides comprehensive health coverage at a very low cost or for free. Eligibility is based on your household income, and in most states, adults earning up to 138% of the federal poverty level can qualify.
• Spouse's Plan: If your spouse has health insurance through their employer, joining their plan is often the simplest and most affordable option. This allows you to get coverage without having to navigate the Marketplace on your own.
• COBRA: If you recently left a job with health benefits, you may be able to continue your previous coverage for up to 18 months through COBRA. However, you will be responsible for paying the full premium, which can be very expensive.
• Short-Term Health Insurance: These plans offer temporary coverage but are not ACA-compliant. They often do not cover pre-existing conditions, prescription drugs, or preventive care, making them a risky choice for long-term health needs.

Family Health Insurance for the Self-Employed

Finding a plan that covers your entire family is straightforward. When you shop on the Health Insurance Marketplace, you can apply for a plan that covers yourself, your spouse, and your dependents. The cost of family health insurance for the self-employed will depend on the number of people enrolled, their ages, and your total household income, which is used to calculate any potential subsidies.

How to Choose the Right Plan

Choosing the best plan requires balancing cost and coverage.

• Coverage and Network: Do you need a plan for just yourself or your family? Check if your preferred doctors and hospitals are in-network to avoid high out-of-pocket costs. Health Maintenance Organization (HMO) plans typically have lower premiums but require you to use network providers, while Preferred Provider Organization (PPO) plans offer more flexibility at a higher cost.
• Costs: Look beyond the monthly premium. Consider the deductible (what you pay before insurance kicks in), co-pays for doctor visits, and the out-of-pocket maximum, which is the most you will pay for covered services in a year.
• Subsidies: You may qualify for premium tax credits (subsidies) that lower your monthly premium. These are based on your estimated household income. If your income is between 100% and 400% of the federal poverty level, you can access these savings.

The Self-Employed Health Insurance Deduction

One of the most significant financial benefits available is the self-employed health insurance deduction. You can deduct 100% of the health insurance premiums you pay for yourself, your spouse, and your dependents. This is an "above-the-line" deduction, meaning you do not have to itemize to claim it. To qualify, you must have a net profit from your business and not be eligible for an employer-sponsored plan through a spouse.

Steps to Get Health Insurance

1. Estimate Your Income: Your subsidy eligibility is based on your projected gross income for the year. It is important to estimate this as accurately as possible and update it in the Marketplace if it changes.
2. Gather Your Documents: You will need to provide proof of identity (like a driver's license), proof of income (tax returns or bank statements), and proof of residency (a utility bill).
3. Compare Plans: Use the Marketplace website or a licensed broker to compare plans. Look at the premiums, deductibles, and provider networks to find the right fit.
4. Enroll: The annual Open Enrollment period is typically from November 1 to January 15. You may also enroll at other times if you have a qualifying life event, like moving or losing other coverage.
5. Pay Your First Premium: Your coverage will not begin until you make your first monthly premium payment.

When Your Business Grows: ICHRA and Venteur

As your business expands and you hire employees, your health insurance needs will evolve. The Individual Coverage Health Reimbursement Arrangement (ICHRA) is a flexible, tax-advantaged solution that allows you to reimburse employees for their individual health insurance premiums.

Venteur simplifies ICHRA administration with a user-friendly platform that ensures compliance and integrates with your payroll systems. This allows you to offer competitive health benefits as you grow your company.