If you are self-employed or a freelancer, you aren’t alone. In fact, there are more freelancers today than there have ever been. A 2023 study by Upwork and Freelancers Union shows that 64 million Americans freelanced in 2023. According to the same study, freelancers represent 38% of the entire U.S. workforce.

The appeal of working as an independent contractor or freelancer includes flexibility and work-life balance. But you also must manage all the aspects of your work and life. Health-care coverage is an important consideration if you’re an independent contractor or consultant since you may have multiple insurance options. Let eHealth help you navigate those options today at no extra cost!

What does self-insured mean?

Being self-insured refers to a method of health insurance in which an individual or entity takes on the financial risk of covering their healthcare expenses instead of purchasing a traditional insurance policy from an external insurance company. In this arrangement, the individual or entity is responsible for paying their medical bills directly, without the assistance of an insurance carrier to pool and distribute the risk among a large group of policyholders.

Employer-Sponsored Health Insurance

Employer-sponsored health insurance is provided by employers to their employees as part of the employee benefits package. In this case, the employer typically assumes the financial risk of covering their employees’ healthcare expenses. The employer negotiates with an insurance company to secure a group insurance policy that covers all eligible employees and their dependents. The premiums for this insurance may be partially or fully paid by the employer, with the remaining portion deducted from the employees’ salaries.

Self-Employed Health Insurance

Self-employed individuals, including freelancers, entrepreneurs, and independent contractors, do not have access to employer-sponsored health insurance. Instead, they have the option to purchase health insurance policies on their own from private insurance providers or through government health insurance exchanges. Alternatively, some self-employed individuals choose to be self-insured, covering their healthcare costs out-of-pocket without relying on traditional insurance policies. By being self-insured, they have more control over their healthcare decisions and may tailor their coverage to suit their specific needs. However, this also means that they bear the full financial responsibility for any medical expenses incurred.

Do I need self-employed health insurance?

If you don’t have an employer or employees, but you bring home taxable income, then you most likely need to find independent contractor health insurance through an individual or family plan. Some examples of individuals who might enroll for self-employed health insurance:

• Independent contractor
• Freelancer
• Consultant
• Gig worker
• Private practitioner in medicine, law, accounting, etc.

If this description seems to apply to you, it’s important to explore your options for self-employed health insurance. If you have even one employee other than yourself, you may be eligible for small business group health insurance instead, which works well for people who are responsible for insuring their employees in addition to themselves.

Are there penalties for being uninsured?

Getting coverage for yourself, no matter your job status, may help you avoid paying a penalty for being uncovered. Please note that starting with the 2019 plan year, you’ll no longer owe a federal tax penalty if you can afford health coverage and decide not to get it.

However, states may have different rules, and you may owe a state fee for going uncovered. If you aren’t sure how the rules apply where you live, check out our article on if your state requires health insurance. An eHealth licensed insurance agent would also be happy to go over the individual mandate rules for your state and your options.

Independent contractor or freelancer: does it make a difference for health insurance?

Whether you consider yourself an independent contractor, freelancer, or other self-employed individual, you are likely to be on your own to get your health insurance coverage. Health insurance for freelancers and independent contractors is an imperative. When you’re sick or injured, you aren’t working, and you aren’t getting paid sick days. You are facing potentially staggering medical expenses.

What is an independent contractor?

According to the IRS, “an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”  The payer may be a client organization the individual contracts with or the general public. But there is no employer-employee relationship. Doctors, accountants, and lawyers in private practice are typically classified as independent contractors.

What is a freelancer?

A freelance worker is a temporary, self-employed professional who provides products and services to multiple organizations. Freelancers often work for many clients and take on as many projects as their schedule allows. Freelancers include journalists, copywriters, graphic designers, and web programmers.

Health insurance options for self-employed

You can find health insurance through one of several possible avenues as an independent contractor, freelancer, or consultant. These options include:

• Parent, Spouse, or Domestic Partner’s Group Health Plan
• Affordable Care Act Individual and Family Health Insurance Plan
• Short-Term Health Insurance
• COBRA Coverage
• Medicaid
  
  

Each of these options have advantages and drawbacks, as well as different factors that will determine if you qualify. Let’s take a look at each plan type to see what works best for you.

Parent, Spouse, or Domestic Partner’s Group Health Plan

You may be eligible to enroll as a dependent in a group health plan sponsored by the employer of a working parent, spouse, or domestic partner.

Pros to joining another’s health plan

Group health coverage is often less expensive than individual health coverage because employers and unions typically subsidize a portion of the cost. Also, group health coverage may include added benefits, such as vision, dental and prescription drug coverage.

Cons to joining another’s health plan

If you are single and living alone or age 26 or older you are not eligible for group coverage through a spouse, domestic partner or parent, respectively. The employer may also not subsidize dependent coverage under the group health insurance plan, potentially making the coverage costly. Additionally, you don’t get to select the coverage you need; you take the coverage the employer or union offers.

Affordable Care Act Individual and Family Health Insurance Plan

As an independent contractor or consultant, you may be able to buy ACA health insurance, and if this is right for you, eHealth can help you find the right individual health insurance plan. Open enrollment for ACA plans begins in November and usually ends in mid-December. Plans sold during that time typically begin coverage on January 1 of the following year. So, if you enrolled in a plan in November 2024, your coverage would begin on Jan. 1, 2025. If you miss open enrollment, you may qualify for special enrollment because of life circumstances. Learn more about ACA plans and enrollment here.

Pros of ACA

When you buy an ACA plan, you are guaranteed the coverage and consumer protections of the ACA. It’s also relatively easy to compare the “metal” levels of coverage – bronze, silver, gold and platinum insurance – to determine which meets your personal needs for affordable coverage. Your out-of-pocket expenses may be lower as well, especially if you qualify for a tax subsidy.

Cons of ACA

If you don’t qualify for a tax subsidy, ACA plan coverage may cost more than you can comfortably afford. You can learn more about ACA plan subsidy and income levels here.

Short Term Health Insurance

You may be able to purchase a short-term health insurance policy as temporary coverage. You can learn more about short term health insurance with eHealth and see plans in your area. Short-term health insurance can be an advantageous option for individuals in transition who need immediate coverage. These plans are designed to provide quick access to healthcare for unexpected illnesses and injuries, ensuring that sudden medical needs are not financially crippling.

Pros of Short-Term Health Insurance

You can buy a short-term health policy anytime, as there is no open enrollment period. Short-term policies are also usually less expensive than comprehensive medical plans offered by private insurers and on the government exchange. Additionally, short-term plans often include some level of emergency services, which can be crucial for acute care in unforeseen circumstances. The ability to enroll in these plans at almost any time also adds a layer of flexibility that can be particularly valuable in managing health coverage gaps during life changes. However, it is important to note that these plans are meant as a temporary solve and only offer coverage for a maximum of three months with an option to renew for only one additional month.

Cons of Short-Term Health Insurance

Short-term policies usually provide coverage for only three months, and there is no guarantee that you can renew the coverage. Short-term policies may not cover the benefits you need, since they don’t have the same coverage minimum required coverage as ACA plans. Some states place restrictions on short-term policies or prohibit their sales as well. However, short-term health insurance also has significant limitations that might outweigh its benefits for some individuals. These plans do not cover preexisting conditions, which can be a major drawback for anyone with chronic health issues such as diabetes, cancer, or heart disease. They also do not cover essential health services like prescription drugs, preventive screenings, maternity care, hospitalization, and pediatric care, which are typically covered under comprehensive health plans. Additionally, there are no caps on out-of-pocket expenses with short-term plans, which can lead to unexpectedly high medical bills. Moreover, these plans do not qualify for federal financial assistance, making them potentially less affordable than ACA-compliant plans, and they do not meet the federal standards for comprehensive coverage, putting consumers at risk of inadequate health protection.

COBRA Coverage

If you recently left an employer as a full-time employee, you may be able to continue your employer’s group health coverage for 18 – 36 months, depending upon the circumstances. Learn more about COBRA health insurance, here.

Pros of COBRA

You have the protection of continuous health insurance coverage while you get established as an independent contractor or freelancer. It’s essentially continuing the same coverage you had under your former employer.

Cons of COBRA

COBRA coverage is likely to be more expensive than purchasing independent contractor health insurance. You will run out of coverage, usually in 18 – 36 months.

Medicaid

This needs-based assistance program provides free coverage for about 74 million Americans and can be a solid insurance option for self-employed workers who qualify. Participation is based largely on income—in most states, Medicaid is available to those living below 138% of the federal poverty level—though disability and children are factors as well. You can check eligibility through healthcare.gov. 

Pros of Medicaid

Benefit provisions vary from one state program to another, but federal guidelines require all states to provide a minimal benefit package, including hospital inpatient and outpatient care, physician care, and many other services. Out-of-pocket costs for medical care are substantially lower than private health insurance. Enrollment is open year-round.

Cons of Medicaid

Access to healthcare providers who accept Medicaid may be limited. Eligibility rules may vary by state. Medicaid coverage ends when the insured no longer meets the criteria or eligibility.

How much is health insurance for self-employed?

In 2024, the average national monthly health insurance premium for one person on an ACA benchmark plan (i.e., “Silver” plan) is $477 per month.

Who qualifies for tax subsidies for health insurance?

Eligible individuals for 2024 must:

• Have a household income at or above the Federal Poverty Level (FPL) as defined by 2023 guidelines.
• Not have access to affordable insurance through an employer, including a family member’s employer.
• Not qualify for Medicare, Medicaid, or CHIP.
• Be a U.S. citizen or legal resident. Immigrants below 100% FPL may qualify if they meet other criteria.
• File taxes jointly if married.

How do you get tax subsidies for health insurance?

When you apply for subsidies, you will be asked to estimate your income for the year. You can give an estimate of your income and adjust it later if it changes. Your initial eligibility for a subsidy will be based on this estimate. Any changes in your income and your subsidy eligibility will be reconciled when you file your federal tax return, if you don’t report the income change when it occurs. If your income estimate is lower than your actual income, you may have to pay back some of your subsidy when paying your taxes.

How do I enroll in insurance if I am self-employed?

As a self-employed individual, obtaining health insurance requires a proactive approach during specific enrollment periods or qualifying life events. Understanding these options and making informed decisions are essential for securing suitable coverage. Here’s a breakdown of the enrollment process for self-employed individuals:

1. Open Enrollment Period (OEP): The Open Enrollment Period is a designated time frame during which individuals can enroll in or make changes to their health insurance plans. For most self-employed individuals, the OEP usually occurs annually, typically towards the end of the year. During this period, you can explore various health insurance options, compare plans, and select coverage that aligns with your healthcare needs and budget. For comprehensive information on the Annual Open Enrollment Period, you can visit Open Enrollment Period to gain insights into the enrollment process and its significance.

2. Qualifying Life Events (QLEs): Outside of the Open Enrollment Period, self-employed individuals may still have opportunities to enroll in health insurance through Qualifying Life Events. These events include life-changing circumstances such as marriage, birth or adoption of a child, loss of other health coverage, relocation, or changes in household size. If you experience a QLE, you may qualify for a Special Enrollment Period, allowing you to enroll in health insurance or make changes to your existing plan outside of the standard enrollment window.

3. Special Enrollment Opportunities: In addition to QLEs, certain circumstances may grant you access to Special Enrollment Opportunities. For instance, if you lose eligibility for Medicaid or the Children’s Health Insurance Program (CHIP), you can qualify for a Special Enrollment Period to enroll in a private health insurance plan.

Tips for Informed Decisions During Enrollment

During the enrollment process, consider the following tips to make informed choices:

• Assess Your Healthcare Needs: Evaluate your medical requirements, including prescriptions, doctor visits, and potential treatments, to identify the most suitable coverage options.
• Research Plan Options: Compare different health insurance plans, assessing their coverage details, network of providers, premiums, and out-of-pocket costs.
• Utilize Online Resources: Leverage reputable online resources, like eHealth Insurance, to gain insights into available plans and enrollment guidelines.
• Seek Expert Advice: Consult with insurance brokers or agents who specialize in health insurance for self-employed individuals. They can offer personalized guidance tailored to your unique needs.
• Budget Considerations: Analyze your budget to find a balance between affordable premiums and appropriate coverage, ensuring your health insurance aligns with your financial situation.

By understanding open enrollment periods, qualifying life events, and special enrollment opportunities, self-employed individuals can secure the right health insurance coverage to safeguard their well-being and financial stability. Making informed decisions during enrollment ensures that you have comprehensive coverage tailored to your specific healthcare needs as a self-employed individual.

Find a self-employed health insurance plan that works for you

Comparing health insurance options as an independent contractor or freelancer can be confusing. At eHealth, we want to make this experience as easy as possible for you. Our user-friendly site and licensed insurance agents are here to help you find the right coverage for the right price. Keep in mind that eHealth’s help is free of charge, and you won’t pay more for a plan purchased through eHealth than you would if you were to purchase it anywhere else. You can start comparing individual health insurance plans by entering your zip code and finding the best plans in your area.

This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.