Beginner’s Guide to Health Insurance for Freelancers

Navigating the complex terrain of health insurance as a freelancer can seem daunting, but with our Beginner’s Guide, you’re about to unlock the secrets to securing your peace of mind and health with confidence, paving the way for a thriving freelance career.

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You probably have a lot to consider before you decide to call yourself a freelancer or small business owner. Aside from getting your first clients and making sure you have all the necessary tax information, you should also be prepared to cover your health insurance plan. Without a group insurance plan or 401(k) from your employer, it may be hard to know where to look to ensure you’re covered and making the right decision for your life.

Don’t worry; we’ve got you covered. In this guide, we’ll explore the different options available as a freelancer to help you make a better-informed decision about your health insurance coverage. 

5 Ways to Access Health Care as a Freelancer

The number of people turning to freelancing and becoming self-employed is increasing. In 2020, freelancers accounted for 36% of the workforce in the United States. Freelancing brings freedom, but it also means paying for your own insurance. 

Thankfully, you have a few options. You may even find local, national, and industry-based organizations that provide group health insurance plans for freelancers.  

  • Join a spouse’s or parent’s health insurance
  • Enroll in a health care plan through the ACA
  • Enroll in COBRA through your previous full-time job
  • Become a member of the Freelancers Union
  • Medicaid for low income workers

Spouse’s or Parent’s Coverage

If you are under age 26 and your parent’s health plan covers dependents, you can stay on their plan until you turn 26. This is because the Affordable Care Act (ACA) requires insurance providers to extend coverage. 

  • If your parents have job-based insurance (they have it through work), they should check with the plan provider or their employer for details on how and when they can add you.
  • If your parents’ insurance plan is through the Health Insurance Marketplace, they can add you during the yearly open enrollment period, which runs from Nov. 1 through Dec. 15. You can also be added through the special enrollment period, which allows for enrollment outside of the open enrollment period if you experienced certain life events, like losing health coverage, moving, getting married, having a baby, or adopting a child. 

If you’re married and your spouse has health insurance coverage through work, you can also be added to their plan. Have your spouse contact the insurance provider and ask about the process; most policies can be converted from an individual to a family plan quickly and easily. However, you might see an increase in monthly premiums and deductibles. If you are not married but are in a committed relationship and share a home with your partner, you may still qualify to be added to their insurance policy as a domestic partner. 

Enroll in a Plan Through the ACA

You can also get insurance coverage for yourself and your family through the Affordable Care Act (ACA), sometimes called “Obamacare.” The ACA created the Health Insurance Marketplace where anyone can sign up for a health plan, regardless of their employment status. This may be the best health insurance option for you because it allows self-employed individuals to choose from different plans. 

Through ACA, you can sign up for a plan during the open enrollment period. Federal open enrollment lasts from November 1 to December. 15, but some states open their enrollment periods sooner, or extend their deadline. 

You may sign up through special enrollment if you go through a qualifying life event, such as marriage, divorce, or job loss, which impacts your insurance status. However, you must enroll within 60 days of the life event or you’ll risk needing to wait for the next open enrollment period.

Find additional information on how to enroll through or your state’s Marketplace.

Enroll in COBRA Through Your Previous Job

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a government program that allows employees to keep their group health insurance plan when they leave their job for whatever reason. Through COBRA, your employer’s insurance provider will convert the group plan to an individual plan for you. This makes it possible to keep your existing coverage for 18 or 36 months. 

However, group insurance plans cost less because the premiums are pooled. With an individual plan and without a subsidy from your employer, you’ll have to pay full price for the plan plus a 2% administrative fee. If you want to explore this alternative, contact your employer’s insurer and get information on COBRA coverage and the monthly premium.

Become a Member of the Freelancers Union

You may also want to consider joining the Freelancers Union. It’s an organization where freelancers can receive benefits commonly available only through labor unions, such as advocacy on public policy, resources, and health insurance plans. Membership is free and open to freelancers of all kinds. Aside from health plans, the union also offers coverage on dental, vision, disability, liability, and term life insurance. 

Similarly, if you are a member of a professional organization or trade group, connect with your community and explore what they have to offer for insurance benefits and discounts. Your local Chamber of Commerce can also be a good resource due to offering group health insurance for freelancers and self-employed individuals in some areas. 

Use Medicaid if You’re Low Income

If your freelance business is not profitable yet, you may qualify to apply for health insurance through Medicaid. Since the program is state-run, the eligibility requirements vary from state to state and may depend on your income, household size, family status, disability, age, and other factors. 

For income eligibility, the threshold is 138% of the federal poverty level ($12,760 in 2020 for individuals). This means if you earned less than $17,608 the previous year, you may qualify for Medicaid coverage based on income.

Average Costs of Health Insurance for Freelancers

The cost of health insurance plans for freelancers will vary depending on the plan you choose, your age, location, pre-existing conditions, and whether you’ll be enrolling as an individual or with your family members. 

Here are some terms you also need to be familiar with to better understand your health insurance plan coverage: 

  • Premiums: Your health insurance premium is what you’ll pay yearly or monthly to your provider to be enrolled in a plan.
  • Deductibles: This is the amount of money you’ll need to pay out of pocket for any medical service you receive before your plan starts covering the costs. Deductibles reset every year for most insurance policies. 
  • Copays: A copayment is a fixed amount that you’ll be expected to pay for any service covered by your plan. Each service covered by your insurance will have a specific copay amount. You’ll start paying copays after you meet your annual deductible. 
  • Coinsurance: Coinsurance is like a copay, but instead of a fixed amount, you’ll pay a percentage of the cost of any medical service you receive. 
  • Out-of-pocket costs: This refers to any medical expense that you must pay for on your own. Deductibles, copays, and coinsurance are considered out-of-pocket costs. 
  • Out-of-pocket maximums: All plans set out-of-pocket maximums. When this amount is met, any medical expense covered in your policy will be paid for by your plan.

Learn More About the Benefits and Options for Freelancers

Look for health care coverage that suits your freelance work and lifestyle. The options presented in this article are intended to start you in the right direction of finding an affordable health insurance plan that meets your needs. There are numerous plans on the market, so we also recommend seeking advice from insurance agents.

At ZenBusiness, we understand you’re being pulled in every direction as a new business owner. Let our dedicated team take care of the details of starting a business so you can focus on succeeding.

Freelancer Health Insurance FAQs

  • There are several health insurance plans for freelancers, including:

    • Being added or staying on a parent’s health plan
    • Being added to a spouse’s employment health insurance
    • Enrolling in a health insurance plan on the ACA Marketplace
    • Converting an existing group employment plan to an individual through COBRA
    • Becoming a member of the Freelancers Union and taking advantage of the health insurance plans made available through the organization
    • Applying for low-cost health insurance plans through Medicaid
  • Check this list by Investopedia for the best health insurance companies for self-employed individuals. They’ve compared 15 of the top providers, reviewing each company’s history, reputation, convenience, nationwide availability, and claims process.

  • As a freelancer, you’re essentially a small business owner. You have more flexibility and control over your work hours, who to work with, and how much you can earn. The downside is having to shoulder health care costs, live without paid time off, and plan for retirement on your own.

  • According to the Health Insurance Index Report for 2019, here are the average monthly premiums for individual plans and families:

    • $448 — average monthly premium for individual plans
    • $404 — average premium for individuals aged 35 to 44
    • $279 — average premium for individuals aged 18 to 24
    • $799 — average monthly premium for individuals aged 55 to 64
    • $1,002 — average monthly premium for two-person families
    • $1,403 — average monthly premium for four-person families

    These figures represent households and individuals who didn’t qualify for any subsidies. The Centers for Medicare and Medicaid Services (CMS) reported that after applying subsidies, the average monthly individual premium amounted to $87.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

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