Whether You’re Working the Gig Economy or Self-Employed You Have Several Options.
What Is a Freelance Worker?
A freelance worker, independent worker, or self-employed person is someone who does business on their own and does not work for any one company. As a freelancer or self-employed worker, people enjoy many benefits and flexibility, as well as work-life balance, but also have to manage all aspects of their work themselves. Health care coverage is one important consideration when you decide to become a freelance worker, or are self-employed.
How Much Does Health Insurance Cost for Freelancers?
Although it would be great to be able to give one number to answer this question, everyone’s health insurance rate will vary. However, before you worry about how much health insurance costs, consider that in 2016, according to Department of Health and Human Services the average American with a federal marketplace plan paid $106 a month after subsidies. In addition to the marketplace, you also have other options to find affordable health insurance.
Should Freelance Workers Worry About Healthcare and Health Insurance?
With constant talk of changes to the health care system, repeal and other issues, health care costs are everyone’s concern. Being a freelance worker puts you at risk because if you are sick and suddenly can’t work, you will lose your income while having to pay hospital bills and costs of medication and treatment. Without a group health insurance plan through a traditional workplace, getting covered on your own is increasingly important.
We have some strategies to offer that can help you figure out what the best way is to insure yourself and options of where you can turn to find health insurance as a freelance worker.
Freelance Work in the United States
Many people are choosing to work independently, in fact, in 2015, 1 in 3 workers were choosing to earn income from non-traditional work, that works out to 53 million Americans.
The estimates are that by 2020, that’s just 3 years away, 50 percent of the workforce in the United States will have some form of freelance work. A major challenge facing independent, self-employed or freelance works is in finding affordable and reliable health insurance coverage. Luckily there are several options to choose from, and with a little research, a good plan can be found to make sure that you can protect your health and get medical care when you need it.
Resources for Independent, Freelance or Self-Employed Workers
With shared office spaces through companies like WeWork, and ample opportunity to rent office space, as needed, for example through companies like Breather, independent workers are finding it easier than ever to conduct professional business in profitable ways as freelancers, consultants, and self-employed workers.
Some of these services, like WeWork, even offer help to independent workers with human resources, web consulting, and accounting. However, one area that remains challenging, and often difficult to justify as an expense for freelance workers is finding affordable health care.
5 Places to Get Health Insurance as a Freelance Worker or When Self-Employed
You can find health insurance through several places as a self-employed freelancer.
Some options include:
- The Freelancers Union, which offers a health insurance plan, as well as supplemental medical plans like dental, or other insurance plans like life insurance.
- If you recently left your job or are about to leave your regular employment to venture out on your own as a self-employed or freelance worker, most health insurance plans offer the option when leaving a job to convert your existing group plan into an individual plan. Individual plans may be more expensive depending on your personal circumstance, but the costs you might save in working for yourself may easily cover the difference. If you are leaving your job, you also may qualify for the special enrollment period that we explain below. Be sure and check your options there to make sure you save money wherever possible.
- Ever since Obamacare or the Affordable Care Act, you can find health insurance through the health care marketplace either as an individual or in some circumstances as a small business. Most freelancers won’t be in the small business category, but here’s the link, just in case it applies to you either now, or if your business grows.
- Your Spouse’s Health Insurance or Domestic Partner’s Health Insurance may be a good option to consider and one that can save you money if you have decided to be self-employed and do freelance work. Even if you are not legally married, you may qualify as a domestic partner if you share the same home and live a domestic life together, as long as you are not married to anyone else. You can learn more about who qualifies as a domestic partner here.
- Your local chamber of commerce, professional association or business groups. If your profession has associations, or if you become a member of a self-employed worker or independent worker association, you may be able to get group insurance through these kinds of memberships. The group insurance allows individuals to band together as members of a group of self-employed workers giving a similar effect to the kind of group insurance you would get through an employer. You can read more about plans like this and other options for health insurance plans in our article here.
What Kind of Health Insurance Plan Is Best for Freelancers?
There are a number of strategies you can use to find the most affordable health insurance policy. Because health insurance is based on several factors, your individual situation and needs become an important factor in figuring out what plan will work best for you. We cover an extensive list of ideas and options to find affordable health care in our article: 10 Ways to Keep Your Health Care and Insurance Affordable.
What to Do If You Missed Open Enrollment and Need Health Insurance
If you missed open enrollment, you can visit the marketplace and see if you qualify for a special enrollment. Life changes and circumstances make it possible for you to qualify outside the open enrollment period for health insurance. You can also get health care if you qualify for Medicaid or CHIP. You can learn more about this and see if you qualify for health Insurance enrollment outside of the open enrollment period here.
What About Short Term Health Insurance Plans or Temporary Insurance for Freelancers?
Short term health plans do not provide you with the benefits or coverage options that are offered by the Affordable Care Act (ACA) plans. A short term health insurance plan may be a temporary option to consider if you missed the open enrollment period and want to avoid paying medical costs until you can get ACA type coverage, however, they do not meet the condition of the Affordable Health Care Act (ACA) and may result in you having a penalty to pay under the ACA minimum coverage requirements if you do not carry the required coverage for at least 9 months of the year. Speaking to a licensed health insurance broker may help you uncover many more options, they will be in a position to give you professional advice, and will also be able to tailor solutions to your needs. Make sure to check all the other options outlined above before choosing this kind of solution.
Do You Have to Have Health Insurance If You’re a Freelancer?
If you can afford health insurance, then you must buy your own health insurance under the Affordable Care Act. Even self-employed or freelance workers need to have the “minimal essential coverage” health insurance.
How Tax Credits for Freelance Workers and Health Insurance Costs Work
Subsidies and tax credits can help make your health care costs affordable. You may also be able to get an advance tax credit. In a Department of Health and Human Services Report from March 2016: “The average advance premium tax credit covers about 73 percent of the gross premium for individuals who qualify for an average advance premium tax credit.”
The Penalty for Not Having Health Insurance Is Not Worth It
If you can afford health insurance and don’t qualify for an exemption, then you will have a penalty to pay known as the individual mandate penalty. The penalty is payable when you file the taxes for the year you did not have health care. The amount of the fee depends on your personal situation and can end up being quite costly. It is based on the greater of the following:
- 2.5 percent of your household income
- Total yearly fee of a bronze plan health insurance
- $695 per adult, $347.50 per child under 18 to a maximum of $2,085 in 2016/2017
So, although paying for health insurance when you are a freelancer may seem difficult to budget for, you may end up paying more long term if you don’t sign up for a plan.
Cutting Health Insurance Costs
If you find the plan prices expensive, then consider taking a higher deductible plan, or choose a lower “metal-level” in the marketplace. Again, consider having a discussion with a health insurance broker who represents several insurance companies and can search various options for you. The more you shop for your health insurance, the more likely you are to save money. Shopping in only one place will limit your possibilities.
Make sure you and your family have health care coverage rather than pay the penalty, make sure to apply for tax deductions for premiums paid, and this way you won’t pay the penalty to the government at tax time for not having health insurance and get nothing in return.