So you’ve decided to become a freelancer. Congratulations! Now that you’re in control of your career, it’s time for you to learn about some important facts about freelancing and health insurance.
Even though the Affordable Care Act has made individual health insurance available with guaranteed issues, it can still be difficult to navigate all of the choices out there.
That’s why we created this guide, just for freelancers like you! In these pages, we’ll explain how the ACA works, and whether or not you should get an Obamacare plan (and if so, which one).
What short-term medical plans are and whether they’re right for you, what tax credits apply to self-employed people (like yourself), and more.
| Takeaways |
|---|
| Freelancers have various health insurance options available to them. |
| It’s crucial for freelancers to research and understand the different types of health insurance plans. |
| Professional associations can offer group rates and specialized coverage for freelancers. |
| Freelancers may be eligible for health insurance subsidies based on their income. |
| COBRA allows freelancers to continue their employer-sponsored health coverage for a limited period. |
| Alternatives to traditional health insurance, such as health sharing ministries and short-term plans, can be considered. |
| Estimating the cost of health insurance requires evaluating factors like age, location, coverage needs, and pre-existing conditions. |
| Finding the right health insurance plan is essential for freelancers’ financial security and well-being. |
If You’re A Freelancer, You Need Health Insurance
Health insurance is a must for freelancers because it can protect them from financial hardship in the event of an accident or illness. Many freelance workers also use their health insurance to cover routine care such as checkups and prescriptions.
Additionally, smaller companies do not offer benefits packages that include health coverage; therefore, freelancers are often responsible for paying the entire cost of their healthcare expenses out of pocket.
This can be difficult if they have been injured and have no income streams while recovering from their injuries or illness.
To choose the right type of plan for your needs, consider what kind of coverage you need: basic? comprehensive? HMO/PPO/POS? Aetna has options available so that you can get what is right for your situation!
When it comes to getting freelance health insurance in the USA, knowledge is key. Check out our comprehensive guide on top 15 things to look out for when getting freelance health insurance in the USA to make an informed decision for your coverage.
The Affordable Care Act (ACA) Still Applies To Freelancers
If you’re a freelancer, you might be wondering if the Affordable Care Act still applies to you. The answer is yes the ACA still applies to freelancers.
You may have heard that freelancers can opt-out of ACA and pay for their healthcare without the help of tax credits or subsidies, but this isn’t true (and it’s not a good idea).
The reality is that unless your income from self-employment alone is equal to or more than $11,700 in 2019 (up from $10,800 in 2018).
Then even if you opt-out of ACA coverage, which would require paying full price for whatever insurance plan your state offers on its exchange marketplace (if there is one).
Then when filing taxes next year as an independent contractor with no employer-provided health benefits through their company they’ll have to pay extra taxes because they aren’t eligible for any kind of subsidy
During tax season due to not having any employer assistance while being classified as an independent contractor instead of being considered an employee under federal law like before.
This rule changed during Obama’s presidency years ago when he signed into effect new regulations making changes like these happen overnight without warning anyone about them beforehand.
So now people across America are scrambling trying figure out what happened after seeing all these changes take place
You Can Buy Individual Health Insurance If You’re A Freelancer
Individual health insurance is cheaper than family health insurance, but it’s more restrictive in terms of what it covers. For example, with family health insurance you can typically add more people to your plan as dependents at no additional cost.
But with individual health insurance, any additional people will be subject to rate increases based on the age and gender of each person added.
You may also want to consider buying short-term disability (STD) coverage for income protection when your disability leaves you unable to work for an extended period and STD is not included in most plans like COBRA or group benefits through employers.
Are you a self-employed freelancer looking for health insurance? We’ve got you covered. Discover effective strategies and tips for finding health insurance options when you’re self-employed in our article on how to find health insurance when you’re self-employed.
You Can Buy Family Health Insurance As A Freelancer
If you’re a freelancer, you have more options for health insurance than someone who is employed. For example, if your spouse or children are not eligible for coverage under their own employer’s plan, then you can buy family health insurance as a freelancer.
Another option is individual health insurance if you’re a freelancer. This is similar to the way individual life and disability policies work:
You may need to prove that your spouse/family members are not eligible for coverage from another source before purchasing this type of policy on their behalf (e.g., through an employer).
If your income does not qualify for subsidies under the Affordable Care Act (aka “Obamacare”), then high-deductible health plans may be right up your alley as well these have lower premiums but higher deductibles before benefits kick in!
Non-ACA plans also exist; however, these come with fewer consumer protections like guaranteed issue and pre-existing condition clauses than those offered under Obamacare–so be sure they’re right for YOUR situation!
You Can Get High-Deductible Health Insurance As A Freelancer
High-deductible health insurance is an excellent choice for freelancers. You can get high-deductible health insurance as a freelancer through your employer or a private insurer.
High-deductible health insurance is also known as a health savings account (HSA), which allows you to use pre-tax dollars to pay for medical expenses that aren’t covered by the plan’s deductible.
This can help you save money in the long run because you’ll be paying less in premiums and out-of-pocket costs, but it does require you to be thrifty about how you spend your healthcare dollars.
You Can Get Non-ACA (Obamacare) Health Insurance As A Freelancer
The short and sweet answer is yes. You can get non-ACA health insurance as a freelancer. Non-ACA health insurance is also called “non-compliant” or “association” coverage, and it’s not available on the ACA exchanges.
Although it may sound like a good idea to forgo ACA compliant coverage in favor of an alternative, non-compliant plans have their own set of problems that don’t make them worth considering:
- They are typically more expensive than ACA-compliant plans (sometimes by as much as $100/month).
- They have less choice in doctors and hospitals than the ACA exchanges do (which means if you ever need urgent care or hospitalization, your options could be limited to just one doctor or facility).
- They often do not cover out-of-network care at all (this means that if you need treatment from someone who isn’t part of your plan network, they won’t pay any portion of your bill).
Buying health insurance for the first time as a freelancer can be overwhelming. Don’t worry, we’ve got you covered with our list of 13 things to consider when buying health insurance for the first time. Take a look and make a confident decision for your coverage.
What About Short-Term Medical (STM) Plans For Freelancers?
STM plans are also known as mini-med plans, and they have nothing to do with the ACA. They’re not available on healthcare.gov or any state marketplace websites you have to buy them directly from an insurance company.
They’re not comprehensive health insurance policies, but they can be good options if you don’t qualify for a subsidy under the ACA and don’t want to pay individual market rates.
There are some downsides: STM plans aren’t guaranteed renewable (meaning that if your income or job status changes, your coverage could end), so you run the risk of losing coverage altogether when you need it most.
They also typically offer lower provider networks than other types of health plans do (which means fewer providers may be covered by your plan). And they often have high out-of-pocket expenses (like copays).
Can I Get Group Health Insurance As A Freelancer?
If you’re a freelancer, you can buy health insurance through:
A group plan. If your company has at least 50 people working for it and offers health benefits to its employees, you may be able to join that group plan.
A private exchange. Some states have created their health insurance marketplaces (also called exchanges) for individuals who do not get coverage from an employer or government program such as Medicare or Medicaid.
In these exchanges, individuals can shop for and compare different types of plans before purchasing one that best meets their needs and budget. You can learn more about private exchanges here [link].
A public exchange. Most states operate their public exchanges where small businesses or individuals purchase coverage through the same process used by large employers who provide benefits directly to their workers.
For example, filling out forms online rather than calling a broker on the phone (although brokers are still available). People who qualify for subsidies on the individual marketplaces may also have access to subsidies on public exchanges;
However, there are some differences between how these two kinds of plans work so consumers must understand what they are getting into before deciding which type of plan best fits their situation
What Are My Coverage Choices If I Am A Self-Employed Sole Proprietor?
The self-employed sole proprietor is the best choice for those who are freelancing, as it provides the most flexibility and is the cheapest option.
With this type of insurance, you would only need to pay for your medical expenses; your spouse, children, and dependents will not be covered.
However, if you have a spouse or dependents that do not work with you in your business then they can be added to your coverage plan. Alternatively, if you are paying for their health insurance already then there is no need for them to take out their plan as well.
The Employer Mandate And Auto-Enrollment Penalties
You might be wondering whether the employer mandate is still in effect. Yes, it is.
But what about the penalties?
There are no penalties for those who haven’t been covered by a group health plan they simply won’t have to pay the individual mandate penalty at tax time if they don’t have coverage.
However, if you were going to get insurance through your employer but didn’t because of this change and then got sick or injured during that year without coverage.
Then yes: you would be responsible for paying your medical bills until you could get back on an employer-sponsored health plan (or another form of health insurance).
When it comes to freelance health insurance in the USA, you need to be well-informed to make the right choice. Explore our comprehensive guide on top 15 things to look out for when getting freelance health insurance in the USA and ensure you have the coverage you need.
How Will The ACA Impact My Taxes?
The ACA provides tax credits to self-employed sole proprietors who purchase health insurance through the exchange. This is an important benefit because it means that you’re not paying full price for health insurance.
You might pay a little more than the average cost of premiums across all individuals, but this can be offset by how your tax burden will be reduced.
The government will give you money based on how much you earn and how much they think that you need to cover your health care costs (this amount is calculated using a percentage of your yearly income).
If these credits are available to freelancers under the age of 65, then it’s likely that they’re available to freelancers over 65 as well!
Do Any Tax Credits Apply To Me?
If your company is small, then you may be eligible for tax credits.
Tax Credits For Freelancers
If you’re a freelancer, there’s no way around it: taxes are going to be part of your life.
As a self-employed person, you’ll have to pay both the employee and the employer portion of Social Security and Medicare in addition to other deductions like state income tax and health insurance premiums.
But luckily, some types of small businesses qualify for reduced tax rates and if yours is one of them, then congratulations! You can take advantage of this opportunity by using an IRS form called Schedule C (Profit or Loss from Business). See which factors qualify below:
Tax Credits For Self-Employed Individuals (Sole Proprietorships)
A sole proprietor has no employees and has assumed all financial risks associated with operating their own business. If this sounds familiar, then congratulations!
Your business might qualify as a sole proprietorship so long as your annual gross receipts don’t exceed $50K ($25K if filing as head of household).
This means that even though many self-employed people file under Schedule C instead of Form 1040 (the standard income tax form).
They still need to report any income they make at the end of each year through Form 1040 because they’re considered “self-employed” rather than “independent contractors.”
Freelancers Can Find Excellent Health Care Options Outside Of The Traditional Work Setting
Freelancers can find excellent health care options outside of the traditional work setting. Have you considered joining a health insurance plan through a trade organization or professional association?
If you’re an independent contractor, you may be able to get access to a flexible spending account (FSA) which allows you to contribute money on a pre-tax basis directly from your paycheck. Those funds are then used exclusively for medical expenses.
You will have ample time to use up all the money in the FSA each year before it expires at the end of December 31st.
This is unlike other types of health insurance plans that require employees to pay out-of-pocket until their deductible amount has been met, after which point employer-sponsored benefits kick in and help cover some costs as well.
But only up until they hit their annual maximum benefit limit (which can vary widely from one company’s plan to another’s).
Looking to leverage your freelance skills and start an online business? Our article on how to use your freelance skills to start an online business provides valuable insights and actionable tips to help you kickstart your entrepreneurial journey.
Conclusion
The American health care system has come a long way in the last few years, and freelancers are benefiting. Thanks to the Affordable Care Act, no one can be denied coverage for pre-existing conditions or charged more because they’re sick.
The availability of new options like short-term medical plans and association memberships means that even those who don’t qualify for subsidies on the Marketplace can find affordable coverage.
Once you enroll in a plan, you can begin taking advantage of some great benefits like preventive care with no out-of-pocket costs, prescription drug discounts, and free flu shots at your local pharmacy or grocery store just to name a few!
And if you need more information about how these changes will affect your taxes (for example, what tax credits apply to me?), we have an article explaining everything here.
Further Reading
Health Insurance for Freelancers: A Comprehensive Guide: This comprehensive guide provides in-depth information about health insurance options specifically tailored for freelancers. Learn about different coverage options and how to find the right insurance plan for your needs.
Yes, Freelancers Can Get Health Insurance: 12 Options: Discover 12 different health insurance options available for freelancers. This article explores various avenues to obtain health coverage, including private plans, government programs, and professional associations.
Getting Self-Employed or Freelancer Health Insurance: Learn about the specific steps and considerations for obtaining health insurance as a self-employed individual or freelancer. This resource provides insights on navigating the enrollment process and finding affordable coverage options.
Now, let’s move on to the FAQs section:
FAQs
Can freelancers qualify for health insurance subsidies?
Yes, freelancers may be eligible for health insurance subsidies, depending on their income level. Subsidies can help reduce the cost of premiums and make health insurance more affordable.
What are the advantages of purchasing health insurance through a professional association?
Purchasing health insurance through a professional association can offer several advantages, including group rates, broader coverage options, and access to specialized plans tailored to the needs of freelancers in specific industries.
Is it possible to keep my current health insurance plan when transitioning to freelancing?
In some cases, freelancers may be able to keep their current health insurance plan through COBRA (Consolidated Omnibus Budget Reconciliation Act). COBRA allows individuals to continue their employer-sponsored health coverage for a limited period, typically up to 18 months.
How can I estimate the cost of health insurance as a freelancer?
To estimate the cost of health insurance as a freelancer, you can explore different plans and obtain quotes from insurance providers. Factors such as your age, location, desired coverage, and any pre-existing conditions can influence the cost of premiums.
Are there any alternatives to traditional health insurance for freelancers?
Yes, there are alternatives to traditional health insurance that freelancers can consider. These include health sharing ministries, short-term health insurance plans, and health savings accounts (HSAs). It’s important to research and evaluate the suitability of these alternatives based on your individual needs and circumstances.
Costantine Edward is a digital marketing expert, freelance writer, and entrepreneur who helps people attain financial freedom. I’ve been working in marketing since I was 18 years old and have managed to build a successful career doing what I love.