Health Insurance for Self-Employed Individuals

Health insurance is an invaluable tool for self-employed individuals and small business owners, providing critical protection in case of unexpected medical emergencies. Unlike individuals who are covered under employer-sponsored health insurance plans, self-employed people are responsible for securing their own health coverage. 

Health insurance offers access to healthcare providers, including medical specialists, hospitals, prescription drugs, and preventive care. By investing in health insurance, self-employed individuals can protect their health and their small business from potential strains caused by unexpected medical expenses. In this guide, we’ll explore the ins and outs of health insurance, how it affects self-employed individuals, and how they can secure coverage.


If you’re looking for health insurance as a self-employed individual, we recommend checking out our partners at HealthNetwork. You can use HealthNetwork to check out plans in your area – including Medicare plans during open enrollment – and find coverage options that fit your needs.

Who Needs Individual Health Insurance?

Health insurance is something that everyone needs, regardless of employment status. This is especially true for those who are self-employed or small business owners and not covered by an employer’s health plan. Without insurance, even routine medical procedures or check-ups can become a financial burden. 

More importantly, unforeseen emergencies can lead to exorbitant medical bills, leading to debt and financial instability. Health insurance provides not only financial protection but also access to quality medical care. Self-employed individuals should prioritize finding a good health insurance plan to protect themselves from the financial risk of potential health issues.

Who is Considered Self-Employed?

Self-employment individuals are those who derive a majority of their income from self-employed Schedule C income. These individuals typically work as entrepreneurs, freelancers, or independent contractors, and they are considered self-employed because they are responsible for the success of their business. 

Self-employed individuals determine their work schedule, decide which projects to take on, and manage their own finances, including accounting and taxes. Furthermore, many self-employed individuals don’t have any employees, but may outsource work on a project-by-project basis to other firms or contractors. 

With the growth of the gig economy and more common job-hopping and side-hustling, self-employment is a growing trend that offers many benefits, including increased flexibility, greater control over work, and potentially higher income.

Some common titles for self-employed individuals include:

• Freelancer
• Consultant
• Independent contractor (including doctors, lawyers, etc.)
• Tradesperson
• Artisan
• Artist

However, regardless of title, self-employed may describe any other worker who does not derive their income from a W-2 job and who doesn’t have full-time employees of their own.

Health Insurance Coverage Options for Self-Employed Individuals

Self-employed individuals have several options when it comes to buying health insurance. Most commonly, they can enroll in a plan through the health insurance marketplace (Healthcare.gov), which offers a variety of affordable healthcare plans that can be tailored to their lifestyle and budget. Alternatively, they may opt for a private plan through a health insurance company or join a group plan through a professional organization. 

Here are some of the different options for self-employed individuals looking for coverage:

Marketplace

Self-employed individuals can use federal or state marketplaces to buy health insurance. These are ideal for those who need affordable healthcare coverage and don’t have access to the benefits provided by an employer. Through Healthcare.gov, enrollees can explore a range of health insurance options from various insurance companies – or be routed to an exchange specific to their state, where they can find even more tailored plans. 

Using a marketplace, entrepreneurs can compare plan details, costs, and benefits to choose a plan that fits their needs. Marketplaces also provide the option for qualifying enrollees to lower their premiums by applying for tax credits. And, if you need help finding a plan that fits your needs, you can go through the process with the help of an insurance agent in your area.

Medicare

Self-employed individuals who qualify for Social Security benefits can also receive Medicare coverage. Typically, this means being at least 65 years old, but it may also be an option for certain younger applicants who have a disability or meet other criteria. 

By enrolling in Medicare Parts A and B, individuals can access a range of medical services, including hospital stays and preventative care. Medicare also offers prescription drug coverage through Part D plans. For those who are self-employed and cannot obtain insurance coverage through an employer, Medicare can be a valuable option to help meet their healthcare needs. 

Medicaid

Self-employed individuals who are struggling to afford health insurance coverage may also be eligible for Medicaid benefits. While Medicaid is commonly associated with low-income families, it also provides expanded eligibility for individuals who are self-employed. This program allows qualifying individuals to purchase quality health insurance coverage at a reduced cost, making it a practical option for those who are looking to obtain affordable insurance as a self-employed individual. 

By enrolling in Medicaid, self-employed individuals can receive necessary medical care and preventive services without the added financial burden that comes with purchasing traditional health insurance plans. 

COBRA

COBRA stands for Consolidated Omnibus Budget Reconciliation Act and allows certain people to buy health insurance plans that meet their specific needs. To qualify for COBRA, individuals must have had a previous employer-sponsored health insurance plan and experienced a qualifying event such as job loss or reduction in hours. 

Under COBRA, individuals can purchase the same health insurance plan they had through their employer. While it can be more expensive than traditional health insurance plans, COBRA provides options for individuals who may not have access to other health insurance plans.

Short-term Medical Plans

Short-term plans offer temporary coverage options that allow for flexibility and cost savings. They are an ideal solution for individuals who are looking to bridge gaps in coverage or those in a transitional period, such as those between jobs or waiting for Medicare eligibility. Short-term plans are designed to cover unexpected medical expenses. 

By choosing a short-term medical plan, self-employed individuals can access quality health insurance at an affordable price. Additionally, short-term plans often offer a range of coverage options, allowing individuals to create a customized plan that fits their specific needs. 

SHOP Marketplace

The SHOP marketplace, or Small Business Health Options Program, is a government-run platform designed to help small business owners provide healthcare coverage to their employees. This service is available to businesses with 50 or fewer full-time employees, including non-profit organizations. It offers a selection of affordable health and dental insurance plans, along with employee tax credits. 

The SHOP marketplace is ideal for small businesses looking to offer competitive benefits to their employees without incurring high costs. With a variety of plans to choose from, employers can tailor their benefits package to offer the best options for their workforce.

Who Qualifies for Marketplace Savings?

The Affordable Care Act (ACA) provides income-based subsidies to those with a household income between 100% and 400% of the federal poverty level. If your income falls within this range, you may be eligible for premium tax credits that can significantly reduce the cost of your health insurance. 

It is important to note that the amount of savings you receive decreases as your income increases, so it is essential to accurately report your income to the marketplace to ensure you receive the correct subsidy. If you are uncertain about your eligibility or how to calculate your income, most marketplaces have a tool for seeing if you qualify. Alternatively, a licensed insurance agent can assist you with the process to make sure you don’t pay more than you should.

Tips for Getting Health Insurance as a Self-Employed Person

• Weigh premiums vs. deductibles: Plan premiums typically decline as deductibles increase. You shouldn’t choose a plan with a deductible so high that one medical event can cause serious financial strain, but choosing a plan with slightly higher deductibles can help you save a lot of money in monthly premiums.
• Check providers for in-network: Before you pick a plan, take the time to research local healthcare providers who are in- or out-of-network. If you have a current doctor or take prescribed medications, make sure these are covered by the plan or that you understand additional costs you may incur after moving to the plan.
• See if you qualify for savings: If you’re still building your freelance income or only work part-time as a gig worker, check whether you qualify for tax credits that can help lower your monthly premiums.
• Use an HSA: If you get a high-deductible plan (any plan with a deductible of $1,500 or more for an individual or $3,000 or more for a family), consider opening a health savings account (HSA). Using an HSA, you can make tax-deductible contributions each year (similar to an IRA) that help lower your taxable income and let you cover medical expenses (including deductibles) using pre-tax dollars.