Self-Employed Health Insurance
Self-Employed Health Insurance

Self-Employed Health Insurance

What Is Health Insurance?

Health insurance is a necessary expense in the US to ensure you do not incur excessive medical bills should you have an accident or an illness.

Health insurance is a benefit usually found in employment contracts.

It offers employees, their spouses, and their dependents a subsidized insurance plan to help pay for medical issues when they arise.

If you are self-employed, then getting the right health insurance is down to you.

There were more than 59 million people registered as freelance or self-employed in 2020 according to Statista

Although many people choose this way of working to attain a better work-life balance and increased flexibility, health insurance is one of many considerations that need to be made with this career choice.

As a self-employed person, whether you are a freelancer, a consultant, or an independent contractor, there are several ways to get insurance coverage, and the choice is up to you.

Choosing the right insurance provider and policy type is obviously more complicated than simply receiving a pre-arranged policy benefit through an employer.

There are many benefits to doing the legwork to find the right one for you, however.

The types of health insurance that you might want to consider as a self-employed person include:


COBRA offers a run-on health insurance policy that usually lasts for up to 18 months.

It is a continuation of the health insurance that your employer offers and is available to employees who have recently left an employer to become self-employed.

You can choose to take a COBRA policy up to 60 days after leaving employment and ensure you have no gap in coverage.

With COBRA, however, you are liable for the monthly premiums, including your employer contributions. This could make it a costly option for most freelancers.

There is also a 2% admin charge to be paid.

Short-Term Health Insurance

Freelancers can sign up for short-term insurance policies outside of the normal enrolment period (usually Nov-Dec). These usually last about three months.

As a health insurance option, they often offer low monthly premiums.

However, the out-of-pocket costs, copays, and deductions tend to be much higher than other options, and they are unlikely to cover any pre-existing conditions.

Industry-Specific Health Insurance

Membership of a union or an industry regulatory service might offer health insurance specific to your career area.

This might be a version of a group insurance plan; however, it is worth comparing coverage with other providers to ensure that you are not paying a higher premium to receive less benefit.

Health Insurance Marketplace

This is a good place to start when looking at individual or family health insurance plans.

Not only can you compare health insurance companies.

However, you can also find out if you qualify for tax credits, subsidized premiums, or Medicare/Medicaid as well as enrolling your eligible dependents on the Children’s Health Insurance Program (CHIP).

Parent/Spouse/Partner Group Plan

If you have a parent, spouse, or live-in partner that has a relevant insurance plan in place through an employer at a group level, you could be eligible to be part of that, rather than needing to seek your own insurance.

It is worth making sure that their coverage is relevant for you.

If you are single and living alone, you will not qualify for spousal coverage.

If you are over 26, you will not be considered on your parents’ insurance.

Private Health Insurance

Several private health insurance providers offer different levels of cover at varying rates.

Assessing each of these can be an issue for the newly self-employed who want to make the right decision.

Understanding what to look for and the different terminology involved in health insurance will help inform your decision and ensure that you receive the right coverage for the best overall price.

Why Should You Get Health Insurance?

Numerous freelancers and self-employed people in the US are young; therefore, health insurance might not appear to be worth the investment.

If you do not have this safety net in place for yourself and your family, you are vulnerable to the possibility that an accident or sickness could significantly alter your lifestyle and incur debt for the rest of your life.

Finding affordable health insurance that covers the needs of you and your family might be complicated.

However, not having protection should the worst happen is not worth the risk. You never know when an accident or illness might strike.

With the appropriate knowledge in place and a little time, finding good health insurance that will not break the bank is not as complicated as you might think.

What Will Affect the Price of Your Premium?

The average premium in the US for a single health insurance plan is $456 per month, and for a family is $1,134.

Several factors can affect the costs of your health insurance, including:

  • Age: You can expect your total insurance costs to increase as you get older.

  • Tobacco use: Smokers can pay up to 50% more in premiums in some states, although in others, it is not permissible for an insurer to charge more for smokers.

  • Pre-Existing Conditions: There are some conditions that an insurer will not give coverage for, and others might mean paying more in premiums or deductibles.

  • Location: Despite attempts to standardize health insurance across the US, costs still vary in different locations. This is often due to the costs of the provision in that area.

  • Individual/Family: The number of people named on the insurance policy will increase the monthly premiums.

  • Services Covered: If you have a basic health insurance plan, several things have to be covered by the law; however, if there are additions to the policy (for example, dental insurance), the premiums might be higher.

  • Subsidies/Tax Credits/Medicaid: If you qualify through low income, disability, or any other reason, then you might get subsidized premiums and copays, which will bring down the overall cost.

Self-Employed Health Insurance: What Do You Need to Know?
Self-Employed Health Insurance: What Do You Need to Know?

What Should You Look For in a Health Insurance Provider if You Are Self-Employed?

When comparing the differences between health insurance coverage and policies, you must look beyond the monthly costs.

Although the premium is an important consideration, there are other aspects to consider to prevent being startled by hefty copayments, coinsurance, or out-of-pocket spending, as lower rates usually include expenses for other products.

Conducting research before making a claim is wiser than finding yourself without coverage or handling complaints when you become unwell or are injured.

Monthly Premium

This is the cost that you will pay, usually monthly, whether not you use any healthcare services.

Most health insurance companies provide several coverage levels or tiers with premiums reflecting what is covered and how much it would cost if you need anything.

Other Costs

There are several other costs associated with health insurance. These include:

  • Deductibles: The amount you pay towards a health service before health insurance kicks in (usually a dollar amount; however, sometimes a percentage)

  • Copay (copayments): A flat fee for filling a prescription or visiting a doctor

  • Coinsurance: Percentage cost that you pay for the insured service (for example, you pay 20%, and the insurance pays 80%)

  • Out-of-pocket expenses: Usually, health insurance will pay up to a set amount of out-of-pocket expenses, and anything above that needs to be covered by you

These different amounts might mean that if you pay a lower monthly premium, then other costs are higher, and vice versa.

What Is Covered?

Because of the Affordable Care Act, certain medical expenses have to be covered by health insurance, including:

  • Emergency health services, including hospitalization
  • Maternity care
  • Pediatric care (including newborn, dental and visual care)
  • Mental health and substance abuse treatment, including rehab
  • Prescription drugs
  • Management of chronic diseases

This standardization of provision means that no matter which insurance company you choose, you are guaranteed to get coverage for these expenses.

The other thing to consider is if other health services are covered, such as telehealth, dental insurance, and vision care.

Network Coverage

Health insurance providers will only work with a certain number of hospitals and doctors.

Therefore, it is essential to ensure that coverage is available to you in your location and that all the staff in the hospital are in-network, including the laboratories.

Medicare/Medicaid Support

Some private health insurance policies do not work in tandem with government provisions in terms of Medicare and Medicaid.

Therefore, if you are in a qualifying group, it is best practice to ensure that they are supported.

Many policies can be adjusted to allow for government support to be used in conjunction.

Is Health Insurance a Deductible Business Expense?

In most states, health insurance premiums are a deductible business expense and can offer you a tax break.

When you file your tax return, you can deduct the total premiums paid for health and dental insurance from your gross income.

This could reduce your tax bill or increase your refund.

The deductions you can use include premiums for you, your spouse, and any dependents up to the age of 26.

You cannot deduct more than your net profit for the year; however, the tax breaks might convince some self-employed people to choose a higher premium plan.

The knowledge that there will be less costly in terms of deductibles alongside the reduced tax bill you will receive is quite convincing.


Cigna offers a convenient range of services that are appropriate for self-employed people who do not have the time to physically attend appointments.

With a wide range of coverage for virtual services, including telehealth and prescription delivery, Cigna offers global coverage for 180 million customers in 30 countries, including many US states.

Blue Cross Blue Shield

Operating since 1929, Blue Cross Blue Shield has high customer satisfaction rates, with more than 107 million customers in all 50 states.

The network coverage offered by Blue Cross Blue Shield is almost unbeatable, with 96% of hospitals and 95% of doctors considered in-network.

Policyholders can also enjoy discounts on services, like gym membership.

Kaiser Permanente

With a strong reputation as a leader in preventative care coverage, Kaiser Permanente has more than 12.4 million customers despite having a more limited area of coverage (just seven states).

Kaiser Permanente offers a variety of plans, including Medicare supplemental plans.

The claims process is more complicated than that of other providers.

However, Kaiser Permanente's emphasis on "keeping healthy" could make it a good choice for those without dependents or underlying health conditions.

Molina Healthcare

Designed to support the underserved groups in the US, Molina Healthcare specializes in affordable health insurance for those who rely on government assistance.

Although not available in every state, the plans are transparent in terms of pricing with low out-of-pocket expenses and are designed to work with Medicare and Medicaid.

Final Thoughts

Health insurance might seem an unnecessary inconvenience to put in place; however, the benefits will become obvious should you or a family member have an accident or become unwell.

Not only could have an accident or illness yourself cause steep medical bills, but you must also consider that you might not be able to work.

As a freelancer, you are your business. Without insurance, you could incur serious debt problems for many years if the worst does happen.

Choosing the right health insurance coverage can provide you peace of mind in knowing that you, your family, and your company are protected.

It may even save you money on your tax payment if you consider it carefully.

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