Best Health Insurance for Self Employed & Freelancers
This guide is for anyone who is an independent professional who doesn’t get health insurance from an employer or the government, and who is looking for a way to make even major and catastrophic healthcare events affordable – at a price that’s realistic for your budget.
Traditional Health Insurance for Self Employed & Freelancers
Health insurance is the first thing most people think about when it comes to medical plans. For many, it’s also the most expensive.
However, traditional individual health insurance does have two major things going for it:
- Insurance companies must cover pre-existing conditions costs from day one for new enrollees. However, you must enroll during the Affordable Care Act open enrollment period (November 1st through January 15th in most states), or during a 60-day Special Enrollment period triggered by a life event, such as job loss, relocation, marriage, widowhood, or divorce.
- You may qualify for a premium tax credit subsidy to help make your premiums more affordable. The exact amount of your subsidy will depend on your income and the size of your household. But if your family income is less than 400% of the federal poverty line, you will likely qualify for at least some subsidy.
For those with pre-existing conditions who don’t want a break in coverage that would expose them to potentially major medical costs, and for those who want or need a subsidy to afford health insurance, a traditional health insurance plan may be the best choice.
Click here to see what specific plans are available in your area––and contact an HSA for America Personal Benefits Manager to get personal guidance in choosing the best plan for your needs and for signing up.
Compare Pricing on the Best Insurance Plans Available
If You Don’t Get a Subsidy…
For those who make too much to qualify for an Affordable Care Act subsidy, though, traditional “Obamacare” premiums have become increasingly unaffordable since the law’s passage nearly 15 years ago.
As of 2023, the average cost for a “silver” tier Marketplace plan ACA is $453 a month for a 30-year-old, $509 for a 40-year-old, and $712 a month for a 50-year-old, according to the Kaiser Family Foundation.
Over 60? The monthly premium is $1,079 per month.
Plan on nearly twice those premiums, or more, for married couples and families.
And you still have to pay your deductible, if you need care. And the Silver plan only pays 80% of your costs above that – up to the annual stop-loss amount.
For the millions of Americans who don’t get a subsidy, this is a budget-buster.
Limited Care Networks
On top of the high premiums, traditional health insurance products typically impose limitations on what doctors and hospitals you can use for non-emergency care.
This is a routine practice at HMOs, PPOs, and EPOs (exclusive provider organizations).
In some cases, provider networks are focused on one particular state or metropolitan area. If you travel a lot, you’re a digital nomad, a truck owner-operator, or a traveling salesperson, this may not work well for you. If you need a doctor while you’re out of state, you may have a hard time finding someone to treat you without having to pay out-of-network fees.
You should look for a plan with a very large network of authorized providers, both in and out of state, even if you have to pay a little more for it.
You should also look carefully at your plan’s deductibles, co-pays, annual out-of-pocket cap (the most you’ll have to pay out of pocket), and prescription drug benefits.
Make sure any drugs you depend on are on the formulary, or your plan’s list of covered drugs. And if you have a specific doctor you want to see, check to make sure they are an authorized care provider before you enroll.
High Deductible Health Plans and HSAs
High deductible health plans (HDHPs) are a special type of health insurance policy.
Premiums are lower, but deductibles are set higher than for most standard policies. This forces consumers to take more responsibility for their care and incentivizes shopping around for the best deal on healthcare.
But HDHPs also allow you to make tax-free contributions to a health savings account (HSA). These are fantastic tax-favored accounts that let you reduce your income and self-employment tax in the current year, and allow you to use tax-free dollars to pay for healthcare.
Once you turn 65, the money left in your HSA becomes available penalty-free to supplement your retirement income. You just pay the income tax on amounts you withdraw, like an IRA.
If there is an affordable HDHP available in your area, or if you get a subsidy, buying an HDHP, opening an HSA, and contributing as much as you possibly can is a great long-term strategy. Especially since HSA contributions eliminate self-employment tax liability on the amounts you put in.
That gives self-employed and freelancers more than a 15% advantage, right out of the gate.
The Health Sharing Alternative
Medical cost-sharing –– more commonly known as health sharing –– is a less well-known alternative to traditional health insurance approaches.
And for many self-employed and freelancers, it can be a much more affordable, cost-efficient alternative.
What is Health Sharing?
Health sharing plans are based on a community-sharing approach to medical expenses and are not bound by narrow network restrictions, granting you the freedom to choose any healthcare provider you like. This is a great benefit if you travel frequently.
Health sharing plans can have significant cost savings—often up to 50% less than unsubsidized traditional health insurance premiums.
Enrollment
Unlike traditional insurance, which restricts enrollment to specific periods, health sharing plans allow you to join at any time.
The Best of Both Worlds: Combining Health Sharing with HSA MEC
If you have verifiable income from self-employment, it’s now possible to pair any health sharing plans with a health savings account.
This essentially provides the “best of both worlds:” the cost savings of a health sharing plan with the tax savings and long-term strategic benefits of a health savings account.
And the savings that health sharing plans provide – usually hundreds of dollars per month, free up a lot more cash flow to contribute to your HSA!
Learn more about HSA MEC, and how you can use it to make yourself eligible to make HSA contributions.
Direct Primary Care Memberships
Direct Primary Care (DPC) simplifies access to healthcare by eliminating insurance and establishing a direct, personal relationship between the patient and their primary care provider.
In a DPC membership, you’ll pay a set monthly or annual fee directly to a primary care provider or clinic. In return, you get unlimited primary care services in the doctor’s office. Some even make house calls!
Because DPCs have very little overhead (they don’t need an army of billing staff on the payroll), they have a much smaller patient load. This translates into much longer appointment times, and usually much greater availability of same-day or next-day appointments.
Note: DPC does not cover specialist care, hospitals, surgery, therapy, ER visits, or costs for major or catastrophic medical events. You shouldn’t rely on DPC alone, but combine it with a traditional health insurance or health sharing plan.
Direct Primary Care is a great option for those who need to see a doctor regularly, and who can afford $100 to $150 per month for unlimited primary care services.
Integrating DPC with Other Health Plans
While DPC memberships offer substantial benefits, they typically cover only routine and basic healthcare needs.
To ensure comprehensive coverage, it’s advisable to pair a DPC plan with additional health insurance options:
- Combine with Health Sharing Plans. Linking DPC membership with a health sharing plan can provide a broader safety net, covering more significant health events and emergencies that DPC does not address.
- High Deductible Health Plans (HDHPs). For those seeking more traditional insurance coverage, combining DPC with an HDHP can offer a balance of routine care through DPC and major medical coverage through an HDHP. The HDHP may offer lower monthly premiums compared to standard health insurance plans. However, members of direct primary care plans are not eligible to make pre-tax HSA contributions.
- Specialized Plans for DPC Members: Some health sharing plans, like DPC DIRECT, are specifically designed to complement DPC memberships, offering an integrated approach to manage both everyday health needs and less frequent, higher-cost medical issues.
Considerations and Limitations
DPC plans are not designed to be standalone solutions for all healthcare needs.
They work best for managing day-to-day health and maintaining wellness but need to be supplemented with other insurance forms to cover comprehensive health scenarios, including serious illnesses and emergencies.
Freelancers seeking a balanced, effective healthcare strategy might find combining DPC with other tailored health plans like health sharing programs or HDHPs provides a flexible, cost-effective solution that meets all their medical needs, from the routine to the unexpected.
International Coverage or Health Sharing?
For those who spend considerable time abroad, the choice between travel insurance and more comprehensive health plans like international medical insurance is critical.
While travel insurance provides short-term coverage for emergencies, it lacks the comprehensive care that digital nomads require. In contrast, international medical insurance offers extensive health coverage, including routine care, which is more aligned with the needs of those living overseas long-term.
Compare Pricing on the Best HealthShare Plans Available
Best Health Insurance for Self Employed & Freelancers Conclusion
Freelancers and self-employed people have a variety of options when it comes to health coverage.
From self-employed health plans to individual insurance policies and health sharing options, each offers distinct benefits and drawbacks to consider. It is crucial to review the available plans, evaluate your specific healthcare requirements, budget constraints, and subsidy eligibility, and understand the tax benefits and coverage details involved.
By analyzing your options, you can build the ideal health coverage package for your wellness and finances.
We are Here to Help!
Looking for advice on optimal healthcare choices that fit your lifestyle?
Reach out to a Personal Benefits Manager at HSA for America for customized guidance that aligns with your specific requirements. We’re here to assist you in exploring your health insurance and health sharing options, making sure you have the coverage you need wherever life takes you.
For Further Reading: HSA MEC: A Powerful Way to Supercharge Your Health Share Plan | Health Plans for Digital Nomads: What You Need to Know to Live Life on the Go | Affordable Health Insurance for Self-Employed
