If you're wondering how to get health insurance coverage as a freelance worker, you're not alone. Changes in the health insurance market since the Patient Protection and Affordable Care Act (PPACA) - also known as Obamacare - was implemented have been significant. The good news is that it's easier for many freelancers to find health insurance coverage now than in the past. The bad news is that it may still be quite expensive.
Health Coverage Options for Freelance Workers
Because there's a tax penalty for not having health insurance - an average of $969 per person for 2016 - and because the financial impact of a health crisis can cost you even more, you shouldn't go without health insurance. Health insurance options available for freelance workers include:
If you freelance part-time on the side of another full-time job, you may be able to carry health insurance for yourself and your family through your primary job. That would be an easy option (and likely the most affordable one).
If you plan to leave, or have recently left, a full-time job with insurance benefits, you may consider using COBRA continuation health insurance. COBRA allows you to continue an employer-based health insurance plan for up to 18 months following termination of employment in most circumstances. However, the premiums can be quite high, as you must pay the full cost of coverage plus a two percent administrative fee. If you qualify for another health insurance option, you probably want to look beyond COBRA coverage.
Private Health Insurance
If you don't have access to your own employer-based coverage because you are a free-time freelancer, you'll want to look into private health insurance. You may also want to investigate this option even if you are eligible for coverage from an employer, because it may be more economical.
It's important to know the various rules surrounding health insurance enrollment. Important points to know include:
- You can only enroll in or change health insurance coverage during the open enrollment period (November 1 - January 31) or you become eligible for a special enrollment period as a result of a qualifying event event.
- If you earn under 400% of the federal poverty level, you may qualify for a subsidy to help you pay your health insurance premiums.
- Only health insurance policies purchased through the health insurance marketplace (healthcare.gov) for your state or via qualify for a subsidy.
- Health insurers have a choice whether or not to sell insurance in your state. If they do, they may choose to only sell policies outside the health insurance marketplace. This means you can't get a subsidy on those policies.
- If you don't qualify for a subsidy, you can purchase a plan outside the marketplace. However, you should be aware that all marketplace plans meet PPACA requirements, and some off-marketplace plans may not. Verify that any plan you plan to purchase is PPACA-compliant before finalizing your decision.
Keep in mind that not all private health insurance policies are created equal. While there are certain required coverages and guidelines, you can find policies with higher or lower deductibles and coverage amounts. This will affect the monthly premium you pay.
Private insurance can apply only to you, or it can apply to your entire family. The family premium for a plan will be quite a bit higher than the individual premium. However, as a freelancer your health insurance premiums are tax deductible!
Catastrophic Health Insurance Plans
The government recognizes that some people need lower-priced, high deductible plans in order to afford health insurance. These are called catastrophic health insurance plans. They are available to people who are healthy and under 30 or who have a hardship exemption from health coverage.
You'll need to keep in mind that these plans have the required coverage of all qualified health plans, but otherwise cover only three primary care visits per year until the deductible is met. The deductible for these plans is quite high, meaning that you will pay for most of your care yourself.
If you have an ongoing health need or are not looking for a high deductible, this is not the plan for you. If, however, you are looking for affordable health insurance that you expect you won't need to use much, a catastrophic health insurance plan could be a perfect choice for you.
There a few government coverage programs for which some freelancers may qualify.
- Medicaid and the Children's Health Insurance Program (CHIP) are state-based coverage options for lower income Americans. Some states expanded the eligibility guidelines for Medicaid when Obamacare was implemented. Each state has its own application procedures for these two programs.
Medicare is generally coverage for only you, where Medicaid and CHIP may cover your entire family.
Coverage on a Spouse's Plan
If you are married, you may be able to get coverage on your husband or wife's employer-based health insurance policy. You'll have to compare the coverage and rates to what you can get in the private insurance marketplace to know if this is a good option. Depending on subsidies, it may not be cheaper than purchasing private coverage.
However, if you and/or your spouse make a higher amount of money and don't qualify for a health insurance subsidy, it's highly likely that being listed on your spouse's insurance will be the best health insurance option for you as a freelance worker.
Coverage on a Parent's Plan
If you are under the age of 26 and your parent's health insurance plan covers dependents, you can usually be listed on your parent's health insurance policy until you turn 26. If you turn 26 in the middle of the year, your health coverage will likely end during your birthday month. You'll then be eligible for a special enrollment period to get your own health insurance, either through your employer or through the insurance marketplace.
Choosing the Right Health Plan for You
Being a freelancer doesn't mean having no access to affordable health insurance. There are a lot of health insurance options for freelance workers. Whether you choose employer-based coverage, a private insurance plan, government coverage, or coverage on a spouse or parent's plan, you want to make sure you have health insurance. The financial consequences of being seriously sick or injured without it are too great.