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Health Insurance and the Self-Employed

Self-employed individuals will need to seek out health insurance that they will buy for themselves or their family members.  In the eyes of the government, self-employed is defined as an income obtained by the individuals from a business that does not have any other employees.  You will need to look into small-business health insurance plans if you have employees.

Do I Need Insurance?

In a nutshell, it is suggested that everyone purchases health insurance because they need it. Just because you are the only employee in your business doesn't mean you should have to go without health insurance coverage.  If you make the decision to forego health insurance coverage, you may put yourself and your family at risk of financial disaster.  Not having health insurance coverage is not worth the risk, and you should cover yourself as soon as possible.

In an attempt to aid in making a better decision on your health insurance coverage, let's take a little closer look at the options available to self-employed individuals.

-         Health Insurance Marketplace

If you feel you may be permanently employed, start your search on the government-sponsored health insurance marketplace.  On the marketplace, you will find information and help to determine if you are eligible for tax credits, lowering premiums, or even Medicaid assistance.  

-         Private Health Insurance

Many private providers will offer those self-employed individuals health care coverage at a somewhat affordable rate.  You will have access to plans that provide a range of benefits—providers in-network, routine checkups, and preventative care—for you and your family members at no additional cost.

-         Sharing Ministries

The first thing to remember with health care sharing ministries is that they are not technically "health insurance." Instead, it is a group of individuals that pool their money and place it into one central fund.  The fund is then used towards any of the medical health care costs of those individuals in the group.  A sharing ministry may be a viable option if you have no dependents and are relatively healthy.  Make sure to check out all the fine print if considering this type of coverage.

Short-Term Self Employment

If you find that you will only be self-employed for a short amount of time, then what?  Perhaps you were laid off from your current job and find the need to turn to freelance work while you search to find new full-time employment.  In this case, you have a few options to look at and choose from.

-         Cobra

You can retain your health insurance with your previous employer via COBRA or Consolidated Omnibus Budget Reconciliation Act.  With COBRA, you can keep the same health plan you have with your employer for no less than eighteen and no more than 36 months.  Keep in mind that the monthly premiums will go up, as you will cover them all, and your employer will no longer be required to pay their portion.

-         Short-Term Insurance

Another option is to acquire a short-term health insurance plan that standardly covers you for up to three months.  There are two primary benefits of short-term insurance—the ability to sign up for the insurance OUTSIDE the government-mandated yearly enrollment period, and your premiums will be much lower than you would see with COBRA.  On the flip side, you will find that your out-of-pocket expenses will be much higher, and there is the possibility the plan will not cover any pre-existing conditions.

-         Industry-Specific Insurance

You may be one of the lucky ones who stumble upon a union geared at freelancers offering a discounted health insurance plan.  These plans are usually geared at a wide range of individuals—from college grads to caregivers.  However, take caution and read the fine print to ensure the terms of the plan are giving you what you are paying for and not less when compared to a marketplace plan.

If you are self-employed and find yourself looking for a health insurance plan, you do not have to go it alone.  Insurance plan shopping can be confusing and stressful, and it would be in your best interest to seek out the assistance of a insurance professional to guide you along the way.

Here at Savvi, our mission is to help people take the stress out of buying health insurance in Houston, San Antonio, Dallas, Ann Arbor, and Grand Rapids.  Feel confident by knowing that you'll have the absolute best plan that fits your lifestyle & budget. We look forward to working with you.