7 Tips to Get the Best Self-Employed Health Insurance

by Nick Versaw Updated December 3rd, 2021

Entrepreneur recording a course

As a self-employed person, you’re your own boss. It’s up to you to make sure you have the coverage you need for your health. Without the buying power of purchasing insurance as a large group, premiums for the best self-employed health insurance policies can be high. But don’t worry: There are several strategies you can use to get the coverage you need without going broke.

For many, being self-employed is the American Dream. You control your destiny, set your hours, and your earning potential is limited only by your hustle. However, whether you’re an independent contractor, gig worker, freelancer, startup founder, or anything in between, you still need health care coverage without breaking the bank. 

But there’s no need to stress. In this guide, you’ll learn seven key tips for finding the best self-employed health insurance from private insurers and the Health Insurance Marketplace. We’ll discuss tax advantages that exist only for 1099 and schedule C filers like full-time freelancers and entrepreneurs. 

1. Pick a Comprehensive Health Insurance Plan

Regardless of whether you purchase an individual plan from Healthcare.gov or a private company like Blue Cross Blue Shield, UnitedHealthcare, Cigna, or another provider, make sure your health insurance policy is Affordable Care Act (ACA) compliant. In a nutshell, this means that your plan covers the following list of “10 Essential Benefits,” plus they can’t have a lifetime or annual maximum:

  • Emergency care
  • Labs
  • Generic prescription drugs
  • Wellness (preventive care)
  • Maternity
  • Mental health 
  • Inpatient hospitalization
  • Ambulatory care (outpatient, urgent care, walk-in clinic, etc.)
  • Pediatrics
  • Physical rehab services and equipment

Before 2019, there were federal penalties associated with inadequate health insurance. The rule was called the federal mandate or the individual mandate. Today, there are no requirements regarding insurance at the national level, but some states still impose penalties for not having ACA-compliant insurance. 

2. Look Into Private Self-Employed Insurance

You might believe that since you’re self-employed, you won’t qualify for insurance from a private company. However, some of the most popular and trusted private health insurance companies offer affordable plans for small business owners and self-employed people.

Blue Cross Blue Shield

Blue Cross Blue Shield (BC/BS) offers some of the best self-employed health insurance benefit plans. Their You Plus Blue plan provides their members access to 1.7 million in-network clinicians, including more board-certified doctors than any other insurance provider in the United States. 

Your out-of-pocket costs for this plan will vary based on the type of business entity, group size, and location. Self-employed individuals and their families may purchase BC/BS plans directly from the company.

UnitedHealthcare

UnitedHealthcare plans are underwritten by a company called Golden Rule Insurance. An underwriting company helps evaluate applicants for coverage. In this case, Golden Rule also provides customer service, so be prepared to see that name as you browse. 

UnitedHealthcare has two categories of health insurance plans for self-employed individuals

  • Short-term health insurance: Provides health insurance options for one year or less.
  • Tri-term: Provides health care coverage for up to three years.

Prices vary based on factors like age, location, pre-existing conditions, and past medical history. You can purchase this insurance through UnitedHealthcare.

Cigna Individual and Family Health Insurance

Cigna offers plans for self-employed individuals and their families that include benefits like $0 virtual visits, $0 preventive care, and $0 to $3 copay for generic drugs. You can purchase insurance directly from Cigna.

3. Consider the Health Insurance Marketplace

Best self-employed health insurance: coach assisting a woman at the gym

If you can’t afford private health insurance, there are many affordable insurance plans through the Marketplace. These plans are available to all self-employed people, including gig workers, freelancers, and contractors.

Are you worried that you’ll be trapped in an agreement with some no-name company? Rest assured that the insurance plans on the Marketplace are provided by familiar names like Cigna, Centene, Anthem, and Molina. 

When you fill out the application on the Marketplace, you’ll need to provide an estimate of your self-employment income. Your net income determines your Marketplace savings. For reference, your net income is the amount of your revenue minus all of your operating expenses.

Look for affordable plans that offer adequate coverage with low premiums and deductibles, plus a convenient provider network. If you’re interested in learning more about government-subsidized insurance plans, check out our guide to navigating the Health Insurance Marketplace.

4. Understand Self-Employment Taxes and Health Insurance

Being self-employed comes with many tax deductions that aren’t available to W-2 employees. For example, when you’re self-employed, you can deduct expenses related to your business from your taxable income, as long as they’re reasonable for your business type. These deductions may include running a home office, travel and meal expenses, equipment, and health insurance payments.

In addition, there are no federal or state taxes withheld from your paycheck by an employer as they must be for employees. Instead, you may pay your taxes to the IRS each quarter. This means you can hold on to your hard-earned money for longer.

The downside to being self-employed and filing Schedule C is that you could be under the IRS’s microscope more often. Audit rates for self-employed Schedule C filers are higher than for other business owners. Here’s why: The IRS wants to check for under-reported income, overstated deductions, and failure to pay self-employment tax. 

We don’t say this to worry you. Just keep detailed records and comply with your local, state, and federal tax laws. Speak to a tax professional if you have any questions about whether health insurance can be considered a deduction.

5. Tap Into the Health Insurance Premium Tax Credit

If your household income is below a certain amount, you might qualify for a federal tax program to help you pay for health coverage. The Premium Tax Credit may cover some or all of your self-employed health insurance premiums. You don’t even have to wait until you file your income tax return to receive the credit — those who qualify can choose to pay reduced monthly premiums instead. This only applies if you buy coverage through the Marketplace.

Self-employed individuals and families whose modified adjusted gross income is between 100% and 400% of the federal poverty level (FPL) will receive some level of assistance if they meet all the other requirements.

6. Know Your Employment Classification

Are you self-employed, or are you a small business employer? Your employment classification is confusing because all self-employed people are technically business owners, but not all small business owners are self-employed. Not only are the tax implications different for each classification, but your options for buying health insurance change as well.

Suppose you have employees (anyone to whom you issue a W-2), including yourself, a spouse, family member, or any other person. In that case, the IRS considers you a “small business employer” and not self-employed

Small business employers can’t buy individual self-employed plans from the Health Insurance Marketplace. However, you may still be able to use the Small Business Health Options Program (SHOP) for businesses of 1-50 employees to find the lowest cost of health insurance coverage for you and your staff.

7. Consider Your Health Insurance Options Before You Resign

In what is being called the “Great Resignation,” Americans are leaving their jobs in record numbers. Some are starting their own businesses, joining the gig economy, and opting for part-time or contract work that better fits their ideal lifestyle. As a result, many are becoming uninsured. 

But they (and you) may not know that through the Special Enrollment Period, if you lose coverage for any reason, you can purchase a health insurance plan on the Exchange (even if it isn’t during the open enrollment period). 

Insurance is available through the ACA for people who don’t qualify for Consolidated Omnibus Budget Reconciliation Act (COBRA) because they quit their job. The ACA may also offer individual health insurance for the newly self-employed individual laid off from work who can’t afford COBRA

Are you unemployed? Learn how to find the coverage you can afford despite pre-existing conditions and regardless of enrollment periods. 

Compare Prices for the Procedures You Need Done

Best self-employed health insurance: entrepreneur happily using a tablet

Finding the best self-employed health insurance prices and coverage options means shopping around. Whether you’re looking for health insurance for your entire family or just yourself, don’t let the high costs of health premiums and deductibles keep you from following your dream. Self-employed people often qualify for tax breaks, incentives, and subsidies

Find other ways to save by comparing prices on any medical procedure. The pricing tool from Compare.com allows you to search for the best prices from thousands of health care providers in your area. Type in the procedure name plus your ZIP code, and in seconds, you’ll see exact prices, facility locations, and provider names. Knowing what to expect before you go helps you prepare to meet out-of-pocket expenses as well as negotiate better prices.

Compare Car Insurance Quotes