For many freelancers, the question of health insurance is one of the hardest one to solve, so much so that it can sometimes even be a deal breaker. But there are options. So if you’re not one of the lucky ones (under 26 and still covered by your parents insurance or married to a working partner so covered by your spouse’s insurance) here are a few options to look at when shopping for health insurance.
The Affordable Care Act (ACA) offers a wide range of plans, variable per state, to any US citizen and legal immigrants. You can choose between Bronze, Silver and Gold plans, depending on your needs and what you can afford. Depending on your income, you might even be eligible for a subsidy that can drastically reduce your premiums. Open-enrollment period usually starts mid-November. But if you experience a major life event before then (birth of a child, death of spouse, loss or gain of coverage through another job, etc.) you can enroll at that time. And yes, as you’ve probably heard, you can’t be denied coverage because of a pre-existing condition.
Some professional organizations offer healthcare options for their members, including The Freelancers Union. You can find out more here and see if there’s a plan that could be a good fit for you! If you can’t find a good plan for you today, keep checking back. If the union keeps growing, the plans could get better and better over time. And you should also do a quick search specific to your profession, see if there are any guilds or unions that offer this type of benefit.
Most insurance companies offer individual plans, but they usually come with either a very high deductible or a very high premium. Combined with an HSA (Health Savings Account, a tax-advantaged bank account where you can save up to $3,550 for an individual or $7,100 for a family tax-free as long as it’s used for qualified health expenses in 2020), this option could be interesting if you just want to protect yourself in case something major happens, so you don’t end up completely bankrupt. But you’ll most likely still end up paying ticket price for day-to-day health expenses, the usual wear and tear of life! Being part of a plan will often give you a discounted rate at the doctor though.
If you’re leaving a job to start your freelancer adventure, you can keep your previous employer’s insurance under a program called COBRA. For up to 18 months (some states like California offer even more time), you can stay on your former employer’s plan, but you will need to pay the full premium: your usual share plus what your employer used to pay for you. It can add up, but depending on the company’s size and plan, it can allow you to get much better health coverage for a similar price tag as the Affordable Care Act.
Make sure to always compare the total costs between these options. 12 months of premiums under COBRA could end up being more than 12 months of premiums + the Out-of-Pocket Max from an ACA plan. So make sure to look at the total expense over the course of the year, in the worst-case scenario – the numbers might tell you something you didn’t think of.