Navigating Health Insurance for the Independent Contractor

Insurance for the sole-preneur made simple 

One of the biggest concerns for freelancers and aspiring independent contractors is health insurance. Under the Affordable Care Act, everyone is required to have health insurance; those who don’t, face penalties. Health insurance coverage also provides peace of mind surrounding potential medical emergencies, illnesses, and injuries.

People often shy away from going freelance because of the perceived hassles with securing coverage. Instead, they stay in salaried positions just to maintain their benefits. But independent contractors do have solid choices when it comes to health insurance. We’ve outlined the basic terminology and options here.

Open Enrollment

Open enrollment occurs November 1 to December 15. That’s when you can enroll in a new health insurance plan that will cover you in the upcoming year. You may qualify for a special enrollment period at a different time if you’ve experienced certain life events.

Leaving a job

If you’re leaving a position that offered you employee-sponsored health coverage, check to see if you can convert that group plan into an individual plan. If you’re offered COBRA, which is a temporary extension of employee-sponsored health coverage, make sure you understand the time limits and enroll promptly in an individual plan when your COBRA is running out.

Coverage through a spouse or partner

If applicable, find out whether you can join your spouse or domestic partner’s employee-sponsored health insurance plan. Even if you’re not legally married, you may qualify. If you are losing a spouse’s or partner’s employee-sponsored benefits through divorce or separation, you can also seek individual coverage through a special enrollment period.

Group coverage for individuals and families

Freelancers can also explore the option of group insurance. According to a 2016 Field Nation study, one third of the U.S. workforce is made up of independent contractors. It makes sense for membership programs to offer group benefits to this growing sector. The Independent Contractors Benefits Association, Inc. (ICBA), for example, is a non-profit association of independent contractors that provides access to affordable group healthcare coverage and other benefits, including dental and vision plans and discounts on physician visits and prescription medications. Group coverage plans vary and offer solutions that fit your family’s needs.

The Marketplace

The Affordable Care Act allows you to find individual insurance plans on the Health Insurance Marketplace. Plans cover your essential care, any pre-existing conditions, and preventative services. Depending on your income, you may qualify for a plan with tax credits or for Medicaid/CHIP. If you operate as a small business with a few employees, you can use the Small Business Options Program (SHOP). Plans on the marketplace are categorized by tiers. A bronze plan will offer the lowest monthly premium, but you’ll pay more out of pocket for the care you access. On the other end of the spectrum, a platinum plan offers the highest monthly premium, but you’ll pay much less when you need care. You’ll have to weigh the pros and cons of each plan and find one that fits your anticipated use of healthcare throughout the year.