Finding health insurance is a big challenge for freelancers, and often greatly influences their decision to become self-employed or go back to being employees (with benefits) again. But for the estimated 42 million people in the U.S. who are now self-employed, there are ways to shop around to find affordable health insurance.
Some freelancers are fortunate enough to be married to someone who has access to employer-sponsored health insurance. The spouse will have to pay a higher premium for family coverage, but it will probably still be less than an individual plan purchased by the freelancer.
According to the 2012 Kaiser Family Foundation/Health Research & Educational Trust Survey of Employer Health benefits, annual plans for employer-sponsored family insurance at private firms cost approximately $15,199 in 2012, with workers paying $4,495 and employers $10,704 toward those premiums.
The average individual non-group plan cost $3,606 in 2012, according to CNN Money, so by paying about $889 more a year, your spouse can add you (and the rest of your family, if you have children) onto his plan, which is much more cost effective than paying four times more for an individual plan. But be aware that some plans won’t let participants add anyone until open enrollment season, which is usually in November or December of each year.
Many professional and trade associations offer health insurance at group rates. Some examples: For small business owners, the Small Business Administration offers individual health insurance and group and non-group disability insurance along with group health and dental insurance to its members directly or through contractual arrangements with Small Business Service Bureau, Inc. SBSB insurance products and programs are offered through its affiliate, Small Business Insurance Agency, Inc., a national general insurance and brokerage agency licensed in 50 states.
The National Association for the Self-Employed (NASE) offers dental insurance, a medical savings program, and hospital, family practice, and specialty provider discounts to its members. Membership in the Freelancers Union is free to New Yorkers, who upon joining can get access to health and dental insurance coverage through Freelancers Insurance Company.
If you’re over 50, AARP offers major medical health insurance, dental insurance, vision and prescription discounts to its members. Even members of retail chains like Sam’s Club and Costco have access to a variety of health screenings, discounts, and insurance options, depending upon the state in which they live.
Individuals can purchase policies with low premiums (but high deductibles), commonly known as “major medical” or “catastrophic” policies. A variety of these options can be compared at HealthCare.gov, and you can go online and get an idea of costs at a number of websites, including GoHealthInsurance.com and Insure.com.
Although individual policies can be expensive, one positive to going with an individual plan is that you can deduct 100% of the premium cost from your income when calculating your federal income taxes. Another plus: The deduction is not subject to the 7.5% adjusted gross income limitation that other medical expenses are, according to Turbo Tax.
As reported by the National Cooperative Business Association, many healthcare-related cooperatives have emerged across the U.S. over the last 20 years. The growth of such cooperatives is attributed to an effort to keep healthcare costs affordable for consumers and small businesses, control the high cost of prescription drugs, and help community-owned nonprofit hospitals remain independent.
HealthPartners, Inc., based in Minneapolis, Minnesota, is the nation’s largest consumer-owned HMO. The co-op and its related organizations provide health care services, insurance, and HMO coverage to nearly 1.25 million members, including individuals looking for affordable coverage.
Group Health Cooperative, based in Seattle, Washington, covers one-10th of the state’s residents with coordinated-care plans for both groups and individuals. Cooperative Health Choices was established in Wisconsin in 2008 to offer insurance options to a variety of entities, including corporations, government organizations, business partnerships, rural utility cooperatives, and self-employed persons residing in the state.
The Affordable Care Act
The Affordable Care Act will begin to tackle this problem in 2014, when those who are under 65 will be able to purchase health insurance through state insurance exchanges, with tax credits for those with low and moderate incomes. Even those with preexisting conditions will have the opportunity to purchase a policy. Self-employed individuals may also qualify for premium tax credits and cost-sharing reductions based on income when they purchase coverage in the marketplace.
The hope is that increased access to quality, affordable health care under the Affordable Care Act will make it easier for potential entrepreneurs to go out on their own instead of remaining employees simply because of “job lock” or the lack of access to affordable health insurance.