Health Insurance Guide for Self-Employed

November 16, 2023

Health insurance options for self-employed people are more diverse than you may realize. One of the biggest struggles for independent contractors or freelancers is understanding their options and how to get the best deal. In this post, we’ll help you explore everything you need to know about how to get the best health insurance when you’re self-employed.

What Is Self-Employment?

Self-employment is defined as anyone who does not have an employment contract with a legally registered business. Freelancers, consultants, doctors, lawyers, real estate agents, tradespeople, sole proprietors, and consultants can all be classified as self-employed. An independent contractor, who receives a 1099 from their clients, is also considered self-employed.

This post will focus exclusively on health insurance options for those who are essentially their own employers, not small business owners who employ other people.

Health Insurance for Self-Employed Individuals

Everyone needs health insurance. It offers protection against expensive medical bills in the event of an emergency or serious diagnosis. While the cost of health insurance for self-employed people can be a deterrent, the cost of not having coverage when needed can be much worse.

If you ever fall ill, suffer an injury, or need surgery, paying out-of-pocket costs could become unbearable. Health insurance helps protect your finances and gives you peace of mind. Without it, you could face thousands of dollars in medical bills from a single hospital visit.

Why Health Insurance Matters for the Self-Employed

Being uninsured as a self-employed person puts your well-being at risk. In the event of an accident or sudden illness, you will be solely responsible for covering the cost of treatment. If you find out that you need to start taking prescription medication daily, you will have to pay for it out of your own expenses. Without health insurance, even essential medication can be unaffordable. Insulin for diabetes can cost $1,200 or more per month without coverage.

Another issue is that people without health insurance often tend to choose care based on cost over quality or necessity. This can jeopardize your overall health, leading you to go without medical treatment when you need it.

Health Insurance Options for Self-Employed

Luckily, there are a lot of options when it comes to health insurance for self-employed people. These medical plans come at a variety of price points, too, so you can find a solution that works for your budget.

Remember, it’s better to have some coverage than none at all. Avoid not getting health insurance if you can’t afford the best plan. You can still benefit from having some type of financial protection.

Individual Health Insurance Plans

Individual health insurance is what you pay for on your own. There are many options available. You can pay a monthly or annual bill, called a premium, and pay for a portion of care (called a co-pay) until you reach your deductible. Once you pay the deductible, your health insurance provider covers all future medical expenses for the rest of the year (or until you reach your policy’s maximum coverage amount).

Health Savings Accounts (HSAs)

Health Savings Accounts work similarly to health insurance, but you deposit money into an account each month and use it to pay out-of-pocket expenses. Instead of having a policy with a provider, you choose how much money to put into your HSA. If you’re wondering, “Is health insurance tax-deductible for self-employed?” then the answer is yes when it comes to a Health Savings Account.

Marketplace

The marketplace is where you go to buy individual or family health insurance plans through the state or federal government. Here, you can weigh your options, compare quotes, and explore different types of coverage. Some people only need the baseline coverage, which often includes a free physical and screenings each year. Other people need more advanced health insurance to cover chronic condition care or treatment from specialists.

Average Costs of Health Insurance for Self-Employed

The cost of health insurance for self-employed people varies depending on where they live and what type of plan they buy. Nationally, the average health insurance premium for a self-employed person is $495 per month. In Florida, that figure is slightly lower at $484 in 2023. A family health insurance plan typically costs around $1,200 per month in 2023.

How to Choose the Right Health Insurance Plan

Although you aren’t legally required to have health insurance, it is a good idea to consider your options each year. The annual Open Enrollment Period for health insurance lasts from November 1st to January 15th.

During this time, you can compare rates and find one that works for you. Below are some tips to help you get the best deal for your budget.

Tips for Lowering Health Insurance Costs

One option for lowering health insurance costs is to make sure you understand the different types of plans. The two most popular types of health insurance are HMO and PPO. HMO stands for health maintenance organization. With this type of plan, your doctor coordinates care for you. This means you need them to write a referral for you to see a specialist. HMOs are less expensive than PPOs, or preferred provider organizations. These allow you to pick and choose which doctors you visit, regardless of specialty, within your health insurance provider’s network.

If you want more variety, then a PPO is a good idea. But to save costs, an HMO can offer more coverage for a lower price.

Common Mistakes

There are several common mistakes when buying self-employed health insurance. Make sure you avoid these:

  • Not researching health insurance plans before buying. Learn about the different types to find what works for your needs.
  • Not comparing the same type of plan among multiple providers.
  • Choosing a plan with an extremely high deductible and low coverage just for a lower premium.
  • Overpaying for a plan that offers coverage you don’t need.

Special Considerations for Self-Employed in Florida

There are state programs you can explore if health insurance costs too much. Medicaid is free health insurance for Florida residents that earn under a certain amount. You can check the maximum income level for a Florida resident here.

It’s also important to know specific health risks Floridians face, like a higher chance of developing skin cancer due to increased sun exposure. The leading diseases in Florida include heart disease, type 2 diabetes, and stroke.

Of course, it’s important to make decisions based on your individual health risks and medical history.

Find the Best Health Insurance in Florida

Learn more about how to get health insurance when you’re self-employed in Florida. Live Health offers a variety of coverage options for various budgets. You can also explore various options for life insurance, vision, dental, and individual health insurance.

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