How To Get Health Insurance When You Work For Yourself
Do you want to work for yourself, but you’re concerned about how to get health insurance?
You’re not alone! It’s one of the most common obstacles holding people back from working for themselves.
Many people hang onto jobs that make them miserable just for the healthcare benefits!
Do you know that only half the U.S. population currently gets health insurance through an employer?
Did you also know that self-employed workers now represent one-third of the U.S. workforce?
Like you, I was also concerned about my health insurance options when I was first laid off in 2000. Here are the highlights of my own personal healthcare insurance journey as a solopreneur:
When I was first laid off in 2000, I continued my employer’s healthcare insurance coverage using COBRA for about a year, which was super expensive!
Between 2001 and 2007 I didn’t have healthcare insurance at times, but for a few years during that period, I purchased a catastrophic healthcare insurance plan that was super cheap, but didn’t cover much!
From 2007 to 2014, I was lucky to be a resident of Massachusetts and benefited from the statewide universal healthcare program implemented there. For the first time, I felt like I had affordable healthcare insurance that covered all of my healthcare needs!
Since 2014 I have purchased my health insurance through Obamacare. You have no idea how much harder and more expensive getting healthcare insurance was before Obamacare as a self-employed worker!
I believe more people would be open to taking the leap into self-employment if they had a better understanding of their health insurance options. Here’s my attempt to get you informed, so you have the confidence to finally go out on your own!
Most Common Health Insurance Options For Solopreneurs
If you are currently employed, I suggest talking to someone in your HR department to understand how much you would have to pay using COBRA. This program enables you to continue your existing healthcare insurance from your employer for a limited time by paying the entire premium on your own, plus a service charge.
Most likely, you will get sticker shock when you see the true cost of your healthcare coverage! However, if you have dependents, an existing medical condition or suddenly lost your job, COBRA gives you peace of mind to continue with your existing healthcare coverage until you figure out your next step.
Your best all-around option for understanding your health insurance options is searching your state’s Affordable Care Act (ACA) healthcare insurance exchange (also referred to as Obamacare). Visit Healthcare.gov to get started.
Before you search for a plan, I highly recommend checking your state’s website to see if you are eligible for discounts and subsidies based on your income. When you are starting your business, every bit of savings helps!
Unfortunately, the cost and quality of health insurance coverage varies from state to state, so I can only speak about my experience as a resident of Massachusetts. I have generally opted for the lowest monthly premiums and highest deductibles known as the “Bronze Plans”. My monthly premiums have crept up over the past several years to over $400.
The annual enrollment period is generally between November and mid-December, but you can enroll at any time of year, if you’ve had a “qualifying-life event” like losing your job.
Family Member’s Insurance
There are a variety of scenarios in which you can secure health insurance through a family member and in some cases as an unrelated domestic partner.
Spouse: If you are married and your spouse has a full-time job, explore the cost of adding you to their plan.
Parent: If you are 26 or younger, you are eligible to remain on your parent’s health insurance plan.
Domestic partner: In some states, counties or cities, domestic partners are legally recognized as two people cohabitating in the same household and are unmarried with certain legal privileges, such as sharing health insurance benefits. Some employers also recognize domestic partners. Check your local laws and the policies of your domestic partner’s employer (if they are open to it of course;) to see if your domestic partnership may help you get health insurance.
Health Insurance Brokers
If you want to explore your health insurance options beyond plans offered by Healthcare.gov, you can purchase plans directly from insurance providers through a health insurance broker. You can start searching for a broker in your area using AngiesList or consider asking The National Association for the Self-Employed for guidance.
Business Associations
If you are already a member of a business association or are considering joining a membership organization serving the self-employed, you may be able to buy health insurance through them. Here are some member associations that offer health insurance:
Alternative Health Insurance Options
Over the past 25 years, I have also relied upon many alternative and unconventional options to meet my healthcare needs outside of conventional health insurance.
My high insurance deductible has incentivized me to constantly seek lower-cost alternatives for specific healthcare needs.
Below is a mix of some of the services I have used and others some of my solopreneur peeps have tried.
Talk to your doctor about your healthcare needs. During the times I didn’t have health insurance, my doctor found ways to keep my costs low. For my office visits, he charged me just 25% of the rate he would for insurance companies (that tells you something right there about the outrageous costs of healthcare!)
To treat a sinus infection, the same doctor once gave me a free Z-Pak! He said a drug rep recently gave him a few samples. Anytime he prescribed medication, he always found the lowest-cost option.
Also, talk to the administrative staff in your doctor’s office to get suggestions about which health insurance they would recommend. They have to deal with them all the time, so they’ll provide insight into which ones will give you the most bang for your buck!
Negotiate a payment plan for large medical costs. Most healthcare providers will let you pay what you can, but you will need to pay consistently. Also, medical debt under $500 no longer affects your credit score as of 2023.
Catastrophic health insurance is an option to consider if you are healthy, have no dependents and are under the age of 30 (offered as part of Obamacare). The monthly premiums are low, but the deductibles are very high. Basically, you are just getting this insurance in case you get into an accident or if you are diagnosed with a serious illness.
Consider buying a traveler’s health insurance policy if you plan on spending extended time abroad working as a digital nomad. The cost depends on your destination, age and length of time you’ll be overseas, so it’s generally much less expensive than staying in the U.S. and paying for health insurance.
Health Savings Account (HSA) could be a good option to supplement your health insurance, especially if you have regular medical expenses or anticipate an upcoming procedure. Think of them as an IRA for health expenses. You can contribute up to $4,150 a year (for individuals as of 2024). HSA gains are tax deductible and withdrawals aren’t taxed when used for valid medical expenses.
First-time patient offers are my go-to move for reducing the cost of my eye and dental exams! Standard annual dental insurance would cost more than two cleaning visits in the course of a year!
Fortunately, I have healthy teeth, so now go to the dentist just once a year. I have paid as low as $60 as a “new patient” for a cleaning, a full set of X-rays and fluoride treatment, which would cost upwards of $150 as a “regular patient”.
I use the same tactic for my annual eye exam! When I need new prescriptions for my glasses, I use Zenni Optical. It now costs less to get a new pair of glasses than when I was a kid! No joke!
Retail medicine is completely changing how I view my healthcare options. Again, I have a high insurance deductible, so barring a hospital stay, I’m never going to hit it. It’s often cheaper and faster for me to get a flu shot, my cholesterol tested or treatment for minor illnesses at a walk-in clinic or a pharmacy like CVS.
Save on drugs costs by buying generic drugs, by getting them from a retailer like Wal-Mart or find coupons on GoodRx.com.
Take your health insurance premiums as a tax deduction! Unlike an employee, you can take them as a tax deduction when you work for yourself!
Check out Care Credit Card for health and wellness expenses. I’ve used it to pay expenses over time with no interest.
How To Choose the Right Health Insurance For You
I’ve given you a lot of different health insurance options to consider because I want you to realize you have far more options than you realized!
You are no longer limited to the handful of options provided by your employer. I want to inspire you to create a health plan that works for you and your budget.
Here are a few key factors to determine the right healthcare plan for you:
#1 Your Health Needs
If you want to work for yourself, your health can’t be overlooked! You are the engine of your business, so you gotta take care of yourself better than ever!
Take a moment to list your existing medical needs, like prescriptions, therapies and your average number of doctor visits each year.
Also, consider your health goals over the next year. Are there any procedures or other anticipated medical expenses on your horizon?
Understanding your overall health costs will help you determine your desired annual deductible versus your monthly premium.
#2 Dependent Coverage
If you have a spouse, children or other family members reliant on your health insurance, make a list of their medical needs as well. The number of dependents covered will have a significant impact on the type of insurance you choose. Also, look into the Children’s Health Insurance Program (CHIP) for subsidized coverage for your kids.
#3 Your Risk Tolerance
Everyone has a different relationship with risk. Your risk tolerance might also vary from one aspect of your life to another. When it comes to your health, you want to make sure you feel secure in whatever way that means to you.
If you are providing for a family, your risk tolerance is most likely lower than mine as someone who is single.
If you are younger, your risk tolerance might be higher than someone like me in their 40s.
If there’s one crucial lesson I’ve learned in business, the lowest cost option isn’t always the best option. Choose the option within your budget that gives you peace of mind.
#4 Your Questions + Needs
Finally, what else do you expect from your health insurance provider? Hire them as you would for any other member of your team and consider at least three options to make the best choice for you.
What unanswered questions do you have about buying a health insurance policy?
Take a moment to make a list of all your questions and start finding answers for them.
The more familiar you get with buying health insurance, the more confident you will be about overcoming this obstacle to working for yourself!