Health Insurance Guide for Self-Employed, 1099 Contractors & Freelancers
If you’ve made the leap to the self-employed life, congratulations! Choosing a solopreneur career path or becoming a gig worker or freelancer has become increasingly popular in the United States, since this type of work arrangement can provide autonomy and freedom. In the U.S.:
- The National Employment Law Project reports in March 2024, 10% of workers were self-employed.
- In October 2024, there were 9.4 million full-time self-employed people, according to the U.S. Bureau of Labor Statistics.
- Statista reports, in general, the number of people who freelance in any capacity will climb to 90.1 million people by 2028.
Some self-employed people choose this type of lifestyle because they want to become entrepreneurs and build their own businesses, while freelancers and contractors may enjoy the ability to work on the assignments they choose, on their own schedule.
While the self-employed life can offer lots of flexibility, it also means you’ll need to manage your own health insurance. You may have been previously employed full-time and received
group health insurance from your employer. As a “business owner,” you are responsible for choosing, obtaining, and paying for your health coverage. This guide explains what to keep in mind.
Key Takeaways
- Healthcare without insurance is expensive. If you’re self-employed and want to maintain your health and the ability to work your business, make health insurance part of your business plan and financial planning.
- Without health insurance, the cost for surgery can be $7,500 or more. The cost for comprehensive cancer coverage can extend to hundreds of thousands of dollars. Health insurance offers coverage for regular checkups and preventive care, as well as other essential health services.
- If you’re self-employed and need health insurance, you can get an affordable plan through a private insurance broker, through the federal Affordable Care Act Marketplace, through COBRA coverage or by securing a group health insurance plan, if you have other employees.
Options for Self-Employed Health Insurance
Self-employed contractors and freelancers have a few options when buying health insurance. As you handle your own health insurance needs, it can help to talk with a self-employed health insurance provider, who can walk you through self-employed health insurance options like those below.
1. COBRA Health Insurance
COBRA is short for the Consolidated Omnibus Budget Reconciliation Act. It covers workers and their families for up to 18 months when an employee has lost their job or experiences a specific circumstance, such as:
- Death
- Divorce
- Transition between jobs
- Voluntary job loss
- Decrease in hours worked
With this coverage, being self-employed alone wouldn’t qualify you for COBRA. You’d need to lose your health insurance coverage due to losing your job with your former full-time employer or by experiencing another life event, like the ones above. Then, you can get COBRA and choose to pursue a self-employed career.
COBRA may put the responsibility of paying for coverage on the individual, up to 102% cost of the plan, which includes administrative fees. So, even though you’ll still be eligible for the coverage you used to have at your job under COBRA, you may be required to pay for the entirety of the coverage, which your employer might have helped cover previously.
COBRA generally does require that group health insurance plans offered by employers with 20 or more employees offer “continuation coverage,” which is a temporary extension of healthcare coverage. If you worked for a large company, you’re likely eligible for COBRA if you lose your job with health insurance.
When you might want COBRA: COBRA might be a good option for you if you like your old health insurance plan, and you want to continue your current healthcare coverage arrangement in the meantime as you look for your next option. Also, if you’ve already met your deductible for the year, or if you take expensive prescriptions, continuing coverage under COBRA may make the most financial sense.
2. ACA / Government Health Insurance Plans
You may have heard of it as “Obamacare” or as the “Affordable Care Act,” ACA for short. ACA is the U.S. federal government-sponsored healthcare coverage. The ACA has an annual Open Enrollment Period, during which anyone can enroll in a plan or change their plan, beginning November 1 and ending January 15. Otherwise, you may qualify for an ACA plan if you are eligible for:
- A Special Enrollment Period due to a life change: Qualifying life changes may include moving, having a baby, adopting a child, or getting married.
- Medicaid: Medicaid is an insurance program that offers free or low-cost healthcare coverage to people with low income, including people with disabilities, older adults, pregnant women, individuals, families and children.
Typically, if you’re eligible for COBRA, you’ll also be eligible for an ACA plan. When you purchase healthcare through the ACA marketplace, you may also be eligible for subsidies. These include a premium tax credit health insurance subsidy and a cost-sharing subsidy.
There are also state-sponsored health insurance plans, depending on the state. Arizona has a State Plan for Medicaid and a State Plan for the Children’s Health Insurance Program (KidsCare), which are partnerships between the Arizona Health Care Cost Containment System and the Centers for Medicare and Medicaid Services. Not all states have State Plans, so check with yours to see what’s available.
When you might want an ACA plan: ACA plans can vary greatly in provider options and in costs. If you have flexibility in what providers you’re willing to see, and you’re eligible for subsidies, an ACA plan may make sense. You’ll be able to research all your plan options and choose the one that works best for you.
If you have pre-existing conditions, the ACA plan may also be a good option for coverage. Keep in mind, navigating the marketplace can be a little challenging with all the options that are available. You can contact us for free expert ACA guidance through the process. We will learn all about your budget and your unique healthcare needs, and we’ll present you with all your options so you can compare them before you choose.
In Arizona, the following healthcare providers currently offer plans on the ACA Marketplace.
Even if you’re outside of Open Enrollment, you can still fill out our free form for information and other health insurance options available.
3. Private Health Insurance Plans
Private health insurance plans are offered all times of the year through private insurance specialists, like AZ Health Insurance Brokers. Insurance brokers work directly with health insurers and can give you a customized quote that provides you with the best insurance offering for your budget and health needs.
Private plans can also vary widely in price and coverage. If you have a pre-existing condition, you may pay for a more expensive plan with a private insurer. But if you’re relatively healthy, you may be able to get a less expensive plan compared to a COBRA or ACA plan, that still covers you for emergencies and preventive care.
When you might want a private plan: If you’re not eligible for COBRA, and if you won’t get any subsidies from the ACA marketplace, a private plan can be a good option. You can get an individual insurance quote for a private health insurance plan within minutes here.
Another benefit of a private health insurance plan is that the customer service can be much better compared to having to deal directly with the insurance company. Your self-employed health insurance broker can become a valuable partner for your business success, one who’s a direct phone call away. That saves you time, stress and hassle from having to deal with impersonal customer service representatives at a big company.
4. Group Health Insurance Plans
If you’ve expanded your business to include at least one other employee in addition to yourself, you can explore group health insurance plan options. Providing your employees with health insurance coverage can be a good recruiting and retention benefit. Consider:
- Employee Benefit Research Institute reports in 2024, 83% of workers ranked healthcare coverage as extremely or very important when considering job decisions.
- According to Gallup, “well-being” is in the top two factors job seekers consider when looking for a new job, which healthcare benefits can support.
- In October 2024, “Forbes” reports 67% of employees (more than two-thirds) cited employer-covered healthcare as the top benefit a job can offer. More than 80% of employees who are older than age 42 are seeking jobs that include employer-covered healthcare.
How do business/group health insurance plan options work? As the business owner, you purchase the plan and decide on specifics, like employer healthcare coverage, copays and deductibles. Typically, employers cover a portion of the plan’s annual or monthly premium cost, while employees cover a premium portion, too.
When you might want a group plan: If you have at least one other employee and plan to expand your business, it might benefit you as a business owner to offer group health insurance.
We recently experienced a Great Resignation, where American workers quit their jobs in record numbers. Professionals are becoming clearer on what they want from an employer. In many cases, this includes health insurance coverage. If you can offer it, group health insurance plans can help you recruit and retain top talent.
Need Help Getting Self-Employed Insurance?
Self-employed individuals have many diverse ways to secure valuable health insurance coverage. When you work for yourself, healthcare setbacks can also impact your business. That makes healthcare coverage an essential part of successful business operations for self-employed individuals.
Consult with an Arizona health insurance broker to evaluate your options. We’ll talk with you confidentially about your health history and needs, your budget and what you want out of your healthcare coverage. We can then recommend the top health insurance options for self-employed workers, so you can select a plan that works for your (and your family’s, if needed) requirements.
Call us at 602.617.4107,
contact us online, or email
quotes@azhealthinsurancebrokers.com for more information.
Self-Employed Health Insurance FAQs
What are the main health insurance options for self-employed individuals?
Self-employed workers can get private health insurance or federal marketplace coverage, also known as the Affordable Care Act (ACA) or Obamacare health insurance coverage. Self-employed workers who are leaving a previous job may qualify for COBRA health insurance coverage. Self-employed workers who employ other employees could also offer group health insurance plans to their employees.
Can self-employed health insurance premiums be deducted as a business expense?
Yes. If you’re self-employed, there’s a possibility you’ll be able to deduct health insurance premiums for yourself, your dependents and your spouse as a business expense on the federal income tax return.
How does being self-employed impact eligibility for premium subsidies/tax credits?
Being self-employed can impact eligibility for premium subsidies or tax credits, particularly when purchasing an ACA health insurance plan through the federal health insurance marketplace, also known as the exchange. Talk with a health insurance broker to see what you might qualify for.
Can self-employed individuals contribute to a health savings account (HSA)?
Yes, self-employed workers can contribute to an HSA, as long as they have a high-deductible health plan (HDHP).
Are there any additional tax-advantaged savings healthcare programs for self-employed worker medical expenses?
Yes. For self-employed workers, a health reimbursement arrangement (HRA) 105 or HSA are popular options. In some instances, an individual coverage health reimbursement arrangement (ICHRA) may also be used.
How do self-employed people afford health insurance?
Self-employed people are responsible for securing their own health insurance. This means, health insurance coverage should be a part of business plan budgeting. Typically, freelancers and independent contractors charge clients a higher hourly rate or fee than what full-time workers would make, to account for expenses such as health insurance, retirement planning and paid time off. You can visit the Small Business Administration for assistance with writing a business plan and financial planning as a self-employed individual.
How much is health insurance a month for a single person?
Health insurance costs will vary widely depending on factors such as: what kind of coverage you get, if you’re adding a spouse or dependents to a plan, how much you want to pay in monthly premiums versus how much you’re willing to pay in deductible costs, whether or not you qualify for government subsidies for a federal marketplace plan and whether you add on supplements, such as accident insurance. You may be able to pay little to nothing for health insurance if you qualify for government subsidies. If you get basic coverage for medical emergencies and annual checkups, you could expect to pay a few hundred dollars a month for coverage, or around $10 to $15 a day or more, depending on the coverage you select.
What are medical costs if you don’t have health insurance?
There are great financial risks to not having health insurance coverage. In 2024, KFF reports 49% of uninsured adults have difficulty affording healthcare costs, while 62% of uninsured adults report having healthcare debt. If you don’t have health insurance, a visit to urgent care typically costs up to $300, fixing a broken leg can cost at least $7,500, and a 3-day hospital stay will cost at least $30,000. Treatment for something like cancer can cost hundreds of thousands of dollars.
Is there a penalty for not having health insurance?
No, there is no longer a financial penalty for not having your own health insurance.
Can you be denied medical treatment if you don’t have insurance?
If you don’t have health insurance, you still have the right to receive emergency medical care, though you will be charged for those expenses. You will also be charged if you receive non-emergency care treatment, such as visiting urgent care, going to the emergency room for non-life-threatening care, and seeing a doctor for routine care or issues like the flu.
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