Freelancer health insurance: everything you need to know

Health insurance can be confusing for freelancers. Let's look at the different options available to you.

October 6, 2022

Freelancer health insurance: everything you need to know

Health insurance can be confusing for freelancers. Let's look at the different options available to you.

Health insurance is already a notoriously confusing subject for Americans, but for freelancers, it’s even more stressful. Without a company health insurance plan, you’re left on your own to sort through the different options available and figure out what’s right for you. And regardless of which option you choose, freelancers often end up paying higher costs for health insurance than their full-time counterparts. 

So, if you’re wondering how do freelancers get health insurance? you’ve come to the right place. Let’s take a look into the different options for freelancer health insurance and some things you need to consider when making this decision. 

Spouse or domestic partner’s plan 

If you’re married, this is probably the best freelancer healthcare option for you. With these plans, the employer tends to pay into the plans so you can probably get a lower premium this way, and it usually doesn’t require much work to get added to your spouse’s plan. The downside is that your insurance will be tied to your partner’s employer for health care, and if your partner loses their job you will lose your insurance as well. This would create financial anxiety and instability, if your partner were to lose their job.  But because the costs are significantly lower than the other options, that risk is usually worth it for most freelancers. 

ACA - The Affordable Care Act

Healthcare.gov has options for freelancers, premium tax credits, and other savings. To qualify for this you simply have to have a business that takes income but doesn’t have any employees. There’s a quick and easy calculator on the website that takes basic info like what state you live in and how much your income is to give you a rough estimate on how much you could save. The big caveat here is that depending on how high your income is, you may not qualify for this option. Just make sure to take that into account as you’re evaluating your options. 

One of the major benefits of using the ACA is that your insurance must cover the 10 essential health benefits, so you’re likely to be covered for most of your health needs. The 10 includes things like mental health, chronic diseases, and more. If you have children, they’ll also be able to stay on your insurance plan until they’re 26. If you can’t join a partner's plan, this might be a good fit for you. 

COBRA 

If you’ve recently left your full-time job to go freelance, Cobra might be a good fit for you. This isn’t a permanent solution for freelancer health insurance but it can be a great way to transition if you recently left or are about to leave your full-time job. COBRA can typically get you covered for anywhere from 18-36 months. 

The biggest downsides here are that you’ll pay more than you paid as a full-time worker and it’s only a temporary solution. But it can be a good way to get coverage for your first few years getting settled as a freelancer, while you weigh which permanent decision might be right for you. 

Group insurance 

Group insurance can also be an option for freelancer healthcare. Groups like the freelancers union offer group insurance for freelancers as a way to help freelancers wade through their complicated insurance decisions. Many cities also have local chambers and business groups for freelancers that can offer health insurance, so do a little digging for groups in your city. Look for local professional organizations and ask if they offer group health insurance. 

Private insurance and HSAs

If you don’t qualify for options like ACA, that might leave private health insurance as one of your only options. The costs will seem extremely high compared to rates through an employer-sponsored plan, but they typically won’t be as high as the cost of your medical bills if you are uninsured and need unexpected medical care down the line. 

You might also be able to put away a certain amount of money each month into a tax-deductible HSA. This would soften the blow if you ended up needing to pay out of pocket for a higher medical bill that wasn’t totally covered by your insurance, and you can end up with pretty significant tax savings at the end of each year because the account is tax deductible. 

The risk of being uninsured 

Freelancer healthcare is confusing and with rising insurance costs in the US — particularly for private insurance — some Americans are choosing to accept the risk and go without health insurance. But there are significant risks that come with not being uninsured, and it’s important to understand them before you choose that course of action. 

The biggest risk here is medical debt. 50% of Americans are now in medical debt, and a large amount of the people included in that statistic are insured. So their debt would be even higher if they were uninsured. If you’re uninsured, the costs of unexpected accidents, injuries, or illnesses can be extremely high. You’ll often be charged full price out of pocket and this could lead to constant anxiety around unexpected medical costs and take a toll on your mental health as well. And with the cost of prescription drugs constantly rising alongside insurance costs, you would also run the risk of not being able to get the medications you need. 

Finding the right option for you

Figuring out freelancer health insurance isn’t the most fun part of being a freelancer, and the right option is probably going to be different for each freelancer. Make a pros and cons list before you decide, and be sure to ask other freelancers you know to learn about how they handle their health insurance as well. The more you learn about each option, the better informed you’ll be to make the decision that’s right for you. 

Interested in more resources for freelancers? Check out our freelancer resources to learn more about how to find success as a freelancer or join our LinkedIn community for freelancers to have a place to share strategies and tips with other freelancers and stay in the know. 

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