There is a lot of freedom in working for yourself; self-employed individuals get to set their hours, pick their work location, and decide which types of tasks or projects they take on. However, since independent contractors aren’t considered employees, they aren’t typically eligible for company benefits such as health, vision, or dental insurance.
This can be difficult for people who often need to see the doctor for things like pre-existing conditions or who have small children. Medical expenses can add up, especially when you have a family to think of. When you’re self-employed, it’s important to ensure you’re prepared for the unexpected.
Read on to learn how much health insurance costs when you work for yourself and how you can get the quality coverage you need for you and your family at an affordable rate.
Self-Employed vs. Full-Time
So, what does it mean to be self-employed? Self-employed workers are people who work as sole proprietors or independent contractors and typically specialize in one specific trade or skill.
Your job classification affects your eligibility for healthcare benefits, so it’s important to understand how being an independent worker is different from full-time employment. When employed full-time by a company, they are legally required to provide Social Security, Medicare, state taxes, unemployment taxes, and a consistent salary or hourly wage.
When you’re working for yourself, you’re responsible for covering costs like these on your own. Businesses are not legally required to offer any type of health plan, vision plan, or dental plan to contractors, although some do.
Does Self-employment Affect Tax Season?
Your job classification not only affects health benefits but also how you handle your taxes and the type of tax return you’ll have to fill out.
Independent contractors will typically use a 1099-MISC, which they’ll receive from companies that have paid them over $600 the previous year.
When you’re self-employed, you receive the gross amount of your income and will need to set aside funds to pay for income taxes on your own. Tax rates vary by state, so you’ll need to save an amount from each check that is appropriate for your situation.
What Affects Your Self-Employed Health Insurance Costs?
Here are some factors that will impact how much your health plan costs as a self-employed individual:
- Age
- Location
- Tobacco use
- Type of plan
- Level of coverage
The amount you spend on health insurance will depend on your unique circumstances. The more coverage you need, the higher your monthly premiums will be. If you don’t visit the doctor often, you can purchase a health insurance plan with just the basics.
Your Age
Age plays a major role in the cost of your insurance plan; in fact, older people pay much more on average than those younger than them. This is because a health insurance company would see someone older as riskier to insure because they tend to need more medical attention.
Older people, particularly senior citizens (65 and up), are much more likely to have pre-existing conditions or develop other illnesses that require them to visit the hospital for regular treatment. Not all senior citizens frequent the hospital, though, so this could feel unfair for some.
Your Location
The city and state you live in also affect the cost of your premium. Every state has different laws and regulations surrounding health insurance, so make sure to do plenty of research on the trends in your area. The competition also matters. If there are a lot of health insurance companies in a particular area (ex: New York), they will all set their rates at a much more competitive price point.
This means you’ll likely get a better deal than people who live in areas without many options available. Less competition means companies can set higher rates because they know people don’t have many other quality health insurance options.
Your Tobacco Use
People who smoke regularly, or within the past 12 months from applying for health insurance will have to pay a surcharge. This extra fee could equal up to 50 percent of your total premium.
This is because tobacco can dramatically impact your physical health, meaning you’d need more medical care as a result. If it’s found that you’ve been dishonest about your tobacco use to pay less on your premium, you could face fines, probation, or even jail time.
The Type of Plan
Do you need a family plan to cover your spouse and dependents? Perhaps you’re just shopping for yourself. An individual plan will be much more cost-effective, but the family plan will offer you the best value for your spending if you have dependents. The more people you need to cover, the more you will spend on your monthly premium.
The Level of Coverage
Four categories of health plans could fall under bronze, silver, gold, and platinum plans. Due to the high deductible, and limited coverage, the bronze plan will have the lowest monthly bill. The bronze plan is best for those who don’t plan on needing to see the doctor very often outside of the standard preventative care.
The silver plan is great for people who see their doctor more often than the occasional check-up but don’t have any conditions that would require regular care — that’s what the gold plan is for. If you have a pre-existing condition and your medical expenses are quite high, you’ll get the best value with the gold plan.
The platinum plan will cost you the most on your premium, but the deductible and out-of-pocket costs will be the most affordable. If you have more than one condition requiring you to visit your doctor often for treatment, the platinum plan is the best choice.
Ways To Access Health Coverage
If you’re self-employed, so many healthcare options are available.
- Medicaid
- A parent’s plan
- A significant other’s plan
- A global health insurance plan
If you want access to quality coverage for yourself and your loved ones, but don’t want to break the bank, here are some options you can choose from.
Medicaid
Medicaid is a federal and state government assistance program designed so those with little or no income can still access the quality healthcare they need most. However, you must meet certain criteria regarding income and other non-financial requirements.
According to the Affordable Care Act, your financial eligibility is determined based on your Modified Adjusted Gross Income (MAGI). Eligibility is determined month-by-month, so when you no longer meet the requirements, your coverage will end on the last day of your first non-eligible month.
A Parent’s Plan
Did you know you can stay on your parent’s health plan until the age of 26? It doesn’t matter if you’re married, not living with them, or financially independent; you can still stay on (or get back on if you went off) their plan until you turn 27. So, if you’re in your early 20s and new to the self-employment journey, you might opt to go this route to cut costs wherever possible.
If your parents have a health insurance marketplace plan (and you’re not on it already), they can enroll you during the annual enrollment window. They can also enroll you during the special enrollment period if you have a qualifying life event (ex: having a child).
A Significant Other’s Plan
If your spouse has a health insurance plan on their own or through their job, you can take advantage of this as well. They will have to contact their insurer and convert the plan into a family plan, so the monthly premium would go up, but it’s cheaper than both of you purchasing individual plans.
A Global Health Insurance Plan
If you’re working remotely as a self-employed individual and like to change your work location often, a Global Health Insurance plan with Insured Nomads could be a great option for you. You will be covered for emergencies and have access to mental health resources, inpatient and outpatient care, prescription coverage, and more.
Everything You Get With Insured Nomads
When you opt to purchase health insurance through us, you’ll have a couple of options to choose from. The Preferred Global Health plan offers regional coverage outside of the United States. The Preferred Plus Global Health plan offers worldwide coverage for travelers within the U.S. and beyond.
Health Plan Highlights
There are so many amazing benefits you can get with your Global Health Insurance plan; we cover many things that other travel insurance companies don’t.
- Inpatient care. Inpatient care is what you receive if you need to go to the hospital for any reason that requires you to stay for at least one night (possibly more). This could be anything from an organ transplant to chemotherapy treatment recovery.
- Outpatient care. Outpatient care is what you receive if you have a medical issue that can be taken care of within the same day you arrive in the hospital. You’ll be discharged in this case and won’t need to stay overnight. Examples of outpatient care include check-ups with your primary care physician and minor urgent care visits.
- Mental health resources. You’ll also have access to mental health resources like counseling and substance abuse support. You can request to speak to someone anytime you visit the hospital for inpatient or outpatient care.
- Additional assistance. Other assistance we offer includes ambulance transportation to your local ER, preventative screenings, prescription coverage, vision care, and more.
INC Membership
Every traveler who purchases a Preferred Global Health plan or a Preferred Plus Global Health plan will receive an INC Membership at no additional cost.
A few highlights:
- Find connection. If you’re looking to elevate your solo travel experience, we can connect you with other travelers on the same path as you. It’s a great opportunity to make new friends while having fun and memorable experiences.
- Stay informed. You’ll be notified immediately if any health and safety alerts could make it dangerous to travel or changes regarding visa or vaccination requirements.
- Luxury perks. As a membership holder, you’ll also gain access to every airport lounge you come across along your journey. You can enjoy perks like fine dining and sleep pods at no extra cost. You can also access a VPN to protect your data when working on public WI-FI networks.
- Mental health. We also provide travelers with telemedicine services. You can speak to a licensed therapist in the language you feel most comfortable communicating. Our team is multilingual and multicultural.
- Emergency assistance. In our mobile-app, you’ll have access to a panic button 24/7, all year long. We can send someone out to you whenever you need. If you need to be evacuated or relocated for your safety, we can make those arrangements at no extra cost.
Our membership is an extra layer of protection (and fun) for those working from different locations worldwide.
Travel Safely, Work Better
It might be tempting to skip purchasing global health coverage to save money, but if you need medical care, you’ll have to cover any associated costs out-of-pocket. This would be much more than if you had health insurance to offset some (or all) of your medical expenses.
Your mental and physical well-being has a lot to do with how you perform at work. If you have a pre-existing condition that needs ongoing treatment or a health emergency, you’ll want to be protected so you can keep being your best no matter what happens.
Whichever health insurance plan you select, you can get coverage for up to one year, and renew at the end of your policy period if you’d like. Even better — you don’t need to wait for open enrollment; apply for coverage through Insured Nomads anytime.
About Insured Nomads
Insured Nomads is the first to take an integrated traveltech, fintech and insurtech solution to the world for remote workers, globally distributed teams, expats, and travelers. Their purpose is to make travel as safe and smart as staying at home. They do this by providing health insurance with exceptional medical benefits in tandem with wellbeing, safety, security, and advanced tech-enabled solutions for ease of payment for healthcare, emergency response and evacuation. Insured Nomads is available through affinity relationships, direct, embedded and through select brokers and partners for groups and individuals.
Information on integration, collaboration and partnership contact Brett Estep: brett@insurednomads.com
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Sources:
Young Adult Coverage | HHS.gov
5 Factors That Affect Your Health Insurance Premium Costs | moneycrashers.com
How Health Insurance Marketplace® Plans Set Your Premiums | HealthCare.gov
Tax Forms for Independent Contractors: What Businesses Need to Know | paychex.com
The Differences Between Employed vs. Self-Employed | thebalancecareers.com
6 Health Insurance Options If You’re Self-Employed | moneycrashers.com
Beginner’s Guide to Health Insurance for Freelancers | ZenBusiness Inc.