Health Insurance for Freelancers and the Self-Employed

It is estimated that by the year 2020, 40 percent of America’s work force will be comprised of freelancers, so it is important for all self-employed individuals to find comprehensive information about healthcare in the workforce of today’s world. Here are the new plans and regulations under the ACA.

Self-employed requirements:

  • Individuals who operate an income generating business, and have no employees, are considered self-employed. Those who hire independent contractors are not considered employers and do not have to provide health insurance benefits to their independent contractors.
  • Individuals who hire employees and report the employee’s income on W-2s each year, are considered employers. These people, and their employees, are eligible for healthcare coverage through the SHOP market place.

Insurance options

  • Self-employed individuals may seek insurance coverage through the federal or state health insurance exchange if they believe they are eligible for a tax subsidy to help pay for their insurance, or the self-employed can apply for a plan through the private marketplace.
  • CO-OPS, also known as Consumer Operated and Oriented Plans or non-profit health insurance cooperatives, have been authorized under the ACA law in Section 1322. These are alternatives to small business and individual exchanges operated by federal and state governments. These CO-OPS are organized as non-profits are operated and controlled by their members. The United States currently has 24 authorized CO-OPS.
  • Catastrophic insurance is for individuals who are below 30 and/or have received the hardship exemption. These people may purchase a catastrophic plan in order to meet the shared responsibility requirements. Catastrophic plans may have lower rates than many comprehensive plans; however, the out of pocket expenses are generally higher.

One of the most prominent choices for self-employed individuals is purchasing health care coverage from private exchanges. is one of several comprehensive websites that enables the public to locate insurance to match their needs.

Advance premium tax credit

Self-employed individuals may be able to receive subsidies and/or premium tax credits. This is based upon family modified adjusted gross income and individual income. The greater the income, the smaller the credit. Eligible filers may choose to have all, or a sum of the credit, paid directly to the insurance provider. This will reduce monthly out of pocket premium costs. The following guidelines apply in order to qualify:

  • Individuals who have no access to affordable healthcare coverage through a government or employer plan are eligible.
  • They must purchase coverage through the federal marketplace.
  • The household income must fall between 100% and 400% of the FPL or Federal Poverty Line.
  • Unless individuals meet the criteria in Notice 2014-23 for domestic abuse victims, they should not file married filing separately.
  • Individuals may not be claimed as a dependent by any other person.

Short Term Alternatives

There are short term insurance alternatives which can last up to 90 days (with options for extended coverage pending approval). These plans were designed to offer coverage to uninsured individuals who have lost coverage from an employer, are newly divorced, are age 26 and no longer eligible for coverage on their parent’s plan, and more situations. Most of the benefits generally concentrate on catastrophic coverage, which means comprehensive and preventive care are typically not covered. Temporary, short term insurance instead proves protection from major financial setbacks.

Editor’s Note: This article was updated May 1, 2017 to reflect new federal limits on short-term medical plans.

Colleen McGuire

About Colleen McGuire

Colleen McGuire is an independent consultant who has spent most of her career writing about healthcare and the health insurance industry. For fun she blogs, travels and takes a lot of pictures along the way.