Now that open enrollment season is here, it’s an excellent time to consider your health insurance choices.
We’ve done some legwork to make the process of finding the right plan a little less intimidating. Here’s a guide to six of the most popular options for independent contractors and self-employed workers.
1. Health Insurance Marketplace
Several types of health insurance for independent workers are available on The Health Insurance Marketplace, which is administered by the federal government. You and your family can enroll during the open enrollment period (November 1 to December 15). Or, you can enroll outside of this period if you have a qualifying event, such as getting married or having a baby.
The cost of insurance depends on your household income. You may qualify for subsidies that can help lower your monthly premium payment. Typically, your family income needs to fall within 100 and 400 percent of the federal poverty level to qualify for subsidies. This calculator can help you learn if your income is in the range to save, and if so, how much you can save. It will also tell you if you’re eligible for Medicaid.
2. Employer plan through a family member
If your spouse or domestic partner has employer-sponsored insurance benefits, you may qualify for coverage through their policy. According to the Kaiser Family Foundation, 95 percent of firms offering health benefits offer coverage to spouses.
This is one of the easiest ways to get health insurance, and for many people, it’s the cheapest. Also, if you are under 26, you could be covered under your parents’ health insurance plan.
3. Medicaid and Medicare
Medicaid coverage and eligibility depends on which state you live in. You can qualify for Medicaid based on income, household size, disability, family status, and other factors. If you live in a state that has expanded Medicaid coverage, you can qualify just based on your income If you qualify for Medicaid, coverage can begin immediately – there is no specific enrollment period.
Medicare is a federally-operated program for those age 65 or older and younger people with disabilities. There are specific enrollment criteria and eligibility periods that depend on your birth date and qualifying events. Learn more about by visiting Medicare’s Eligibility & Premium Calculator.
4. Health sharing plans
Health sharing plans are not health insurance, but they are an affordable way to plan for unforeseen medical expenses. These plans are often offered through religious organizations.
As part of a health sharing plan, you pay a monthly share amount (like a premium) as well as an “annual unshared amount” for your own expenses (like a deductible). Your medical expenses must exceed the unshared amount before the plan shares your expenses.
Although health sharing is not the same thing as health insurance, these plans do count as insurance under the Affordable Care Act. This means that you will not be fined a tax penalty for going uninsured if you use a health sharing plan.
5. Short-term health plans
If you’ve recently lost a job with health benefits, you may qualify for temporary continuation of health coverage, or COBRA. The cost of COBRA can be high, because you may have to pay the entire cost of insurance, including the part your employer previously paid.
In most states, you can also buy short-term health insurance for up to a 12-month term. These plans are typically less expensive, but more restrictive, than other types of insurance plans.
6. High-deductible insurance plans
High deductibles on your health insurance mean that you may end up paying more for your healthcare until your deductible is reached. However, there are two big reasons that many people choose high-deductible health plans. They generally offer lower premiums than traditional insurance plans, and they can usually be combined with an HSA.
Wondering whether a health savings account (HSA) is right for you? HSAs are a type of savings account that let you set aside money on a pre-tax basis to pay for qualified medical expenses. To participate, you’ll need to participate in an eligible high-deductible health insurance plan.
You can use HSA funds to pay for deductibles, copays, and coinsurance, plus other qualified medical expenses not covered by your plan. Your HSA balance rolls over from year to year, so you never have to worry about losing your savings.
HSAs have numerous tax advantages, including:
- Contributions are tax-deductible
- You don’t pay taxes on your account’s growth
- You don’t pay taxes on withdrawals for eligible expenses
Because HSA contributions don’t count toward your taxable income, you will be taxed as though you make less money. Let’s say you make $50,000 per year. The annual limit on HSA contributions for 2021 will be $3,600 for individuals and $7,200 for families. If you put $3,000 in your HSA, you will be taxed as though you make $47,000, thus reducing the taxes you owe.
Ultimately, selecting the right insurance plan is a personal decision based on your health, current situation, and budget. Be sure to get multiple quotes from different health insurance companies so you can make a well-informed choice.
Still confused about your options? An insurance broker might be a good resource to help you find the right plan.