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How Self Employed People can Get Health Insurance

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An independent worker is a person who does business for himself or herself and does not need to work for any company. When you decide to become a freelancer, health care coverage is an important thing to consider.

Should Freelancers Worry about Health Insurance?

With the relentless talk of changes in health care, the cost of healthcare has become a major concern for most people. As a freelancer, you are at risk because when you fall ill, you will lose income and have to deal with medical bills. Without the insurance that comes with being an employee, you will have to get your own health plan.

Places to Get Insurance as a Freelancer

You can always find insurance through different places if you are self-employed. Here are your options:

Freelancers Union

This union offers freelancers a health insurance plan as well as supplemental medical plans such as dental coverage. If you want this plan, you should do your research first to see whether it will be enough to cover your needs.

Convert Existing Plan to individual Plan

If you have recently left your employment to be self-employed, your health insurance plan might allow you to convert the group plan into an individual one. However, you should know that individual plans are more expensive than group ones, but the money you will be making as a freelancer might cover the difference.

If you are quitting your job, you should check whether you qualify for the special enrollment period and make the right choice so that you can save on money.

Find Individual Plans

Since the ACA, you can always find a health insurance plan through a marketplace as a small business or an individual. If you are planning to start your own small business, you should consider the small business health plan.

Your Partner’s/ Spouse’s Health Insurance

If you have decided to start freelancing, you should consider joining your better half’s health insurance plan. Even if the two of you are not legally married, you can qualify as a domestic partner if you live together in a domestic setting. As long as you are not married to another person, you can qualify as a domestic partner.

Business Groups or Professional Association

If you join an independent worker association or the profession you are in has an association, you might qualify for group insurance through such memberships. This type of insurance allows persons who are self-employed to band together to form a group insurance.

Health Savings Accounts for Freelancers

If you are wondering what self-employed HSA is, it is an IRA for health care coverage. Basically, it is a type of consumer-directed health insurance. HSAs pair low-cost and high-risk health coverage with a tax-free savings account. They are made to lower small business health insurance costs  and they are attractive to healthy workers and young employees who need irregular care.

Before applying for an HSA, you would need to enroll in a high-deductible plan with a minimum deductible of 1,200 dollars for individuals and 2,400 dollars for families. This model of low premiums and high deductibles encourages people to be frugal while protecting employees from burdens brought on by huge medical bills.

Benefits of HSA Coverage

–          Your savings roll over from year to year and accumulated ones do not expire.

–          Contributions are tax free.

–          Employer contributions to these accounts are not liable to payroll taxes.

–          Dividends and accumulated interest are tax-deferred.

–          HSA savings are usually tied to individuals instead of businesses, which allows you to hold onto the account after the business closes.

 


Open Enrollment Completed

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Thank you so much for all the tips and comments on my Open Enrollment post! I really found the comments to be insightful and incredibly helpful as I decided on my plans.

In the end, I opted to keep my current insurance (a PPO) and a flex spending account for both health and dependent care purchases. I may still switch to an HSA in the future, but didn’t feel comfortable doing so without any EF whatsoever right now. So it will be a consideration in future years, but not at this time.

I increased the amount of deductions for my health HSA but reduced the deductions for my dependent care HSA. And the cost of my medical insurance went up a little as well.

In the end, here are the benefits-related deductions I’ll see per paycheck:

In my open enrollment post, I’d posted all of my paycheck deductions (including required investment, taxes, parking permit, etc.) But to do an apples-to-apples comparison of just the benefits-related deductions (including health insurance, dental insurance, and the two FSA contributions), here’s how things stack up:

2016 per paycheck deduction = $382.90

2017 per paycheck deduction = $340.33

So I’ll be saving a little bit per check, but its really a pretty negligible amount. I also hope to reduce the amount of taxes taken out (pending the CPA’s review), so I may be able to “add back” a little bit more money to my take-home pay after our 2016 taxes have been finalized.

All in all, it’s still a pretty large deduction per paycheck, but I have excellent insurance and am happy with our coverage thus far. I pay for my dad’s health insurance (albeit out of his own funds, but I am the money-manager), and he pays $1,000/month for private insurance for a single individual with crappy coverage! Ugh! So I know I am really very lucky to have such good coverage at such a great rate! And as an aside, my Dad’s birthday is in March and at that time he’ll be eligible for Medicare. So hopefully that means a big reduction in his  health insurance costs.

I just wanted to follow-up to let everyone know what we’d decided regarding open enrollment. Thanks, again, for all your helpful suggestions!

~Ashley

 


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