Best Health Insurance for Self-Employed Freelancers

Find the Cheapest Health Insurance Quotes in Your Area

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Ask any of the 57.3 million U.S. workers in the gig economy why they freelance, and you'll get a myriad of responses, from the ability to work remotely with flexible hours to having more control over what kinds of work they tackle. If the trend continues, it's estimated that by 2027 more than half the country's workers may be freelancing.

Which is not to say freelancing doesn't have its share of downsides. Among them are earning inconsistent income, handling your own accounting and doing your own self-promotion. But perhaps one of the biggest—and costliest—challenges is having to foot the expense for self-employed health insurance.

Finding health insurance is often the greatest hurdle, one that gives workers pause before jumping headlong into self-employment. If you're thinking about going freelance, you may be wondering: Are there affordable health insurance plans for freelancers? Am I able to purchase private health insurance, or do I need to buy a government health insurance policy?

There's not one easy answer that suits every person, but understanding how health insurance for freelancers works and knowing what options are available will help you make an informed decision.

How much does self-employed health insurance cost?

The cost of health insurance for freelancers depends on several factors, such as where you live, your income level and the size of your deductible. Stacey Aikman, director of marketing for Vista360health, estimates that self-employed workers in central Texas typically pay between $200 and $400 per month for health insurance. If you live in a large urban area, such as New York City or San Francisco, those numbers are likely to be higher, but if you live in rural Wyoming or North Dakota, the average cost of health insurance is likely to be lower.

Plans on the lower end of that scale tend to be called "catastrophic" or "high-deductible" plans. That means you pay a low monthly premium, but if you end up needing care, you'll have to pay more out of pocket before your insurance kicks in. So if, for example, you're a relatively healthy 25-year-old with no pre-existing medical conditions earning $40,000, then this type of plan may be your best bet.

Plans on the opposite end of that scale tend to have higher monthly premiums but lower deductibles. So if you have a chronic medical condition and you know you'll have to see specialists or buy several brand-name drugs on an ongoing basis, you may end up paying less over time with this kind of plan.

What are my self-employed health insurance options?

Depending on your health care coverage needs and budget, there's a spectrum of choices to obtain self-employed health insurance, from the health insurance marketplace to government health insurance.

Head to the health insurance marketplace

Also known as Obamacare, the Affordable Care Act (ACA) or the exchange, the health care marketplace is where you can compare different health insurance options in your particular region of the country. If you're having trouble understanding the differences between plans, the site can usually direct you to a person called a "navigator" who can walk you through the pros and cons of each plan.

Many freelancers buy health insurance through the marketplace because all the plans listed on the exchange meet certain basic government-mandated requirements. For instance, all the plans cover 100% of preventive care, and coverage can't be denied due to a pre-existing condition.

Plans on the exchange fall into one of five categories: catastrophic, bronze, silver, gold and platinum.

Catastrophic plans are available only to people age 30 and under or to those who qualify for a hardship exemption that prevents them from being able to afford health coverage. These plans have the lowest monthly premiums and the highest deductibles. They're ideal for people who want coverage for major medical procedures but don't expect to use their insurance on a regular basis.

On the other end of the spectrum, platinum plans have high monthly premiums and low deductibles. These are the best plans for people with ongoing medical needs. Not every state or insurer offers catastrophic or platinum plans.

Your coverage will vary depending on the insurer you choose, but here is an example of the amount of coverage you might receive from each category.

CategoryInsurance paysYou payCost
Catastrophic50%50%Cheapest
Bronze60%40%Affordable
Silver70%30%Midrange
Gold80%20%Expensive
Platinum90%10%Most expensive

If you're eligible for a subsidy, you'll want to buy government health insurance through the marketplace so the government will cover part of your premium. If you're not "subsidy eligible," then the cost of the plan is the same on or off the exchange. You can visit Healthcare.gov to determine your eligibility status.

Check out your partner's health insurance

If you're married or living with a partner, you may be able to join your partner's insurance plan. Unmarried domestic partners are more likely to qualify for an employer-based plan than one on the health care marketplace, said Aikman. If you believe you may qualify for your partner's workplace plan, have them talk to their human resources department or contact their insurance company.

This is the better alternative to government health insurance, since employers often help cover the cost. "There is usually cost-sharing: The employer may pay X% of the premium. You could get better coverage, better prices and a better network," said Meghan Nechrebecki, MSPH, founder and CEO of Health Care Transformation.

Look into professional groups, unions and associations

While this isn't as common as the other self-employed health insurance options, Aikman says you can sometimes find affordable health insurance plans through an organization associated with your line of work, such as Freelancer's Union. You may have to pay fees related to the association in order to become eligible for the plan, so be sure to factor in those costs if they exist.

Find out if you qualify for Medicaid

Medicaid is government-sponsored health insurance for low-income people. When it comes to Medicaid eligibility, your income must be below a certain level. That level varies depending on the state you live in and the number of people in your family (if you have a spouse and dependents). To find out if you're eligible, visit HHS.gov.

If you have any dependents in your family who are younger than 18, you should also check to see if they qualify for the Children's Health Insurance Program (CHIP), which is similar to Medicaid but for children.

Think outside the box

Depending on your particular circumstances, there are additional affordable health insurance options available to you. For instance, if you're a student, your college or university may offer a student health insurance plan. If you're active in or retired from the military, you may qualify for TRICARE. Those who are senior citizens or have certain disabilities may be eligible for government-issued Medicare.

Another option for young adults: You can stay on your parents' family plan until you turn 26. That could become tricky if you move to a different state, warns Nechrebecki, because then you may be forced to see more expensive out-of-network doctors.

Aikman notes that there are also faith-based plans that are not ACA-compliant. These are usually called health care sharing ministries (such as Liberty HealthShare, Christian Medi-Share, Samaritan Ministries and Altrua HealthShare). Since they are religious in nature, some don't cover health care costs like birth control or elective abortions, so they tend to be more restrictive in terms of coverage. But on the flip side, they also tend to be less expensive than other health insurance for freelancers.

What Are Some No-Nos?

Here are some basic things you should avoid doing when searching for self-employed health insurance.

Avoid contacting insurance companies first

Instead of searching through your options on the health care marketplace, you could call up a private health insurance company like Cigna or UnitedHealthcare to order a plan directly—but that's an approach Nechrebecki doesn't recommend.

Not all plans offered will be ACA-compliant, and it can be hard for consumers to know the difference, says Nechrebecki. You're better off looking at the health care marketplace first, especially if you are subsidy-eligible. If you can't find what you need there, then search for an ACA-compliant plan elsewhere.

Stay away from COBRA

If you lose your job and also your health insurance coverage, your former employer may offer you COBRA, which is considered temporary continuation coverage that can last up to 18 months. "This came about before the marketplace options were available and it's incredibly expensive," said Nechrebecki. If you'd rather pay more and keep your old plan, you can do it, she said. But losing your job-related health insurance qualifies you for special enrollment in the health insurance marketplace for 60 days, so you will likely find a better deal there.

Should You Consider Short-Term Health Insurance?

The bottom line: Short-term health insurance is useful only if you're trying to fill a gap in coverage, for instance, or if you miss your open enrollment period.

For 2019 coverage, the health care marketplace's open-enrollment period is Nov. 1 through Dec. 15, 2018. If you don't apply during that time period, then you can't enroll unless you qualify for a special enrollment period (such as if you lost your health coverage, moved, got married or had a baby).

So let's say you lost your medical coverage after you got laid off from a job in January, and you didn't enroll in a new health insurance plan during the immediate 60-day special enrollment period. Then you would have to wait until the next open enrollment period to get coverage for the following year. That would leave you without health insurance for nine months. Short-term health insurance might be useful in that particular scenario, especially if you're young, healthy and don't anticipate needing a doctor on a regular basis.

But unless you fall into that category, steer clear. The premiums can be quite low and tempting, but these types of short-term health insurance plans don't have to meet the ACA requirements. So, for instance, they may not cover 100% of preventive care, and they could deny you coverage for having a pre-existing condition. Mental health coverage and prescriptions may not be covered either, says Aikman. Nechrebecki agrees: "They're skimpier plans and they don't cover as much. It's risky."

The Risks of Not Getting Health Insurance Coverage

Simply put, the risk is the unknown. And while no one likes paying high monthly premiums for health insurance, you would probably sleep better knowing that if you had to go to the emergency room, you won't have to worry about how you'll pay for the cost of that visit.

Even though lifestyle habits like eating nutritious foods, exercising regularly, managing your stress and getting enough sleep can all help you ward off certain medical conditions, your health isn't always within your control. "You could spend $2,500 this year on premiums," said Nechrebecki, "but if you don't and you get into a car accident, you're looking at six figures of health care costs."

"Every ACA-compliant plan has an out-of-pocket max: the most someone is required to pay in one calendar year for eligible services," Aikman said. On the catastrophic plan (high-deductible/low-premium), that max is $7,350 for an individual in 2018. With other plans, that max is even lower. The question you need to ask yourself, says Aikman, is: "What's your peace of mind worth?"

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