The question as a freelancer is not whether health insurance is necessary (it’s mandated now by the Affordable Care Act), it’s what type of health insurance works best for the self-employed.
Without a doubt, shopping for health insurance can be a stressful and daunting task. You could shop around for an individual policy, you may be able to continue on your former employer’s plan or you could get COBRA if you’re between jobs. Whatever the case, it’s essential to research the process heavily. Perhaps there are options available to you that you didn’t even realize were on the table.
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Be prepared. Shopping for the right plan will take a lot of time and likely many phone calls and emails. If you love your current health care providers, for example, reach out to all of them first, find out what they accept and see if there is a common denominator. Then you’ll have to decide if you’re able to go through a union, or if you’ll have to achieve the best type of health insurance through another means.
Here’s a breakdown of some of the options available to freelancers.
Sign up for an individual policy. On the federal website HealthCare.gov, you can compare single health insurance plans in your area. February 15 was the last day to enroll for 2015; however, you may qualify for the special enrollment period if you get married, have a baby or lose your previous health coverage.
“The process [of finding a health plan] can be overwhelming,” says Kerry Hannon, a personal finance expert and author. “I used an independent agent to help me sift through the choices, then selected one independently from that group.”
When doing your own research, ask doctors which carriers they accept to help winnow your choices of insurers and plans, adds Hannon.
Another source is the National Association of Health Underwriters, which can help you identify three to four insurance plans in your area.
Continue on your former employer’s plan. If you took early retirement, you can try to get on your former company’s health insurance plan. According to a recent Towers Watson survey, the cost for Medicare-eligible retirees getting health coverage from their former employers in 2014 averaged $4,986 for single plans and $11,689 for family plans.
Lean on your parents — if you can be claimed as a dependent. If you’re under 26 years old, you’re in luck. The Affordable Care Act requires plans and issuers that offer dependent coverage to make the coverage available until the adult child reaches the age of 26, according to the U.S. Department of Labor.
Freelancer John Surico, who is 23 and based in New York City, gets health insurance from a parent’s plan, thanks to Obamacare. “The ability to be on my parents’ insurance has lifted a frightening burden on my freelance career. But it also constantly reminds me how prepared I have to be when I turn 26,” says Surico, who started freelancing full time after graduating in 2013 and now writes for a host of publications, including The New York Times, VICE and Narratively.
“This option is definitely a good thing if you’re just getting started in your career,” says Hannon. So recent grads may be able to breathe a little sigh of relief until they are able to afford a plan of their own.
Get on a spouse’s company-sponsored health plan. With this option, your spouse would pay a higher premium for family coverage, but it would still cost less than if you obtained an individual policy, explains Hannon.”
In 2014, annual premiums for employer-sponsored family health coverage reached $16,834, up 3 percent from the previous year, with workers on average paying $4,823 toward the cost of their coverage, according to research by the Kaiser Family Foundation/Health Research & Educational Trust (HRET).
Just keep in mind that most plans won’t allow employees to add a family member after open enrollment season, typically at the beginning or end of the calendar year.
Consider COBRA coverage. According to Hannon, it’s a good option if you’re between jobs and need quality health insurance quickly, for a short period of time. “Freelancers should know that COBRA only lasts for 18 months, but it’s a good Band-Aid between full-time jobs for health insurance,” she says.
COBRA is not cheap, however. Freelancers should be prepared to shell out more than average for it, since you are paying for the cost of the coverage plus administrative fees.
Join a professional group. Full-time freelancer Noah Davis has paid $457 a month for health insurance for the last three years through Freelancers Union, an option for many New York State residents.
He explains: “In my mind, the issues are a) cost and b) the confusing details of all the different plans. Considering how much other people pay and what they have to go through to get health insurance, I feel good about my coverage and cost. Sometimes I think I should get a cheaper plan that just covers catastrophes, but then I reconsider and that feels like an unnecessary risk given my situation.”
Other professional groups to look into for group insurance rates include AARP, and alumni and church associations. If you’re running a small business, it would be wise to check with your local chamber of commerce or the Small Business Service Bureau. In addition, the National Association for the Self-Employed offers insurance plans.
Do your homework to see where you can get better prices within a group plan rather than going at it alone.
Open a health savings account. If you have a high-deductible health insurance plan, consider pairing it with a health savings account (HSA), offered through various banks and mutual funds. Contributions are tax free, and you’ll be able to make tax-free withdrawals for qualified medical expenses, such as deductibles and co-payments.
Unlike with some employer HSAs that have a “use it or lose it” policy, an individual HSA will carry over to the next year, and accumulated savings never expire.
Ultimately, it’s up to you to do your due diligence to get the best rates on whichever health plan you choose. Compare premiums, deductibles and out-of-pocket expenses — and comparison shop on sites like eHealth and NetQuote.com.
This interview has been edited for length and clarity.
