This post was provided by Decent, a startup providing affordable health insurance for freelancers in Austin TX.
Finding affordable health insurance can be a challenge for anyone who isn’t covered under an employer-sponsored or group plan. Self-employed individuals are often left to scour health plans on HealthCare.gov under the Affordable Care Act (ACA), searching for the best benefits at the lowest cost. In other cases, people may be able to purchase health coverage through a broker, through a spouse or family member’s plan, or through a professional association.
Self-employed individuals have the option to purchase a health care plan through Healthcare.gov. The best way to navigate health plans on this exchange is to pay attention to the “metal ratings”, which can provide an estimate of out-of-pocket costs. For example:
- Platinum plans—pay for roughly 90% of out-of-pocket costs
- Gold plans—pay for roughly 80% of out-of-pocket costs
- Silver plans—pay for roughly 70% of out-of-pocket costs
- Bronze plans—pay for roughly 60% of out-of-pocket costs
In general, out-of-pocket costs tend to be inversely related to monthly premiums; so the higher the out-of-pocket max, the lower the premium and vice versa. High-deductible health plans (HDHP) are also available, which tend to have lower monthly premiums but much higher deductibles.
Premium Tax Credit Health Insurance Subsidy
Some self-employed individuals qualify for the premium tax credit health insurance subsidy if they make between 100 and 400 percent of the federal poverty level (FPL). The FPL is calculated based on income and family size. A comprehensive chart to find out if you qualify is available here.
There are other ways for self-employed people to qualify for this subsidy by reducing taxable income, even for those that don’t fall into a lower income bracket. For example:
- Maximizing pre-tax retirement contributions: Individuals that make less than $122,000 and married couples whose joint income falls under $193,000 can contribute $6,000 each to an IRA account.
- Becoming an S-Corp or LLC: Electing as an S-corp or an LLC enables self-employed people to deduct business-related expenses. Check with your accountant to be sure you can make certain deductions.
If you get creative, you may be able to find a way to enjoy additional health insurance savings.
Health Insurance Shopping 101
Health insurance shopping doesn’t have to be a headache. There are plenty of ways to find the best healthcare coverage for your unique needs without breaking the bank. We’ve included a list of best practices below so you can find affordable, comprehensive coverage that makes sense for you.
Always Consider Your Choices
Many people opt to stay with the same plan year after year simply because it’s more convenient than taking the painstaking time to review a laundry list of options. That said, plans, benefits, coverage, provider networks, and prescription coverage change all the time.
It can be good to keep a finger on the pulse of the changing industry as most plans evolve significantly each year. Without reviewing your plan, you may end up spending more on lower levels of coverage. Take some time to review your current plan and any new options each year.
Get Schooled on All Things Health Insurance
One of the best ways to be successful at finding a great health insurance plan is to beef up your knowledge of all things health insurance related—including the different terminology. Here are a few key definitions you should be aware of:
- Max-out-of-pocket—the maximum amount you (or your family) will have to pay for covered services each year. In many cases, co-pays, deductibles, and co-insurance all count towards this amount. After the max is reached, the health plan should pay for 100% of any other covered health care costs.
- Deductible—the amount you (or your family) have to pay for covered health care services before benefits fully kick in.
- Co-pay—a small, flat fee that individuals must pay before receiving healthcare (e.g. visiting a doctor or specialist).
These are some of the main factors people use in choosing health insurance plans, though there are many other considerations. Also be sure you understand how prescription medications are covered under your health care plan, including name-brand medication and the generic versions.
See if you Qualify for the Self-Employed Health Insurance Deduction
If you’re self-employed and pay for your own health insurance out of pocket, you may be able to take a self-employed health insurance deduction. If you qualify, your premiums may be tax deductible. In general, those that work for themselves and aren’t covered (or eligible to be covered) by an employer-sponsored health plans through your spouse, you probably qualify for this deduction. If you qualify, you can deduct 100% of your health insurance premiums paid for yourself, your spouse, and any dependents under 27.
In general, you qualify if:
- You don’t have access to (or eligibility for) other health insurance coverage: If you’re not covered by or eligible for an employer-sponsored health plan through yourself or your spouse, you may qualify.
- You report business income: If you report business income from your business, you should be eligible to claim this deduction.
Seek a Plan With Free Primary Care
Many physicians have moved away from the fee-for-service model and toward direct primary care (DPC). This model allows physicians freedom from exhaustive paperwork and oversight from non-medical administrators to focus more on spending quality time with patients. Patients pay a flat monthly (or annual or quarterly) fee that covers lab work, blood tests, annual check-ups, and other routine care services.
Many choose to combine DPC with an HDHP to cover worst-case scenarios, too. Newer insurance companies are also shifting toward the DPC model by offering free primary care that is baked into a more comprehensive health plan. Finding a hybrid option like this is usually the best bet for self-employed people.
Health Insurance Shouldn’t Be Rocket Science
At the end of they day, finding an affordable, comprehensive plan shouldn’t be rocket science. Thankfully, there are alternative options available that make it easy for self-employed individuals to find excellent health insurance.
Decent is changing the landscape of health insurance by offering two plans that are built around the DPC model. Both our Trailblazer Silver plan and Pathfinder Bronze plan include free primary care with the doctor you trust. That means you pay $0 to see your primary care physician—whenever you want.
Both plans are tailored for self-employed people and have low co-pays for almost all services. Transparent pricing means you no longer have to stress about surprise bills or hidden fees. We also offer open enrollment year round, you can sign up today, even without a qualifying life event. Contact us today to see how you can get the coverage you need at affordable rates.