A freelancer’s guide to health insurance

Affordable health care options for freelancers and self-employed workers, no matter their industry

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Derek SilvaSenior Editor & Personal Finance ExpertDerek is a former senior editor and personal finance expert at Policygenius, where he specialized in financial data, taxes, estate planning, and investing. Previously, he was a staff writer at SmartAsset.

Updated|8 min read

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Freelancers and self-employed people don’t have an employer who can offer them health insurance. However, freelancers still have a number of health care options. There are local, national, and industry-based organizations that provide group health insurance for freelancers.

Key takeaways

  • Health insurance for self-employed individuals and freelancers is available through the Affordable Care Act marketplace as well as local and national organizations

  • COBRA coverage is an option if you’re leaving an employer, but it’s often expensive so make sure to also consider plans available through the marketplace

The Affordable Care Act (Obamacare) has also made things easier for the self-employed and freelancers by creating a marketplace where anyone can sign up for a health plan. This is often the best option for freelancers. If you’re under the age of 26, you can also stay on a parent’s insurance, thanks to the Affordable Care Act.

If you’re leaving an employer that has at least 20 employees, you should also be able to keep the same insurance policy that you had with your employer. It will convert to an individual plan through the COBRA program, which you then pay for on your own. It will likely be expensive though. Employers normally help pay for your health care and this option would require you to cover for the whole plan yourself. As a freelancer, the industry you work in may also have professional organizations that help workers to get group health coverage.

Regardless of how you get health insurance, a good way to start your search is just to review the basics of health insurance. Especially if you previously had health coverage through an employer, you may have had reduced insurance costs, or you may have just had perks that you didn’t realize you were receiving, like the ability to pay your health insurance premiums with pre-tax money.

Ready to shop health insurance?

Freelancers can join a spouse’s or parent’s health insurance

If you’re married, you may be able to join your spouse’s plan. Many employers allow workers to add a spouse to their health insurance plan. However, you should look at the details of the employer’s plan to understand how much this would cost. It will almost always raise your monthly premiums, often by a lot. Some employers also apply a surcharge if an employee adds a spouse that could receive coverage from their own employer (though this likely isn’t an issue if one spouse is self-employed). You may also be able to join onto the plan of a domestic partner.

If you are under the age of 26, another option is to remain on your parent’s insurance. The Affordable Care Act allows young adults to remain on a parent’s plan even if their parents don’t claim them as a dependent anymore, they don’t live with their parents, they have a full-time job that offers health insurance, or if they are married.

How the Affordable Care Act helps freelancers and self-employed people

The Affordable Care Act, also called the ACA or Obamacare, created a health insurance marketplace where individuals can get insurance coverage for themselves and their families. This is an option no matter what kind of employment you have.

In order to get a health plan through the ACA, you need to get a plan during the Open Enrollment period. Federal Open Enrollment lasts from Nov. 1 to Dec. 15 each year. You can sign up for a plan during that time and then your coverage will begin on Jan. 1 and cover you for the calendar year. Here’s a state-by-state guide to Open Enrollment no matter where you live so you can familiarize yourself with the process for getting covered next year. 

Health insurance plans available through the marketplace all offer the same essential health benefits, but your monthly premium and other prices may vary depending on where you live. (See which states pay the most for Obamacare.)

You may also qualify for Special Enrollment if you experience a major life event, like a marriage, divorce, the birth of a child, or the loss of a job. An event that qualifies you for Special Enrollment is known as a qualifying life event. So if you currently have a full-time job and decide to quit in order to freelance, you will qualify for Special Enrollment.

COBRA coverage for freelancers

As mentioned, you will qualify for Special Enrollment if you leave your job and need to get individual coverage. But if you’d like to keep your employer-sponsored plan, you may be able to use COBRA.

COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act, is a program that allows employees to keep their employer-sponsored health insurance plan when they leave their job, whether voluntary or not. It works by converting a group plan to an individual plan. Your employer’s insurance provider should be able to advise you on your eligibility and the cost of COBRA coverage.

The major note with COBRA coverage is that it’s expensive. Your employer usually subsidizes health coverage for you, which means the cost you pay isn’t the full cost of a plan. If you elect to use COBRA coverage, you will need to pay the full price of the plan, plus a 2% administrative fee. This will end up costing you hundreds of additional dollars per month, so it may only be viable as a short-term option.

Even if you like your employer’s insurance plan, make sure to compare the full cost of COBRA coverage with the cost of other plans in the marketplace. Talk to your employer’s insurance provider to learn more about how much COBRA coverage would cost. Soon after you leave a job, you should also receive a letter from the insurer explaining how the COBRA plan works and exactly how much the monthly premium is.

Getting health insurance through the Freelancers Union

The Freelancers Union provides health insurance plans specifically for freelancers. It can also provide you with dental coverage, life insurance, and disability insurance. You can learn more by visiting freelancersunion.org.

Similarly, some professions have associations or unions that self-employed and workers can join. Becoming a member in one of these professional associations could give you access to a group health plan, akin to what you can get through a regular employer. You may see these plans called association health plans (AHPs).

In certain areas, the local Chamber of Commerce may also offer group health insurance for freelancers and self-employed individuals.

Medicaid for self-employed people with a low income

Medicaid is a health insurance program available to low-income families and individuals who need help paying for health care. Each state runs and (with the help of the federal government) funds its own Medicaid program. That means the eligibility requirements may be different depending on where you live.

As a rule, though, anyone making up to 133% of the federal poverty level, also called the federal poverty guidelines, could qualify. As of 2021, the federal poverty level for the purpose of qualifying for Medicaid is $12,880 for an individual in all states, except for Alaska and Hawaii, which have slightly higher levels. If you’re eligible, you can apply for Medicaid at any time during the year. Your state’s Medicaid website and healthcare.gov will have more information on eligibility in your area.

Check whether you qualify for Medicaid with our state-by-state guide to Medicaid.

Affordable health insurance for self-employed individuals

If you cannot afford a health care plan but you don't qualify for Medicaid, you may qualify for a health insurance subsidy. Subsidies lower the cost of health care for low-income individuals. In particular, your household income needs to be less than 400% of the federal poverty guidelines.

There are two main types of subsidies. The advanced premium tax credit (APTC) helps by lowering the cost of your monthly premiums. Tax credits work by giving you back a certain amount of money when you file your tax return. However, you can also opt to get premium tax credits throughout the year so that you can apply them directly to your monthly premiums. The other subsidy to consider is a cost-sharing reduction (CSR). CSRs help in more ways than just your premiums, by also lowering your copays, coinsurance, and deductible.

How much of a credit you can get depends on where you live, your annual income, and something called the second-lowest cost Silver plan. Read more about the second-lowest cost Silver plan to see if you qualify for a subsidy and how much of a subsidy you can get.

Learn more about getting affordable health insurance.

Should freelancers open a health savings account (HSA)?

No matter what health insurance plan you have, you will have some out-of-pocket expenses. One way to help pay for your medical expenses is with a health savings account (HSA). HSAs allow you to make pretax contributions, which means you don’t pay income tax, and then you can use the money in your HSA for any qualified medical expenses.

You can’t pay your insurance premium using HSA money, but you can use those funds to pay for copays and deductibles. You can also pay for a number of items like contact solution, prescription drugs, some over-the-counter items, and dental or vision expenses.

Not all plans allow you to open an HSA, though. You will need to have a high-deductible health plan (HDHP) in order to use an HSA. These plans have a high deductible, which means you could be paying more if you get sick, but the premiums are lower and healthy individuals may save money in the long run. Not all employers offer these plans, but they are available in the marketplace for self-employed people.

Read more about who should get an HSA and what medical expenses an HSA covers.