How to Get Health Insurance When You’re Self-Employed

Boss. Business owner. Sole proprietor. Freelancer. Independent contractor. Hustler. No matter what you call yourself, being your own boss is hard-core. But hard-core folks still need health insurance—and when you work for yourself, you’re on your own.

But whether you own a consulting firm of one or run a one-man taco truck, you’re going to find the perfect health insurance fit—because you were built for this. And we’re here to help.

What Is Self-Employed Health Insurance?

Self-employed health insurance is simply individual health care coverage you can buy for yourself (and your family). Individual health insurance is just another term for private coverage as opposed to a group plan (like those offered by an employer).

Self-employed means you have income from a business or a freelance job but don’t have any employees. (If you do have employees, check out these tips on small-business health insurance plans.)

If I’m Self-Employed, Do I Really Need Health Insurance?

Everyone needs health insurance. Just because you’re going it alone with your business doesn’t mean you should go it alone without health insurance. (Also keep in mind, health insurance isn’t the only kind of insurance you’ll need to pick up if you’re self-employed.)

Skipping health insurance could leave you and your family one medical emergency away from a financial disaster. Health insurance transfers the risk of medical expenses to the insurance company—protecting you from medical bills you can’t afford. Even something as simple as a twisted knee can set you back thousands of dollars.

Listen, going through life without health insurance is not worth the risk.

Matthew T. from the Ramsey Baby Steps Facebook Community group found this out. He’s self-employed and went 20 years without health insurance.

“I just never wanted an additional monthly expense in the form of a health insurance premium,” he said.

But one day while listening to The Ramsey Show, it clicked for him why he needed it.

“Look at it as a protection for your money and from bankruptcy—because we all know that one health issue can totally wipe you out,” Matthew said. “I once again went to the healthcare marketplace, only this time, I clicked ‘Submit.’”

Fast-forward 30 days: Matthew went to the ER and after CT scans, an MRI, and a cerebral angiogram, he was diagnosed with bilateral vertebral artery dissection with pseudoaneurysm. After three days in the hospital, his bill came to $169,912! Thank goodness Matthew bought health insurance 30 days earlier.

Don’t risk wiping out your finances. Make sure you’re covered.

Now let’s take a look at your self-employed health insurance options.

Health Insurance Options When Self-Employed

If you can get your insurance through the marketplace, that’s going to be your best option. But that doesn’t fit everybody’s situation so we’ve included lots of others too.

Federal or State Health Insurance Marketplace

The best place to start looking for a health insurance plan if you’re self-employed is the federal government’s health insurance marketplace (HealthCare.gov). The marketplace (also called the exchange) is where you can shop for private health insurance plans and enroll in them. It’s a one-stop shop for finding a plan that works for you.

The marketplace began as part of the Affordable Care Act (ACA), and most states use it. But 19 states have their own marketplace website for residents. You’ll need to sign up for insurance through your state if you live in:

• California
• Colorado
• Connecticut
• District of Columbia
• Idaho
• Kentucky
• Maine
• Maryland
• Massachusetts
• Minnesota
• Nevada
• New Jersey
• New Mexico
• New York
• Pennsylvania
• Rhode Island
• Vermont
• Virginia
• Washington¹

At HealthCare.gov, you can find out if you qualify for lower health insurance premiums or an advance premium tax credit (APTC). An APTC is based on your income and lowers your health insurance premium. 

And if you have kids, HealthCare.gov is also where you can enroll them in the Children’s Health Insurance Program (CHIP) if you qualify.

Medicaid

Medicaid is a federal program that provides free insurance for people with incomes below 138% of the federal poverty level. The maximum income for individuals in 2024 is $20,783 and $43,056 for a family of four.² Disabilities and your number of children also factor into getting approved for Medicaid.

Medicare

Medicare is government-sponsored health care for people over 65. You still have to pay a premium based on your tax history, but Medicare could be a good insurance option if you don’t have insurance available through an employer.

Military Programs

TRICARE is a federal health insurance program for active-duty service members and their families. It also covers National Guard and Reserve members, military retirees and their families, and survivors. If you’re a veteran, you also can apply for VA coverage, which can be supplemented by other types of insurance.

Short-Term Medical Plans

What do you do if you’ll only be self-employed for a little while? Let’s say you were just laid off from your full-time job, and you’re doing freelance work as you search for a full-time gig again. (And if you’re not freelancing, and you’re officially unemployed, check out these health insurance tips.)

If you aren’t planning to be self-employed for very long, you can get short-term health insurance that covers you from three months up to a year. Here are two benefits of short-term coverage:

1. You can sign up outside of the usual enrollment period.

2. Your monthly premiums will be lower than they’d be with COBRA (we’ll talk about that later).

The downside is, you’ll have high out-of-pocket costs, plus it doesn’t usually cover any preexisting conditions.

Limited-Benefit Plans

Limited-benefit health insurance plans, also known as mini-med plans, offer basic medical coverage at a low price, but they only cover specific health issues—like a critical illness or accident. Steer clear of these plans because most of your health needs won’t be covered and you’ll end up paying out of pocket.

Catastrophic Health Insurance

Just starting out in your new business can be pretty rough. If your income is very low, you could qualify for catastrophic health insurance. No, the health insurance isn’t a catastrophe. This kind of insurance only covers massive health expenses like accidents, sudden emergency illnesses, or other injuries plus a few basic things like preventative care services and annual checkups.

Not just anyone can get catastrophic health insurance.

You have to be:

• Under 30, or
• Qualify for a personal hardship, or
• Qualify for an affordability exemption (given to people who don’t earn enough money to afford regular health insurance)

If you qualify, catastrophic health insurance could be a temporary option to fill the gap while you get your business on its feet. But remember, this isn’t going to cut it long-term. Good health insurance coverage is a must to protect your finances!

Membership Organizations

You’ve lucked out and found a freelancer’s union or other membership organization that offers discounted health insurance. Nice! These industry-specific health insurance plans are available for certain groups (from caregivers to college alumni). But read the fine print before signing that dotted line. You don’t want to pay more for a plan that gives you less coverage compared to a marketplace plan you could just buy on your own.

Independent Insurance Agents or Brokers

Some insurance providers have plans customized for self-starters just like you—folks who are self-employed and need good health care coverage at an affordable rate. You’re probably looking for a plan that offers a range of benefits (from access to in-network providers and hospitals to annual checkups and preventative care). Start by speaking to an independent insurance agent who can help you find the best plan for the right price!

Direct Enrollment or Private Exchanges

You can buy a plan directly from an insurance company through a private online exchange and skip the federal or state insurance public marketplace. Sometimes these exchanges are called direct enrollment sites. But they’re not always the best because they don’t have as many plans and companies to choose from as federal or state exchanges do. You also might feel like you’re being pushed to buy a particular plan, and plans don’t have to follow ACA rules.

COBRA

If you recently lost your job, you can keep your previous employer’s health insurance plan with COBRA health insurance. COBRA stands for Consolidated Omnibus Budget Reconciliation Act. (That’s a mouthful!) COBRA lets you keep the same employer-based health plan you had at your old job (for up to 36 months but usually around 18 months).³ But keep in mind, you’ll pay more because your employer won’t be pitching in on the premium anymore.

Health Care Sharing Ministries

You might have heard of something called health care sharing ministries. First, understand that these setups aren’t technically “health insurance.” They’re groups of people who belong to an organization like a church or ministry who pool their money together into a fund. Then they use the fund to pay for major health care costs for members in the group.

Health share plans will usually save you money on premiums, but keep in mind that they’re not regulated by the ACA, which means they’re not required to cover your preexisting conditions. If you’re pretty healthy, a health share plan could be a good option for you.

How Much Does Self-Employed Health Insurance Cost?

You want good coverage—but you also don’t want to pay an arm and a leg for it. Let’s take a quick look at how much you can expect to pay for health insurance if you’re self-employed.

A ton goes into the cost of health insurance: who you need to cover (like a spouse or kids), the level of coverage you need, whether you smoke, your age, and where you live. A marketplace plan also offers financial help based on your income and family size. Here are some average plan costs (without discounts):

                                                                            These numbers are for nonsmokers.

The lower your income and the more kids you have, the more financial help you’ll get. Check out HealthCare.gov to see if you qualify for help.

The ACA also limits insurance premiums to a percentage of your income. At poverty levels, a single person with no kids pays 0%, but the percentage goes up to 8.5% when your income is more than 400% of the Federal Poverty Level (that’s $60,240 in 2024).⁵

Save money with the self-employed health insurance tax deduction.

We’re talking about money, folks! Being your own boss also means getting by even when business is slow. That’s why you need to know how to make your money work harder when you’re buying health insurance. You can do that with the self-employed health insurance income tax deduction. It’s just one of the many self-employed tax deductions you can use.

If you qualify for this deduction, it means you’re allowed to deduct 100% of your health insurance premiums from your adjusted gross income when you file your income taxes every year.⁶ But keep in mind, this is a self-employed health insurance deduction for individuals and their dependents—not for small businesses.

Here are a couple of things you need to do to qualify:

• Show no other forms of health insurance coverage. You’ll need to prove you have your own personal health insurance coverage and aren’t covered by an employer’s group plan or named in someone else’s policy—like your spouse. You also can’t claim the deduction if you qualify for coverage from your spouse’s group plan, even if you choose not to use it.  
• Prove your income from being self-employed. You need to have some income coming in to apply for a deduction. And if you have a few different streams of self-employed income, you can only claim the deduction against one of those streams. The one with the highest income is probably your best bet!

Still pulling your hair out trying to wrap your head around how to file self-employed taxes? Don’t sweat it. Check out these tips on how to file freelance taxes, along with the ins and outs of filing quarterly taxes.

Self-Employed Health Insurance Tips

Okay, as someone who’s self-employed, you’re also doubling up as your own human resources director. There’s no one to call with questions about your benefits. But there’s also no need to panic! We’ve got a few pointers if you’re shopping for self-employed health insurance.

1. Consider agencies that could help.

It’s easy to feel alone and out of the loop when you’re self-employed. After all, you don’t have that feeling of security that comes with working for a large business. That’s why it’s smart to connect with organizations that offer something similar—like the National Association for the Self-Employed. Membership could give you access to discounted health insurance plans, Health Savings Accounts (HSAs), and other support.   

2. Find a high-deductible health plan.

If your health insurance plan has a high deductible, you’re saving on premiums. And savings are awesome. You just need to make sure you can foot the higher deductible when you need to. And that’s where the HSA comes in. An HSA is a tax-advantaged savings account linked to a high-deductible health plan (HDHP). The money you save in your HSA can be used to pay for qualifying medical expenses—like your deductible—tax-free. You can also get a tax break from putting money into your HSA.

3. Get expert advice from an independent insurance agent.

When you’re in charge of finding health insurance, don’t leave it to chance or the internet to find the best plan for you.

An independent insurance agent—like the ones you’ll find through our friends at Health Trust Financial—are the experts to turn to.  

You can find agents who are ready to walk you through your health care options and track down the best health insurance for self-employed folks in the exciting world of being your own boss. And since Health Trust Financial is RamseyTrusted, you know you’ll be working with top insurance agents who really know their stuff.