Most people would love to work for themselves. After all, what’s not to love about being your own boss. Where many people get hung up is the lack of employer perks, the major one being health insurance. Health insurance premiums can be incredibly expensive and navigating the world of finding your own plan is daunting.
As I transition to full-time indie work myself, this is something I am facing head on. I spoke with several other freelancers to hear their health insurance stories and why they chose the option they did. You can learn from their experiences to make the best choice for you and your family. Always remember to do your own due diligence before making any health-related decisions.
Private Health Insurance
Whitney Eakin worked full time as a traveling physical therapist for several years before pivoting to freelance work. She now runs her website Travel Therapy Mentor and takes only the occasional travel contract or PRN work. The website, which started as a side hustle, is now bringing in a steady income. Between her savings and her freelance work, she has saved enough to semi-retire.
All this means Eakin had to find her own health insurance. One of the most important factors for her was having nationwide coverage. She travels extensively and will often spend months at a time outside her home state. Because of this, she didn’t want to have to worry about accessing healthcare along the way. That’s why Eakin opted for private health insurance.
You can purchase private health insurance through some companies directly or through a private insurance broker. Private health insurance works just like most employer-sponsored plans. The primary difference is that you’re your own employer now.
Working for yourself means you can pick the perfect plan to meet your needs. You can select a private health insurance plan based on various criteria such as deductibles, out-of-pocket max, coinsurance, monthly insurance premiums, and more. Since private insurance doesn’t offer any subsidies, it is typically the most expensive way to secure coverage. The best way to compare multiple plans at once is through eHealth Insurance. You can also work with a private health insurance broker directly for a more personalized experience.
Affordable Care Act Marketplace Health Insurance
Jared Casazza is young, fit, healthy, and unmarried with no kids. All these factors mean he rarely uses his health insurance. Even so, he didn’t want to go without just in case disaster strikes. Freelancers sometimes consider forgoing insurance because of the costs, but we are all just one accident away from financial ruin if we go that route.
That’s why Casazza got marketplace health insurance. He is semi-retired, works freelance on his website Fifth Wheel Physical Therapist, and is co-owner of Travel Therapy Mentor. The fact that he works only part time and keeps his expenses low means he meets the income requirements for government subsidies.
Compared to private health insurance, Casazza pays much lower premiums using a marketplace plan. In 2020, the average subsidy amount for a marketplace insurance plan was $492/month, while the average plan cost was $576 a month.
These subsidies mean if you are a lower-income freelancer, you could see a significant financial benefit. Another lesser-known financial benefit of any health insurance plan, including some available on the marketplace, is a health savings account (HSA).
Casazza opted for a high-deductible plan for this very reason. He can use his HSA to pay for medical expenses. In addition, it also doubles as a way to save additional money for retirement using pre-tax dollars which then grow tax-free. Best of all, HSA money is not taxed on withdrawal for qualified expenses or after age 65.
Health Care Sharing Ministries
Matt Crossman didn’t plan to be a freelancer. However, when he lost his staff writing position and was thrust into the indie world, he had no choice but to figure it out. While he originally had traditional health insurance for his family of four, the costs kept going up and up and up.
That’s why about 5 years ago he made the change to a health care sharing ministry. Health care sharing ministries aren’t the right fit for everyone. You must meet certain criteria in order to qualify. For example, most other health share ministries are Christian organizations and require members to sign agreements stating their shared beliefs. They also require members to meet certain health requirements. Crossman decided the health share, Medi-Share, was the right choice for his family.
There are several health care sharing ministries out there. At first glance, they seem to work similarly to traditional health insurance. Everyone in the group pays premiums each month and must meet their deductible before costs are reimbursable.
The major difference between health care sharing ministries and health insurance is a legal requirement to pay. Health insurance companies are legally bound to pay for costs according to the plan. Health care sharing ministries have no such obligations. In fact, there have been more than a few horror stories of health care sharing ministries not paying bills.
There are certainly many satisfied users, including Crossman, though. He said he is eligible for free telehealth visits and discounts when receiving care from in-network providers. While Crossman hasn’t had to use his benefits to pay for anything major, full-time bloggers Kelan and Brittney Kline of the Savyy Couple have. They recently shared with their subscribers that they have had nearly $25,000 in medical bills covered by their health care sharing ministry plan.
Health care sharing ministries can make a lot of sense for freelancers, though the drawbacks can be significant. If it comes down to going without any insurance or opting for a lower-cost plan, please do yourself the favor of having some protection. Medical bills can add up quickly.
Why Paying for Your Own Health Insurance Doesn’t Have to Be a Bad Thing
For many would-be freelancers, health insurance is the only thing stopping them from complete freedom. Although no one likes to pay for health insurance, chances are you’re probably already paying a chunk of change for it at your full-time job.
The fantastic thing about being an independent contractor is you get to decide how to spend your money. With employers, you’re locked into specific plans with rates you have no control over. Being a freelancer doesn’t just give you control of your job; it gives you control over your health as well. That means you can choose the plan that is right for you and your family.