In May of 2015, 15.5 million people in the United States classified themselves as self-employed. That’s up a million from May of 2014. Thanks to on-demand companies like Uber and Instacart, we are seeing a fundamental shift in self-employed individuals. By 2020, the number of self-employed Americans is expected to reach 60 million people.
From the outside looking, the freelance lifestyle seems pretty nice. You get to make your own hours, choose your clients, and you’re never obligated to wear pants. Yes, it sounds quite comfy, especially if you’re clocking in at a large corporation and still sporting a collared shirt and tie everyday. But the freelance lifestyle isn’t for everyone.
One thing people overlook when they’re considering the switch to the freelance life are all the perks that come with a full-time job. Things you didn’t normally have to deal with, like accounting. But freelancers are in charge of everything, that includes things like finding your own health insurance.
If you’ve never had to look for your own health insurance, it can be an imtimidating task. What are you looking for? What’s a good rate? How should you make a decision? It can be overwhelming, so here’s how you can find the best health insurance for freelancers.
Obamacare for Freelancers
Thanks to the Affordable Care Act (Obamacare), getting coverage is easier for freelancers than in the past. Before it was nearly impossible and health care you could get, was often expensive and ineffective.
The first thing that you need to do when you’re looking for health insurance as a freelancer is make sure you’re actually self-employed.
Healthcare.gov considers someone self-employed if they have a business, with an income, but do not have any employees. Just one employee will force you to use the SHOP Marketplace for small businesses to offer coverage to your employees. Check out the Healthcare.gov to determine if you’re self-employed or a small employer.
Your next objective is to estimate your annual income. This is of course tricky because freelancing can be so volatile. But this is important because it will help you choose your plan and also let you know if you’re eligible for cost deductions and tax credits.
Also, remember the government is asking for your Modified Adjusted Gross Income (MAGI). This is your income after deductions. This number can be much lower than your gross income, so it will impact your health insurance options.
Make sure if your income goes above your estimated figure, to update your marketplace application. Otherwise you might have to repay the government taxes based on new rates.
Now you’re ready to choose your health insurance plan on the HealthCare.gov marketplace.
Obamacare health care plans are broken down into three different types of plans, platinum, gold, silver, and bronze. As we mentioned before, cheaper plans have greater out-of-pocket costs.
Different people have different opinions on which plan to choose. Bronze is considered the best bang for your buck. You pay the lowest premium, but have a high deductible. If you’re not likely to visit the doctor, you save a lot of money.
Others believe that the silver plan is the best plan on Obamacare. The reason is that individuals on this plan are eligible for Health Savings Account, Premium Tax Credits, and Cost Sharing Reductions. The latter is only available on the silver plan.
The choice is yours. Everyone’s needs differ, but it appears that the bronze and silver packages are two of the best Obamacare insurance plans.
Alternatives to Obamacare
While Obamacare has become the default option for many freelancers, there are still alternatives to Obamacare.
The reason why your employer’s health care plans are cheaper is because they’re able to buy at a group rate. There are different associations that follow the same model, group together a bunch of people and get group rates. One of those associations is the Freelancers Union, which has over 200,000 members.
Another option is to form your own association. This is a much more difficult and time consuming option, especially with Obamacare. But some people prefer it. There are organizations out there can help you.
Everyone needs health insurance. Not too long ago, it was difficult for freelancers to obtain even basic health insurance. Thanks to Obamacare, it’s become significantly easier.