Health Insurance Options If You’re Self-Employed

According to data from the Bureau of Labor Statistics, more than 16 million Americans — about one in every ten workers — are currently self-employed. This group includes both small and large business owners as well as independent freelancers. Being self-employed comes with several advantages, such as having full control over your work schedule, location, and methods. However, one major drawback is the lack of traditional employee benefits like paid vacation, retirement plans, and most importantly, health insurance.

In the past, finding affordable health insurance was a significant challenge for self-employed individuals. People who left a traditional job could temporarily keep their employer-sponsored insurance through COBRA, but this option was costly and only available for up to 18 months. Once that period ended, unless a spouse’s employer offered coverage, the only alternative was purchasing an expensive private insurance plan. While you could reduce costs by comparing plans or opting for a high-deductible policy, the entire premium still had to come out of your own pocket.

The landscape changed significantly with the introduction of the Affordable Care Act (ACA) in 2010, also known as Obamacare. The ACA made it far easier for self-employed workers to explore various insurance options, compare plans online, and even receive government subsidies to help lower their monthly premiums. Additionally, it expanded opportunities to remain on a parent’s insurance plan until age 26 and made Medicaid more accessible for individuals with lower incomes.

If you’re currently self-employed — or considering taking that step — here are six smart ways to secure the health coverage you need without breaking the bank.

1. Coverage From a Family Member

If you’re self-employed but live with someone who has a full-time job that provides benefits, you may be able to join their health insurance plan. This is often one of the simplest and most affordable ways to secure health coverage without purchasing an individual policy.

Getting Coverage Through a Spouse

Many employers extend their health insurance benefits to employees’ spouses. According to data from the Kaiser Family Foundation (KFF) in 2020, around 95% of companies offering health plans also provided spousal coverage. However, employers typically pay a smaller share of the premium for spouses than they do for their employees.

For instance, in 2020, the average annual premium for an employee’s individual coverage was $7,470, with employers covering 83% of the cost. That left employees responsible for about $1,270 per year.

In comparison, in 2019, the average premium for employee-plus-one coverage (for the employee and one dependent) was about $13,989. Employers typically paid around 72% of that amount — roughly $10,108 — leaving the employee to cover about $3,881 out of pocket.

So, if you’re self-employed and plan to join your spouse’s policy, expect to pay around $2,500 to $3,000 annually, depending on your spouse’s employer. However, if your income is modest, you may find that purchasing your own plan through the Affordable Care Act (ACA) Marketplace — possibly with a government subsidy — or qualifying for Medicaid could be cheaper. Always compare your options for both cost and coverage before making a decision.

Getting Coverage Through a Partner

If you’re not married but live with your partner, you might still be eligible for health insurance through their employer’s plan. Some companies and government organizations extend benefits to domestic partners — defined as couples in long-term, committed relationships who share living expenses.

According to the 2019 KFF Employer Health Benefits Survey, about 43% of employers offering health benefits included same-sex domestic partners, while 35% extended the same to opposite-sex partners. Larger companies (with 200 or more employees) were generally more likely to offer domestic partner benefits.

If you want to enroll under your partner’s policy, the employer might ask for proof of your relationship, such as:

• A domestic partnership registration from your city or state
• A civil union license
• A partnership affidavit from the insurer, declaring that you live together, share expenses, and are not married to anyone else

Getting Coverage Through a Parent

If you’re 25 or younger, you can remain covered under your parent’s health insurance plan. The Affordable Care Act (ACA) requires employers offering dependent coverage to extend it until a child turns 26 years old.

You can stay on your parent’s plan even if you don’t live with them, aren’t financially dependent, or live in another state. However, if you’re in a different state, you might have to pay extra for care from out-of-network providers. Always review your parent’s plan details for costs and coverage limitations.

One important consideration: if you’re on your parent’s plan, they may receive notifications about your medical visits or treatments. If you prefer privacy, it might be better to purchase your own insurance plan through the ACA marketplace or another provider.

2. Coverage Through an Organization

Several professional and trade organizations provide access to group health insurance plans or discounted medical benefits for their members. These associations can be an excellent resource for self-employed individuals seeking affordable health coverage options.

Affiliated Workers Association (AWA)

The Affiliated Workers Association (AWA) is a nationwide network of more than 7,000 self-employed professionals, including freelancers, small business owners, and independent contractors. While it doesn’t offer full-scale traditional health insurance, members can access fixed indemnity plans that help cover significant medical expenses such as hospital stays, ER visits, and outpatient surgeries. In addition, the AWA provides access to dental, vision, and prescription drug benefits, making it a useful resource for supplemental coverage.

Association for Computing Machinery (ACM)

The Association for Computing Machinery (ACM) serves professionals in the tech and computing industry — such as software developers, coders, and database engineers. Through its collaboration with Mercer Consumer, the ACM gives members the option to purchase several types of insurance, including dental plans, short-term medical coverage, and major medical plans. These plans typically cover high-cost emergencies but may not include routine healthcare services.

Writers Guild of America West (WGAW)

The Writers Guild of America West (WGAW) is a union that represents writers, producers, and content creators working in film, television, and digital media. Members who earn a minimum qualifying amount annually from their writing work are eligible to receive comprehensive health insurance coverage through the guild. This can be an excellent benefit for those in the entertainment industry who meet the income criteria.

Freelancers Union

The Freelancers Union advocates for independent workers across the United States. While it directly offers health insurance plans only to freelancers living in New York, it also operates an online marketplace that allows members nationwide to compare and purchase insurance plans tailored to their needs. The organization additionally provides access to dental, vision, and life insurance options.

Other Associations to Explore

If none of these organizations fit your profession, consider checking whether you’re eligible for other membership-based groups that offer health benefits. These may include:

• Professional associations in your field
• Alumni organizations from your college or university
• Local chambers of commerce that often partner with insurers to offer group rates

Joining a professional or trade group can be a cost-effective strategy for obtaining health coverage if you’re self-employed, especially when compared to purchasing individual insurance plans on the open market.

3. Health Insurance Marketplaces

The Affordable Care Act (ACA) brought two major improvements to the individual health insurance market. First, it created state-based online marketplaces where people can shop for and compare health plans. Second, it introduced government subsidies to help lower-income individuals and families pay for their coverage.

These changes made it much easier for self-employed individuals to find and afford quality health insurance. The online marketplace lets you easily compare all available plans in your area, and if coverage is still too costly, federal subsidies can significantly reduce the amount you pay.

Finding Affordable Health Plans

In most states, you can shop for coverage through the Health Insurance Marketplace at HealthCare.gov. If your state runs its own marketplace, the site will redirect you there. Typically, enrollment is open once a year during the Open Enrollment Period, which runs from November to mid-December. You may also qualify for a Special Enrollment Period if you experience major life changes such as getting married, moving to another state, having a baby, or losing other coverage.

According to the Centers for Medicare & Medicaid Services (CMS), the average monthly premium for marketplace health plans in 2019 was $612. The cost, however, depends on your state and the level of coverage you choose.

All marketplace plans — even the most basic — include preventive services such as vaccinations and routine screenings. Plans are categorized into five metal tiers, which represent the balance between premium costs and coverage levels:

• Platinum: Highest premiums but lowest out-of-pocket costs. Covers about 90% of medical expenses.
• Gold: Covers roughly 80% of health care costs, with moderately high premiums.
• Silver: The middle option, covering about 70% of costs. Deductibles are moderate.
• Bronze: Lower premiums but higher deductibles; covers around 60% of expenses.
• Catastrophic: Available only to those under 30 or individuals who qualify for financial hardship exemptions. These plans have very low premiums but extremely high deductibles, and subsidies can’t be used toward them.

Understanding Health Care Subsidies

If your household income falls between 100% and 400% of the federal poverty level (FPL), you may qualify for ACA subsidies to help pay for coverage. There are two main types:

1. Premium Tax Credits

These credits reduce your monthly premium for plans purchased through the marketplace. The lower your income, the larger the credit you’ll receive. Tax credits are available for Bronze-tier plans and above. You can check your eligibility and estimated savings at HealthCare.gov.

2. Cost-Sharing Reductions

If your income is below 250% of the FPL and you already qualify for a tax credit, you may also receive cost-sharing subsidies. These lower your deductibles, copayments, and coinsurance amounts. They apply only to Silver-tier plans.

Combined, these subsidies can greatly reduce your overall costs. For example, in 2019, CMS reported that tax credits lowered the average monthly premium from $612 to $87. According to HealthInsurance.org, cost-sharing reductions in 2020 cut the out-of-pocket maximum from $8,150 to as low as $2,700 for the lowest-income enrollees.

Alternative Option: Health Sharing Ministries

Some people consider health sharing ministries such as Medi-Share as a lower-cost alternative. Members contribute a set monthly amount that is used to help pay for one another’s medical expenses. While not technically insurance, this option may be appealing to those looking for lower monthly payments.

Using a Health Savings Account (HSA)

If you choose a high-deductible health plan (HDHP), you may qualify for a Health Savings Account (HSA) — a tax-advantaged account designed for medical expenses. With an HSA, you can:

• Contribute pre-tax income, reducing your taxable earnings
• Grow your savings tax-free
• Withdraw funds tax-free for qualified medical expenses

You can open an HSA through providers such as Lively or your bank.

To qualify, your plan must meet IRS HDHP criteria. For 2021, that means a minimum deductible of $1,400 for individuals and an out-of-pocket maximum no higher than $7,000. Money left in your HSA at the end of the year rolls over, helping you build a medical fund for the future.

4. Medicaid

If your income is on the lower side, you may be eligible for Medicaid coverage. By entering your income and location on the Health Insurance Marketplace, you can quickly find out if you qualify.

Although Medicaid is a federal initiative, each state manages its own version of the program, which means benefits vary from state to state. Every Medicaid plan must offer essential health services like doctor visits, hospital stays, and lab tests. However, some benefits — such as prescription medications, vision care, and physical therapy — are available only in certain states. You can visit Medicaid.gov to check what specific coverage is offered in your state.

In some areas, though, residents fall into what’s known as the “coverage gap.” This happens when individuals don’t qualify for Medicaid or for subsidized Marketplace health plans. The issue began after the Affordable Care Act (ACA) was introduced in 2010, which aimed to expand Medicaid eligibility to Americans earning up to 138% of the federal poverty level. But a 2012 Supreme Court ruling made this expansion optional for states, and as a result, 14 states chose not to expand their programs. (Oklahoma and Missouri later voted to expand Medicaid in 2020, though implementation wasn’t expected until mid-2021.)

In these non-expansion states, the income requirements to qualify for Medicaid are often much lower than the poverty level. For example, according to the Kaiser Family Foundation (KFF), the average income limit for families in these states is about 40% of the poverty level, which was only $8,532 per year for a family of three in 2019. Additionally, in almost all of these states, childless adults are ineligible for Medicaid regardless of income.

Meanwhile, the ACA subsidies apply only to individuals earning between 100% and 400% of the poverty level. Originally, this wasn’t an issue because Medicaid was meant to cover those below the poverty line. But since some states opted out, many low-income individuals now earn too much for Medicaid yet too little for ACA subsidies. KFF reports that about 2.3 million Americans, mainly adults without children, fall into this gap.

If you find yourself in this situation, your choices are limited. You can still purchase a plan through the Health Insurance Marketplace, but without subsidies, it can be quite costly. The best option might be to explore coverage through a family member, or check other available insurance options mentioned elsewhere in this guide.

5. Medicare

If you are 65 years or older, or have a qualifying disability, you can receive health coverage through Medicare — even if you continue to work. Medicare is divided into four parts, each offering different types of coverage and costs.

Part A – Hospital Insurance

Part A covers most hospital-related care, such as inpatient stays, surgeries, hospice care, and skilled nursing facility stays. It also includes limited coverage for home health services.
Most beneficiaries don’t pay a monthly premium for Part A, according to Medicare.gov, but they are responsible for certain out-of-pocket costs. In 2021, the annual deductible was $1,484, and patients had to pay coinsurance for hospital stays that lasted more than 60 days.

Part B – Medical Insurance

Part B provides coverage for preventive services and medical treatments necessary to diagnose or manage illnesses. This includes doctor visits, outpatient care, mental health services, and certain medical equipment.
Part B comes with a monthly premium that varies based on income. For example, in 2021, individuals earning under $88,000 per year (or $176,000 for couples) paid $148.50 per month. Higher-income earners could pay as much as $504.90 monthly. In addition, there’s a $203 annual deductible and a 20% coinsurance for most services after meeting the deductible.

Part C – Medicare Advantage

Since Parts A and B don’t cover everything, such as vision, dental, hearing, or long-term care, many people opt for Medicare Part C, also known as Medicare Advantage.
These plans are offered by private insurance companies and often bundle together additional benefits like wellness programs and prescription drug coverage. Costs — including premiums, copayments, and deductibles — depend on the specific plan and provider you choose.

Part D – Prescription Drug Coverage

Original Medicare (Parts A and B) generally doesn’t cover prescription drugs, except for medications given during or immediately after a hospital stay. To fill this gap, enrollees can purchase Medicare Part D, a separate plan that provides prescription drug coverage.
Some Part C plans already include drug coverage, but if yours doesn’t, a standalone Part D plan can be added. Each plan varies in premium, deductible, and copayment structure, and higher-income individuals (earning over $88,000 for singles or $176,000 for couples) must pay an extra monthly surcharge in addition to their plan’s base premium.

How Much Does Medicare Cost?

While Medicare provides essential coverage, the combined expenses — including premiums, deductibles, and coinsurance — can still add up. According to a 2020 AARP report, the average Medicare recipient paid around $483.42 per month out of pocket. For individuals with chronic illnesses such as diabetes or heart disease, these costs are often even higher.

Should You Stay on a Marketplace Plan Instead?

Even if you’re eligible for Medicare, you might find that a Marketplace health plan (under the Affordable Care Act) could be a better deal — especially if you qualify for subsidies. However, according to the Centers for Medicare & Medicaid Services (CMS), you cannot receive Marketplace subsidies if you’re eligible for premium-free Medicare Part A.
This typically applies if you are receiving Social Security or Railroad Retirement Board benefits, are eligible to receive them, or if you or your spouse worked in a government job that qualifies for Medicare.

6. Part-Time Work

If you’re struggling to find an affordable health insurance plan on your own, another practical option is to look for a part-time job that includes health benefits. While many employers don’t extend benefits to part-time staff, a few well-known companies do provide health coverage for employees who meet specific work-hour requirements.

1. Costco

At Costco, part-time employees become eligible for health benefits after completing 180 days of employment. The coverage includes vision care, hearing aids, prescription drug benefits, and behavioral health services. Additionally, part-time workers can enroll in the company’s dental insurance plan.

2. Lowe’s

Lowe’s offers a limited medical plan to its part-time team members that focuses on preventive care. However, this plan does not include hospital stays or surgical procedures. Eligible employees can also sign up for dental and vision coverage.

3. REI

Part-time employees at REI receive the same health benefits as full-time staff as long as they work an average of 20 hours per week. They can choose from several medical plans and have the option to add vision, orthodontic, and long-term care coverage for additional protection.

4. Starbucks

At Starbucks, employees who work at least 240 hours within three months qualify for health insurance, as well as dental and vision care. Eligibility begins after completing one quarter (three months) with at least 240 total work hours.

5. UPS

Part-time employees at UPS are eligible for the TeamstersCare Health Plan, which provides hospital, outpatient, dental, vision, hearing, prescription, and behavioral health coverage. To qualify, employees must work a minimum of 225 hours within a three-month period.

Pros and Cons of This Approach

While taking on a part-time position can help secure affordable health insurance, it might require reducing your time spent on your freelance work or small business. However, it also offers a stable income source and can help you stay financially secure during slower business periods.

Conclusion: Health Insurance Options

Securing reliable andaffordable health insurance as self-employed individual may seem challenging, but there are more options available today than ever before. Thanks to the Affordable Care Act (ACA) and the expansion of private and public coverage options, freelancers, small business owners, and independent contractors can now access comprehensive health plans without relying on an employer.

Whether you choose to join a family member’s or partner’s plan, explore coverage through professional organizations, shop on the ACA Marketplace, or apply for Medicaid or Medicare, there’s likely a plan that fits both your budgetand healthcare needs. For those struggling to find coverage, part-time work with benefits can also bridge the gap between affordability and protection.

The key is to evaluate all available options — comparing premiums, deductibles, out-of-pocket limits, and subsidy eligibility — before making a decision. Taking the time to research and plan will not only help you avoid unnecessary expenses but also ensure that you and your family have the health security you need to thrive in your self-employed journey.