What is Self-Employed Health Insurance?

What is self-employed health insurance

Every year, new entrepreneurs start their own businesses. For some, the freedom of running a business is worth the risk of not having health insurance coverage. But for many, self-employment means being responsible for paying for your own healthcare or finding affordable coverage options that don’t interfere with your ability to make money. This post will answer several of the most common concerns regarding self-employed health insurance and help you learn more about the different types of health insurance plans available!

What is Self-Employed Health Insurance?

As the name implies, self-employment health insurance is a type of coverage that some self-employed entrepreneurs and contractors use to provide for their own and their family’s healthcare needs. This insurance platform typically costs more than group health plans because it covers the individual, not just the company they work for.

While there are different types of coverage available, self-employed individuals generally rely on self-employment health insurance to give themselves and their families the coverage they need at an affordable rate when no other options are available.

Who is Eligible For Self-Employment Health Insurance?

Self-employment health insurance might be an option if you run your own business and have no employees (a freelancer or work as a contractor) and/or don’t have access to group coverage through your employer. 

To qualify for eligibility for self-employment health insurance, you need:

  • To have a business that is not incorporated.
  • Work an average of more than 30 hours per week as an independent contractor or freelancer (you can’t qualify if most of your income comes from one employer).

Coverage Options for the Self-Employed

There are three different types of self-employment health insurance plans:

  • Fully insured,
  • Self-insured with an organization like the Freelancers Union, and
  • Self-funded.

Each option offers various coverage options such as employer contributions to your premiums or deductibles.

There are also other options available including the Individual Marketplace on Healthcare, explained in the next section. Other products and services may be available to self-employed individuals, such as association health plans or short-term, limited-duration insurance.

These products are not considered health insurance and may be unavailable in all states. They may cover different benefits than Marketplace plans, but you cannot qualify for premium taxes credits with this type of coverage.

About The Individual Marketplace

The individual marketplace is where people who don’t have employer-sponsored health insurance, like the self-employed or those that work part-time for a company with fewer than 50 employees, can go to purchase coverage.

All plans under the new Individual Marketplace cover the same categories of essential health benefits and are prohibited from excluding coverage for pre-existing conditions. You can choose between a plan with lower premiums, but higher out-of-pocket costs when you need care or one that offers high monthly payments with low co-payments when you do take advantage of your insurance’s services.

You can only enroll in Marketplace coverage during the annual Open Enrollment Period unless you have a qualifying life event. If that happens, then you may be eligible for an exemption from waiting periods or penalties on premiums if your health care costs exceed 10% of household income and are more than 8 times the federal poverty level (FPL).

During the enrollment period, there is no penalty for not having insurance when major changes happen like marriage/divorce or birth/adoption. Instead, enrollees may opt to face a 30-60 day wait before getting new coverage, so people with ER visits who don’t want to pay deductibles often sign up just after these events occur.

About The Self-Employed Health Insurance Deduction

If you’ve been doing any research on self-employment health insurance, you’ve likely heard of the self-employed health insurance deduction. But what does that mean?

In general, self-employed individuals are responsible for paying both the employee and employer share of their health insurance. This often leads to a significant increase in the cost associated with buying an individual plan compared to an employer-sponsored one.

An example might help illustrate the issue:

Jane currently pays $500 per month for employer-sponsored health insurance. Her income tax withholdings are taken directly out of her pay and a portion of that money goes towards paying for her health insurance premium.

Jane decides to go out on her own as a freelancer, in another state, with no health insurance coverage. She is now forced to pay for it out of pocket. Let’s say the average cost for a comparable policy is around $800 per month with a $200 deductible for provided care.

With the Self-Employed Health Insurance deduction, Jane could reduce her health insurance premiums by up to 100% if she qualifies. However, this deduction applies only to your federal, state, and local taxes; not wages earned for self-employment.

Common Questions About Self-Employment Health Insurance


How do I know if I’m self-employed or a small employer?

An individual is self-employed if they are not an employee of a company. A small employer can be any size and does not have to employ less than 50 people.

What type of coverage options do I need?

Someone who is self-employed typically needs Individual Marketplace Coverage or COBRA Continuation Coverage.

What if I leave my job, lose my job-based coverage, and become self-employed?

You may qualify for a Special Enrollment Period if you lose job-based coverage or experience another life change. This period allows eligible individuals to enroll in health insurance, even when it is outside the annual Open Enrollment period.

The time limit during which enrollment can take place varies according to one’s circumstances:

  • If you lost your employer-sponsored plan due to termination of employment, retirement from work, or other qualifying events (such as quitting), then there are no limits on how long into the future this opportunity is available; however, these criteria must be met and will require verification by medical providers before an individual qualifies for benefits under this scenario.
  • You also have 60 days after losing eligibility through Medicaid/CHIP expansion loss whereupon special application consideration applies

What if I’m self-employed and later get a job that offers health coverage?

If you are self-employed and then get a job that offers health coverage, you have the option of continuing with your own plan or switching over to employer-sponsored coverage. It’s important to know that if you switch plans, there is no guarantee for coverage on any preexisting conditions.

What if I’m self-employed and my spouse has coverage through a job?

If your spouse has coverage through their own job, you can be on that plan as a dependent.

If your spouse’s job-based insurance doesn’t cover spouses and dependents, then you can buy a Marketplace plan for yourself and any other family members.

Depending on your household income, you may qualify for premium tax credits or Medicaid savings when purchasing through the Exchange. You will not be eligible if filing separately from your spouse in most cases.

Benely: Your Business’ Best Benefits Consultant

Are you considering going the self-employed route? It could be a great option for you to live the life you’ve always wanted! But before you dive in, we want to help establish a benefits package that will make your life easier. Let us find and personalize solutions by using our vast knowledge of market options – all so as not to confuse or overwhelm yourself with an extensive search on those complicated websites (you know what I’m talking about).

Once we put together this customized solution for you, it’s just one final decision away from being 100% yours. We believe in commitment, growth, and technology while also providing first-class customer experience support at every step along the way.

Click here to learn more about Benely or contact us today to tell us about your needs and get started!