Freelancing — and uninsured? You’re not alone. According to the Centers for Disease Control and Prevention, 18.2 percent of of the population is risking an expensive hospital stay or doctor’s visit by going without coverage. Many of them are freelancers who choose to forgo health insurance because, well, the premiums are sky high.
If the options are to either be uninsured or pay out most of your monthly earnings towards your insurance premium, how do you make the best choice?
Help is on the way
For many self-employed workers, as of January 2014, they’ll find some much needed relief. The Affordable Care Act (ACA) takes effect on the first of next year.
If you’re self employed, you’ll need to purchase health insurance as an individual. If you don’t, you’ll pay a penalty of $95 that increases annually each year that you go without health insurance.
The good news is that there will be state health insurance marketplaces where you can comparison shop for the best rates. You’ll also be able to apply for tax credits at the marketplaces that will offset the cost of your insurance policy.
This is also where the Federal Poverty Level (FPL) comes into play. If your earnings fall between 100 and 400 percent of the FPL, the most you’ll have to pay for health insurance is 9.5% of your annual income. So if you’re not making a lot, you won’t have to pay a lot. Your tax credits will cover the difference between what you are charged and the actual cost.
The ACA will likely be a game changer for the self-employed looking for health insurance. Unfortunately, though, at the moment your options for affordable health insurance are limited.
Need insurance now? There are a few choices out there to tide you over until the state marketplaces begin enrollment in October. Let’s explore some of your options.
If you have a spouse or significant other and their health insurance allows for family coverage, then you’re in luck. With just the click of a mouse or a phone call you can be added to their insurance plan. Yes, the cost will be increased when they add a dependent, but it will still be much less than having to pay full price for another insurance policy.
Thanks to the Consolidated Omnibus Budget Reconciliation Act, employers are required to continue offering you health insurance coverage even when you no longer work for them. This extended coverage is available for up to 18 months, but during that time you’re required to pay the full cost of the premium. This is significant because when you were fully employed you only paid a portion of that premium, so expect some sticker shock. There is also a 2 percent administrative fee on top of all that.
There are several trade and professional organizations that offer health insurance to their members at a discounted rate. A few examples are the freelancers union, alumni associations, bar associations, local chambers of commerce, and trade unions. If you are over 50, you can go with AARP.
You may not qualify for the federally funded Medicaid program, but it’s an option worth exploring. Although the specific requirements are different from state to state, generally if you earn up to 100 percent yearly of the Federal Poverty Level, you should be eligible. Keep in mind that as of January 2014, when the new expanded Medicaid requirements take effect, in some states things will change.
You can also consider working part-time to help with insurance costs. Although there aren’t many that do, some employers will offer health insurance to those working less than 35 hours per week.
How about you…as a freelancer, have you struggled with finding health insurance? Do you have any tips for others who are in the same boat now?
Michael Cahill is the Editor of the Vista Health Solutions Blog. He writes about the health care system, health insurance industry and the Affordable Care Act. For more information about how the ACA may affect small business owners,”visit the Vista Health Solutions self employed health insurance guide. Follow him on Twitter at @VistaHealth.
Stick figure by W. Eric Martin. Thanks, Eric!