The Renegade Writer

How the Affordable Care Act Will Affect Freelancers — And 5 Ways Freelancers Can Get Health Insurance Now

freelancer_health_insuranceFreelancing — 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.

Add-On Coverage


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.

COBRA


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.

Group Insurance


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.

Medicaid


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.

Part-Time Work


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!

Aug 15, 2013 Advice

12 Responses

  1. Bree Brouwer says:

    Fortunately, when I went into freelancing last year, I was getting unemployment insurance of a very good sum every month, so paying for healthcare wasn’t an issue. However, now that I’m off unemployment and not earning through freelancing that much yet, it’s a pain to consider healthcare.

    For my husband and me, it’s actually MORE expensive for us to put me on his work’s plan than for us to pay separately. And that doesn’t even give me maternity benefits, so we can’t even plan or afford to have kids yet.

    My question for next year is going to be how to file taxes if I’m a freelancer and am going to buy my own health insurance again. Will I be allowed to apply some of this to my “business” expenses? Will I have to file separately from my husband or what? I hate the business end of business. :)

    • Hi Bree,

      Thanks for commenting! At this time it does not look like freelancers will be able to deduct the cost of their health insurance at the end of the year in 2013. However this may change. Things with the Affordable Care Act are always slightly in flux as evidenced by the delay in employer mandate earlier this summer. My advice would be to talk with a tax professional is you can to get their take on it. I found this article helpful:
      http://www.takepart.com/article/2013/05/24/self-employed-obamacare

      -Mike

  2. Cheryl Rhodes says:

    This article is aimed only at people in the US.

    Countries like Great Britain, Norway, Switzerland, etc all seem to have very decent health care plans for their citizens. I live in B.C. and paying into the medical services plan is mandatory, we have no choice. Costs about $100/month per couple and depending on income a percentage of that premium can be chopped off so a lot of people in lower income brackets don’t pay at all. That doesn’t include dental. The health care has massive waits – hours in the emergency room, months or years to get surgery. I don’t know why they can’t figure out what they’re doing in right in Europe and apply it here.

    I’ve talked to Starbucks employees and they get benefits working part time.

    • Hi Cheryl,

      When you say B.C. do you mean British Columbia? That’s interesting about the long waits for surgery and other medical services. I was under the impression that the waits were a little longer in Canada, but not years! Have you ever undergone medical treatment in the U.S.? I’d be curious to hear about your experience and the advantages/disadvantages you noticed.

      -Mike

      • Lynne says:

        Wait times and the like vary widely from one province to another, and further according to what you’re waiting for. Also, the extra premiums such as the $100/month Cheryl mentions only apply in some provinces. So, it’s complicated.

        A friend of mine waited for fourteen months for knee surgery. By contrast, dealing with a lesion in my lung took three weeks from the initial consultation with a doctor to the last bit that needed to be done. Part of that delay was my doing, too, waiting to go in for blood work, which is handled as a “show up and wait” thing in this city. The wait in question was roughly an hour. (Fortunately, the lesion was not malignant.)

  3. One way to protect yourself without spending a huge amount is through a low-premium, high-deductible policy. You don’t pay a lot in premiums, but you also pay for everything until you hit your deductible, which may be in the $3,000 to $5,000 range. It’s a pretty good deal if you’re generally healthy but want to protect yourself against an unexpected major health (and financial!) problem. For a 35 year-old woman in California (where I live), these plans run about $120 to $170 a month.

    I believe there will be what the ACA calls a “Bronze” plan available, which will be essentially the same, and that plan will include certain services (like an annual physical) at no charge.

    • Hi Elizabeth,

      You’re right that is a great way to have some protection without breaking the bank. As an addition to what you said, because of the tax credits for those making between 138 and 400 percent of the Federal Poverty Line the bronze plans will be extra attractive.

      The credits are calculated based off of the price of the silver level plan(one higher than bronze)in your area. But that credit can be applied to the lower level bronze plan if you’d like. Meaning that it will be a big enough credit to make the silver plan affordable, but you can choose to put it towards the bronze plan which will make the bronze extra affordable!

      -Mike

  4. Nico says:

    I’m just glad that I’m working part-time and don’t have to worry about this. Health insurance can really mess up with your plans.
    Great post!

    Nico @ Leaf ♦ Pub

  5. Kelly says:

    I’ll be honest, health insurance is my biggest worry right now after leaving my job.

  6. […] An article about healthcare changes in the US will affect freelance writers (and everyone) […]

  7. […] credits will cover the difference between what you are charged and the actual cost,” reports The Renegade Writer. Also, having more dependents increases the subsidy for which you may be […]

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