At the beginning of 2018, there were approximately 15 million self-employed workers in the U.S. — a number that is expected to triple to 45 million by next year. While the trend towards self-employment continues to rise, health insurance options have remained costlier than many self-employed people would prefer. Between monthly premiums, copays and deductibles, and other out-of-pocket costs, health insurance prices can be hard to navigate. We’re here to help! Let’s take a look at how you can get the best self-employed health insurance price.
Do you qualify for self-employed health insurance?
This is an important question as finding the right health plan can get murky. If you do not have or are not eligible for an employer-sponsored health insurance plan and you have taxable income from freelancing, consulting, or running a business where there are no other employees, you probably need a self-employed health insurance plan. If you have a small business with at least one employee other than yourself, you likely need a small business group health plan.
How much will self-employed health insurance cost?
During 2018 Open Enrollment, premiums averaged $440 per individual (unsubsidized) coverage and $1,168 for family coverage. Deductibles averaged $4,578 for individuals and $8,803 for families.
Average monthly premiums per metal tier looked like:
But premiums and deductibles are just two pieces of a more complicated puzzle. Both those shopping for individual and family plans must also consider total out-of-pocket costs (including medications, copays and coinsurance). There are a few ways to get a better picture of your health insurance needs and to find the best self-employed health insurance price.
Understand your budget
Step one is to determine what you can afford. Part of this calculation is also understanding what type of and how much coverage you need. By making some accurate predictions about health services you’ll need for the year, you can better determine what level of care to purchase, which can save you money in the long-run. It will also keep you from over-purchasing health care you don’t need.
While you can’t predict the future with absolute certainty, you should be able to estimate which health services you will need. Take a look at your current medical history to find any predictable health care costs. This might include prescription medications, any treatment for chronic conditions, necessary medical equipment, or specialist visits. In some cases, you may require very few of these things in a given year. These predictable items will make up the bulk of health care costs.
You may also want to factor in unpredictable health services you may need. While this makes up a smaller portion of health care costs, it’s a good idea to add some buffer room into your budget for things that may pop up. Also consider how much risk you’re comfortable carrying. If you’re young and healthy, you may opt for less coverage at a lower cost. On the other hand, you may want to carry a little more coverage in case you sprain an ankle hiking the Himalayas.
Know what’s covered
It’s also important to understand what is covered (and required to be covered) under the Affordable Care Act (ACA). There are 10 essential benefits that individual health plans are required to cover:
- Inpatient care at a hospital
- Outpatient care
- Emergency room visits
- Maternity and newborn care
- Mental health, behavioral health, and substance use disorder services
- Rehabilitative/habilitative services for injuries, disabilities, and chronic conditions
- Prescription drugs
- Lab services
- Preventive services (for wellness and chronic disease management)
- Pediatric services, including dental and vision care
Different insurers may cover these benefits differently. Make a list of any services you may need and keep that list handy for comparing different health plans.
Compare plans and costs on the exchange
Once you have your medical history collected and a general idea about your budget for health care, you can begin comparing plans. Navigate to Healthcare.gov to see the health insurance options in your state and to see if you qualify for any federal subsidies.
Make note of each relevant plan’s coverage for health services you anticipate needing in the upcoming year. You may also want to consider some “what if” scenarios just to get a sense for medical costs in case of an emergency or unforeseen circumstance. This can help you get a sense for your total predicted costs (including worst case scenario) for health coverage.
Don’t forget the tax-advantaged HRAS that can make your health dollars stretch further
If you are self-employed but are considering growing your team, don’t let health insurance be a deterrent. Many small businesses and entrepreneurs are opting for HRAs over group plans to offer benefits to their teams without the unpredictable costs and one-size-fits-all mentality.
The easiest way to think about an HRA is that an employee chooses their own health plan that works best for them. Then, their employer reimburses for premiums and qualified medical expenses. The result? Increased flexibility allows for more personalized plan choice for the employee, less risk management for the employer, and greater tax efficiency for all. With QSEan HRA, employers can make reimbursements without having to pay payroll taxes and employees don’t have to recognize income tax. In addition, reimbursements made by the company count as a tax deduction. Pretty awesome!
There are a couple of different HRA “flavors” to note before you make the decision of what’s best for you. There’s the Qualified Small Employer HRA (aka QSEHRA) which allows employers with less than 50 employees to reimburse for premiums and medical expenses up to $5,150 for singles or $10,450 for couples in 2019. Coming this January, the new Individual Coverage HRA will be available for companies of any size and benefits can be scaled across 11 different classes of employees (like part time or remote workers). ICHRA extends the benefits of QSEHRA to a greater footprint of businesses and is predicted to really transform the group benefits market. Both of these options are the result of a bipartisan effort that has spanned over two presidencies. In other words, the are going to stick around for the long haul.
To decide which one is best for you, reach out to our friends at Take Command Health, the leading resource for small business HRA administration with clients in every state.
Pick the best plan for your budget — and your needs
Remember that finding the “cheapest” premium isn’t necessarily the best way to find the best self-employed health insurance price. You have to consider all health-related costs as well as different scenarios in which those costs may play out. Be sure you’re accounting for all your health needs throughout the year. It may take some time and effort on your part, but that’s sure to pay off in the long-run (and your wallet will thank you). Why not get a free quote from Decent and see if one of our plans (which are specifically designed for the self-employed, ahem) might be the best option for you?
