Updated January 7, 2020
If you’re self-employed or the owner of a small business, what are your health insurance options? How do you know which health plan is the best fit for your needs and the needs of your employees? In this article, we’ll look at the different coverage options available to self-employed persons and small business owners, and help you understand how to pick a plan.
By “self-employed,” we’re referring to people who work for themselves or who may work as a consultant, but have no employees. If you’re a self-employed person, you may have different health insurance options than small business owners who have part-time or full-time employees.
Self-employed people, like most Americans who don’t get coverage through an employer-sponsored health insurance plan, were formerly required to have health insurance or face a possible tax penalty. Although the Affordable Care Act (the ACA, also known as “Obamacare”) previously imposed a tax penalty for most people who went without major medical coverage for more than two consecutive months in a single year, this penalty was removed as part of the repeal of the individual mandate in 2017, with the change becoming effective in 2019.
As a self-employed person, you’re able to purchase an individual or family health insurance plan during the annual open enrollment period, which typically runs from November 1 – December 15 in most states in 2019, or within sixty days of experiencing a qualifying life event. Qualifying life events include such things as marriage or divorce, the birth or adoption of a child, the loss of employer-based coverage, or moving to a new coverage area, among other things.
If your taxable household income is no more than 400% of the federal poverty level (that is, about $49,960 for a single person or $103,000 for a family of four in the contiguous United States for coverage 2020), you may qualify for government subsidies that can help you pay your monthly premiums.
When you’re ready to shop for a new health plan, there are several ways to go about it. You can shop through options such as:
The price of a plan will not change based on where you shop, but private exchanges staffed with licensed agents may be able to provide you with personal help and advice.
Under the Affordable Care Act, small business owners with fewer than 50 full-time workers (or the equivalent in part-time workers) are generally not required to provide health insurance to their employees. Many choose to do so anyway, however, because they feel it helps them hire and retain the best workers.
As a small business owner you can purchase a group health insurance plan that will cover both yourself and your family as well as your employees and their dependents. You can shop for a group health insurance plan at any time of the year in typical cases.
Many small business owners find it helpful to shop for coverage with a licensed online health insurance agent. Licensed agents that represent multiple insurers can help you find a good match for your needs and budget, and can help you look into quotes for dental and vision coverage as well. In some cases, you may have access to government-run SHOP exchanges, where you can also pick a plan.
When you offer group coverage, you are generally required to pay at least 50% of the monthly premium for your employees, though you may have more flexibility when it comes to contributions for their dependents. You may also be able to deduct the amount you pay toward employee premiums from your business taxes. Talk to your licensed tax professional to learn more.
Whether you’re self-employed or a small business owner, you’ll have several different kinds of health insurance plans to choose from. To help you pick the best plan for your needs, it may help to understand some of the basics about plan types and metal levels.
Plan types – like PPO or HMO plans – generally tell you about the way the medical provider network functions. PPO (Preferred Provider Organization) plans tend to give you a lot of freedom to pick the doctors you want to visit – and they may even offer you some coverage when you see a doctor out of your insurance company’s network. HMO (Health Maintenance Organization) plans tend to require you to pick a primary care doctor who will refer you to specialists as needed; with an HMO you may only be covered for emergency care when out of your network.
Plan metal levels tell you about how much you can expect to pay from your own pocket toward covered medical care. All plans typically require some amount of cost-sharing, either in the form of copayments, coinsurance or deductibles. Platinum and Gold plans tend to require the least amount of cost-sharing, though they generally have higher monthly premiums. Bronze plans, on the other hand, tend to have higher cost-sharing and lower monthly premiums.
Health insurance is complicated and you may have questions about the plans you’re considering. You can find some answers online, but sometimes it helps to talk to a real human being. Contact a licensed health insurance agent when you need a detailed explanation or recommendation. It never costs extra to work with a licensed agent and it can make the process of purchasing you next plan a lot easier.