Navigating the Winding Roads of Health Insurance for Independent Contractors

Written by Tom Bentley on January 9, 2017

So, you’re finally taking the leap into freelancing. Congratulations! But what if you leap and land funny? Health insurance for independent contractors isn’t a laughing matter. You should be as careful about preserving your personal health as you are about maintaining your new business.

When I left my corporate job many moons ago, I took advantage of the government’s Consolidated Omnibus Budget Reconciliation Act (COBRA). If you qualify, it gives you the option of continuing your employer-sponsored health plan, which could include your spouse and children, for a limited period. Though the premiums were much higher than when I was employed, I retained my full coverage for more than a year. The knowledge I had the COBRA option, even if fairly expensive, took a lot of my “new contractor” health care anxieties away. If you previously had employer coverage, check out the COBRA option first.

And don’t even consider not getting health insurance, no matter how healthy you are. Medical bills are the biggest cause of bankruptcies (and the cause of many home foreclosures) in the U.S. Disasters happen. Health insurance for independent contractors isn’t a luxury — it’s a necessity.

Affordable Care?

There’s a little thing called the Affordable Care Act (ACA) that’s been around long enough to escalate some egg-throwing between the political parties. Turning away from partisan acrimony, the legislation’s provided affordable health care to millions of Americans who had none before, including freelancers.

I use the ACA through Covered California to get my own insurance and have been assured my benefits for 2017 will be fully covered, no matter how legislators wrestle on the House and Senate floors. Look into it, though, as access and policies differ from state to state and will undoubtedly change in the coming years.

Beyond mammoth government programs, there are more concentrated approaches to securing your health coverage. You might consider a Health Savings Account (HSA), which you set up as a separate bank account to be used only for qualified medical expenses. An HSA usually links to a high-deductible health plan and can provide notable tax benefits.

Options Worth Researching

If you qualify, you should also check out plans available through the National Association for the Self-Employed, the Freelancer’s Union and the National Association of Health Underwriters. There’s a nice overview of their options (and others, like the HSA) at The 10 Best Health Insurance Options for Self-Employed Freelancers.

Freelancers with a pinch-penny budget often go for only catastrophic insurance, which usually means there’s a high deductible that must be met before you can get coverage for most health care basics. Only if you have a major health crisis will you get significant benefits. While that coverage means reduced premiums, it also equates to reduced general and specific care, so truly mull that one over before you choose.

Do This, Not That

Some policy is better than no policy, as this 7 Dos and Don’ts for Freelancers Buying Health Insurance makes clear. There’s also some good info there on being wary of short-term policies and tax implications, which means deductions for you!

Nobody wants to be lectured about their health, but it’s worth hearing: Some simple habits can greatly help your health, and as a freelancer (particularly if you work at home), your path is much easier than that of a cubicle-bound comrade. Take a half hour each day to go for a walk or a bike ride to keep the blood moving; you’ll be surprised at how quickly you begin to look forward to it.

This isn’t for everyone, but I like to use a self-guided meditation app every morning. I also nap pretty much every afternoon for 20 minutes or so. The results: Stress relief is high, blood pressure is low. I also make healthy breakfasts and lunches (most of the time). Working at home has its health advantages.

Navigating the highways of health insurance for independent contractors isn’t exactly a pleasure trip. But navigate you must, because you need to protect yourself and your business from unforeseen health problems. Let’s hope your premiums, and your needs for premium care, remain small. Good health to all!

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