Navigating Health Insurance Options for Independent Contractors: What You Need to Know

Choosing the path of an independent contractor is exciting—there’s the freedom to set your own schedule, take on projects that genuinely spark your interest, and build a career on your own terms.

But I know it’s not all smooth sailing.

One of the trickier parts can be finding affordable health insurance. Without an employer’s benefits, it can feel daunting to tackle healthcare on your own. But I promise you—there are options out there that won’t break the bank, and I’m here to help you make sense of them.

Let’s walk through some of the best health insurance options available for independent contractors like yourself, so you can feel confident in choosing what’s right for you.

Affordable Care Act (ACA) Marketplace

For many of us who work independently, the ACA Health Insurance Marketplace is often the first place to look. The great thing about ACA plans is that they’re designed to cover the basics—everything from preventive care and prescriptions to maternity care and mental health services. Plus, they can’t deny care based on pre-existing conditions. That’s a big relief, right?

Something that is important to know is according to the Kaiser Family Foundation (KFF), 89% of people with ACA marketplace plans qualify for premium subsidies. So, if your income fluctuates month to month, these subsidies can make coverage much more manageable. It’s all about making sure that the support is there for you when you need it.

Health Plan Choices: What Works Best for You?

There are a few types of health plans out there, each with its own level of flexibility and cost-sharing.

Here’s a quick breakdown of the main options, and remember—you get to pick what works best for you:

• Health Maintenance Organizations (HMOs): These plans generally have lower premiums, but you will need to seek medical care within a network of doctors and some require referrals to see specialists.
• Preferred Provider Organizations (PPOs): These are a little more flexible, letting you see in network doctor’s and specialists without referrals. These plans allow you to go out of network usually at a higher cost. You will save by staying in-network, though.
• Exclusive Provider Organizations (EPOs): Think of these as a mix of two-lower premiums, like HMOs, but without needing referrals to see specialists.
• High Deductible Health Plans (HDHPs): Paired with a Health Savings Account (HSA), these plans offer lower premiums in exchange for a higher deductible. And with an HSA, you can save money on a tax-free basis for medical expenses.

According to the U.S. Department of Health and Human Services, a large number of ACA enrollees in 2022 (around 83%) went with HMOs or EPOs because they’re cost-effective and help with coordinating care.

Stretching Your Dollar with Subsidies

If you’re making between 100% and 400% of the federal poverty level (FPL), you’re eligible for premium tax credits, which can really make a difference.

For example, in 2024, the poverty level for a single person is $14,580, and for a family of four, it’s $30,000. If your earnings fall within that range, you could be looking at savings on those monthly premiums.

In fact, the average ACA subsidy was $524 per month in 2022, which brought down the average monthly premium to about $84 after applying subsidies, according to HHS. And here’s another tip: you might qualify for cost-sharing reductions, which could mean lower costs for things like co-pays and deductibles.

Small Business Health Options Program (SHOP)

If you have employees or work with partners, the Small Business Health Options Program (SHOP) might be a great fit for you. It lets you offer health insurance to your team without a big commitment, and even if you don’t have to provide health insurance (businesses with fewer than 50 employees are not required), it could help you attract top talent and get yourself a bit more comprehensive coverage in the process.

SHOP plans can often be combined with small business tax credits, which lets you cover a portion of your team’s premiums and deduct those costs from your taxes.

HDHPs with HSAs: Budget-Friendly and Tax-Advantaged

High Deductible Health Plans (HDHPs), paired with Health Savings Accounts (HSAs), are a great option if you want lower premiums and a way to manage healthcare expenses. By choosing a HDHPs that it qualifies you to contribute pre-tax dollars to an HSA where you can use the funds to cover qualified medical expenses. It’s a bit like your healthcare rainy-day fund that you have on hand in to cover unexpected medical expenses.

According to the Employee Benefit Research Institute, the average HSA contribution in 2022 was $2,084, with the average balance on hand for insured is around $3,665. It’s a helpful way to save for medical expenses without paying taxes on the funds.

Preventive Care Matters, and It’s Covered

One of the wonderful things about ACA plans is that they offer first-dollar coverage for preventive services. This means you don’t have to pay out-of-pocket for essential screenings like mammograms or vaccines. ACA-compliant plans must also cover Minimum Essential Coverage (MEC), which includes basic healthcare services that meet federal standards. So even if you’re purchasing an individual plan, you can have peace of mind knowing you will be covered for the essentials.

Sometimes It’s Worth Asking for Help

If all of this feels like a lot to digest, don’t worry, you don’t have to do it alone. Sometimes it really helps to talk things through with someone who understands your insurance needs.

An independent insurance agent or healthcare advisor can help you make sense of the options, maximize your savings, and find the best fit for your unique needs.

In fact, surveys show that nearly 70% of people who consulted an insurance broker or agent felt more confident in their health insurance choices than those who went direct to the marketplace.  Having that trusted voice can make all the difference.

Finding Coverage That Works for You

At the end of the day, health insurance shouldn’t stand in the way of your dreams. With the right resources—like ACA marketplace plans, HSAs, and options like SHOP—you can find affordable, quality coverage. The key is to explore your choices, make the most of subsidies, and ask for guidance when you need it.

With the right healthcare plan in place, you can focus on doing what you love, knowing that you have your health—and your finances—covered.

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Source:

KFF Marketplace Coverage – https://www.kff.org/health-reform/issue-brief/the-affordable-care-act-and-insurance-coverage-in-rural-areas

U.S. Department of Health and Human Services – https://www.hhs.gov/about/news/2022/01/27/hhs-reports-record-149-million-americans-sign-up-affordable-care-act-coverage-during-2022-open-enrollment-period.html

U.S. Department of Health and Human Services – https://www.hhs.gov/about/news/2022/02/03/hhs-announces-open-enrollment-outreach-efforts-produced-historic-aca-enrollment.html

Employee Benefit Research Institute (EBRI) – https://www.ebri.org/

Insurance Journal – https://www.insurancejournal.com