Understanding Your Healthcare Options As A Freelancer
Healthcare. It’s easily the biggest (and often, most confusing) factor in deciding whether or not to take the first step into self-employment; but it doesn’t have to be. As a licensed health insurance advisor, it’s my job to connect freelancers and self-employed people with the healthcare options that are best for them - and yes, I’m even self-employed myself. In this post, I’m breaking down each health insurance option in hopes it helps you understand what’s available for you and your family.
Affordable Care Act
At the time this article was published, the Affordable Care Act (ACA), more popularly known as Obamacare, is a government program that is open to everyone regardless of pre-existing conditions and age. Each state has different plans with different networks of providers (Blue Cross Blue Shield, Ambetter, etc.) and a variety of rates, premiums and deductibles. To be able to get on an ACA plan you must enroll during an specific enrollment period. There is a national open enrollment period that starts every November, but you can also qualify for a special enrollment period based off of a qualifying event.
What is a qualifying event? Life changes like marriage, having a baby, or boldly quitting your job to venture out into the wonderful world of self employment, which, in turn, caused you to lose your employer sponsored healthcare coverage. There are more qualifying events on the list, but this gives you the general idea. No matter which qualifying event pertains to you, you’ll have 60 days of special enrollment period to apply for an ACA plan, otherwise you will have to wait until November.
Good for: Newly self-employed, those with pre-existing conditions, low income families
Cost range: $300-$1200 a month for families; $250-$500 a month for an individual under 40 years old (*All cost range prices listed in this article are estimates that will vary and range based on your state, county, company and individual demographics)
COBRA (Consolidated Omnibus Budget Reconciliation Act)
The first thing to understand about COBRA is that it is a law, not an insurance plan. COBRA gives the right to employees who were terminated from or decided to leave their employer to continue benefiting from the healthcare coverage previously provided under their employer group plan. The catch? The employee must now pay the total premium. The employer will no longer cover any part of the cost. COBRA is an expensive option and although you can deny COBRA continuation benefits when offered by your employer, this will make you ineligable for a special enrollment period.
Good for: People getting new coverage with in 30 days
Cost range: $500-$1800 a month, depending on the level of coverage provided by your employer
Short Term Plans
Multiple companies provide short term plans and these plans are designed to provide you with temporary healthcare insurance due to unexpected gaps in coverage (i.e loss of employment or waiting period for new employer coverage). These plans are typically written for a term of three months and are generally more affordable than electing for COBRA. In most cases, short term plans do not provide the same level of benefits as ACA or employer coverage plans.
Good for: People that are healthy, Families, and individuals
Cost range: $100-$250 per month for individuals
There are a few private plans on the market that offer coverage options to those who find the premiums of the ACA plans or COBRA to be too high (or that the coverage doesn’t meet their needs) and don’t want to elect for a short term plan. These plans are selective in their risk pools, so not everyone can qualify for them, like an ACA plan.
Good for: Healthy, Ages 18-60, families and individuals
Cost range: $150-$300 for individuals, $450-$1000 for families
Going without coverage
This should never be an option. Don’t do it. If you elect to go without coverage, Murphy’s Law will inevitably apply.
Good for: No one
Cost range: Seriously, don’t even think about it
So, how do you choose which healthcare option is right for you? Ask yourself the following questions:
Do I qualify for a special enrollment period?
What do I want out of my coverage?
Do I need a pre-existing condition to be covered?
Am I just looking for a safety net or daily maintenance coverage?
What is my budget for monthly premiums? And what is my max out of pocket/deductible that I am are willing to meet in a calendar/policy year?