Buying health insurance when you’re self-employed doesn’t have to be a headache. Read on to learn how to get health insurance when you’re self-employed.

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Am I required to get health insurance when I’m self-employed?

Yes, you’re required to have health insurance or face a penalty. The new tax law repealed the individual mandate by lowering the penalty to $0. That doesn’t take effect until 2019, so you’re still on the hook for the 2018 tax year.

 
The mandate held that taxpayers who did not carry a qualifying insurance plan had to pay a penalty amounting to the larger of $695 per adult (or $347.50 per child) not covered or 2.5 percent of household income. If you were only uninsured for certain months of the year, you would pay 1/12 of the penalty for every month you were uninsured.

That penalty extended to all taxpayers, including the self-employed, exempting only individuals who qualified for specific income or hardship exemptions (see the full list of these exemptions on Healthcare.gov).

Although the Tax Cuts and Jobs Act passed in 2017 effectively repealed that individual mandate by lowering the tax penalty to $0, it doesn’t take effect until 2019. Until the repeal goes into effect, you’re still on the hook for the tax penalty if you don’t carry health insurance in 2018.

What are my options for health insurance when I’m self-employed?

There are many ways to obtain health insurance when self-employed:

  • Get health insurance from the individual Marketplace (i.e., Healthcare.gov). Going this route will make health insurance premium tax credits or other savings available to you if your income, household size, and location qualify you.
  • Get health insurance from the Small Business Health Insurance Program (SHOP) Marketplace if you operate a small business with between 1 and 50 employees (other than you or a spouse, family member or owner).
  • Obtain health insurance from Medicaid programs if your location, income, household size and other factors qualify you.
  • Apply for health insurance from Medicare if your age and Medicare tax contribution history qualify you.
  • Purchase health insurance directly from a health insurance carrier (e.g., Blue Cross Blue Shield, etc.)

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How much will it cost to get health insurance when I’m self-employed?

Costs vary widely based on your age, location, the level of coverage you want and the plan deductible. The fees for various health care plans are published on the website of the relevant plan providers annually. You can also use online calculators like the one provided by the Kaiser Family Foundation for help in estimating your premium payments and any premium assistance for which you might qualify.

When shopping for health insurance when self-employed, you’ll need to factor in the total cost of the plan, including the:

      • Premium (the amount you would pay every month to maintain coverage)
        Deductible (the amount you would have to pay for covered health care services before your insurance starts to cover you)
      • Copayments (a fixed amount you pay for a covered health care service)
      • Coinsurance (the patient share of the costs for a health care service, usually expressed as a percentage)
      • Which tax deductions or credits can I take for health insurance when I’m self-employed?

Tax deductions and credits for qualifying health insurance plans help offset the costs of paying for premiums. They include the:

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    • Self-employed health insurance deduction: You can generally deduct premiums you pay for health, dental and long-term health coverage for yourself, your spouse and any dependents of the age 26 or younger.
    • Small business health care tax credit: You may also be eligible for a credit for the premiums you pay toward the monthly premiums of employees for coverage under a qualified group small business health insurance plan you offer your employees.
    • HSA deduction: If the plan you enroll in is eligible for a health savings account (HSA), and you contribute to that HSA account, your contributions are also deductible (up to $3,450 for an individual or $6,900 for a family in 2018).
Manasa Reddigari

Manasa Reddigari

Manasa Reddigari is a freelance technical writer and small business owner whose insights have appeared in diverse digital publications. She has a passion for leveraging technology to reveal simple solutions for everyday business finance complexities. Visit www.scribmint.com to learn more about her work.
Manasa Reddigari

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