Health Insurance 101 for Freelancers
/Author: Ariana Brill
Finding your own health insurance as a freelancer can be super intimidating! There are tons of options available and rates vary widely, so how do you know what kind of health insurance is right for you?
Follow this short guide to help navigate the process.
Match the Doctor to the Network
If you have an existing doctor, hospital, or therapist that you’d like to keep working with, this is the best place to start your search. First, research which health insurance plans are available and in-network for your provider. Large medical groups will usually list this information on their website, but for smaller providers you’ll probably have to call them directly to find out. The process can be time consuming, but it’s super important to do your homework to make sure that your insurance company is “in-network” for your provider, otherwise the plan won’t help much (if at all) when it comes time to receive medical care – I can’t stress this enough!
Available plans: PPO vs. HMO vs. EPO
Health Maintenance Organizations, or HMOs, are typically your cheapest options, but be careful – these plans do not offer any out-of-network coverage. They will also require you to get a referral from your Primary Care Physician (PCP) before seeing a specialist. For example, let’s say you need to see the dermatologist about a weird rash. An HMO would require you to consult your main doctor first and then get a referral to visit the dermatologist in order for the visit to be covered.
Preferred Provider Organizations (PPOs) are more expensive, but these plans do not require you to get a referral from a PCP before seeing a specialist and they also offer some out-of-network coverage – but that doesn’t mean that you can just see any doctor you want! Most PPO plans have a high out-of-network deductible. This means you’ll have to pay for the first few thousand dollars in out-of-network care before the plan kicks in and starts helping you. Even with a PPO, you want to try to stick within the network whenever possible.
Exclusive Provider Organizations (EPOs) are like a hybrid of HMOs and PPOs. Like an HMO, they do not offer any out-of-network coverage; like a PPO, you can go directly to a specialist without getting a referral from your PCP. These plans tend to be priced in between HMOs and PPOs.
How much insurance do I need?
Health insurance is standardized into metal tiers: Bronze, Silver, Gold, and Platinum. I like to think of these as Small, Medium, Large, and Extra Large. Smaller plans cost less each month, but they’ll leave you shouldering more of the cost when it comes time to get medical care. Larger plans are more expensive on a monthly basis, but medical care will be more affordable when you need it.
Bronze Plans
A Bronze (small) plan will completely cover your preventive care (check-ups, pap smears, mammograms, vaccinations, and birth control), but otherwise these plans will only help with coverage for more serious medical situations like appendicitis or a car accident. They don’t help with in-between things like prescriptions and x-rays.
Silver Plans
A Silver (medium) plan makes the most sense for most people most of the time. These plans also completely cover preventive care, but they also offer partial coverage for day-to-day care. For example, let’s say you get strep throat. A Silver plan will have you pay a copay to see the doctor, a copay for the lab tests to determine whether or not you’ve got strep throat, and a copay for the drugs to cure it. A Bronze plan would have you pay completely out of pocket for all of those things. If you are taking prescription drugs or seeing a provider on the regular, you’ll need at least a Silver plan.
Gold and Platinum Plans
I typically only recommend Gold (large) plans for people who are anticipating some major medical event, like surgery or hospitalization. If you’re planning to give birth this year, a Gold plan is probably your best bet. Platinum (extra-large) plans are way too much coverage for most people, but they can make sense if you’re taking multiple medications, or perhaps live with a chronic health condition that requires you see your provider on a frequent basis.
If you’re healthy and don’t regularly need medical care, it’s tempting to save money by choosing a Bronze plan, but this is a big mistake! For freelancers, your monthly insurance premium is a tax-deductible business expense; however, the cost of any medical care that you receive typically is not. You’re better off spending more each month (in pre-tax dollars) so that you can limit your costs (in post-tax dollars) if you end up needing care.
How much can I expect to pay?
The short answer is, it depends. Health insurance gets more expensive as you get older. If you’re in your 20s, you may be able to find coverage for less than $300/month. If you’re in your 60s, it’ll be a challenge to find anything for less than $1000/month.
Should I open an HSA?
A health savings account (HSA) is a bank account where you can deposit pre-tax dollars and then use it to pay for medical expenses. This type of account helps you to avoid paying taxes on money you spend on medical care. In order to take advantage of these tax benefits, you must also be enrolled in an HSA-compatible High Deductible Health Plan. I don’t typically recommend opening an HSA for freelancers and independent contractors because it involves additional administrative complexity, but if you’re super organized and you don’t have a ton of medical expenses, this can be a cost-effective route. Funds in an HSA can be used for a wide variety of semi-medical expenses, such as chiropractic care or purchases like condoms and Band-Aids. You can also use your HSA as a retirement strategy.
International coverage
Your health insurance probably won’t help you if you need medical care while abroad. Fortunately, travel medical insurance is very easy and affordable (usually less than $100/month). Once you book your flight, your next move should be to get some travel coverage. You can check out options here.
If you spend more than six months out of the year abroad, it’s worth your time to look into expatriate health insurance. These plans are designed for globetrotters and offer coverage in every country. Weirdly, expatriate plans are often more affordable than domestic coverage; however, they often require medical underwriting, which means that they may not cover preexisting conditions. You can check out options for expatriate coverage here.
What about an Employee Group Plan?
If your small business has grown to the point where you have at least one full-time employee in addition to yourself and/or your spouse, it’s worth your time to look into small group options. Definitely work with an agent on this – it’s not something you should go at alone!
When can I enroll?
Typically, you can only enroll in health insurance during the Open Enrollment Period. The exact dates of this vary slightly by state, but it’s typically from sometime in October through December or January. You can find the dates for your state’s Open Enrollment period here. During that period, anyone can enroll in health insurance for any reason. Outside of Open Enrollment, you need a good excuse, called a Qualifying Event, to enroll in coverage. This is typically something like moving, getting married or divorced, having a baby, or losing your health insurance from a job or parent.
If you missed the window on Open Enrollment and still need coverage, short-term coverage is available in some states. However, the benefits on these plans are very limited and they do not cover preexisting conditions. Short-term plans this should only be used as a last resort. You can check out options here.
My advice: Work with an agent!
Meet Ariana Brill
Health insurance has gotten complicated enough that it’s almost like buying a house or going to trial – you’re best off working with a professional who can show you the ropes. Health insurance agents work on commission, meaning that you won’t have to pay them a dime; instead, they get a cut from whatever health insurance company you choose. If you live in California, I’d love to help you myself. You can book a free phone appointment with me or one of my teammates here. If you live in another state, I’d recommend searching for a local agent here.
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