A guide to insurance for US freelancers
With all the perks of running your own freelance business, comes a few sacrifices. There are more advantages – flexibility, control of your schedule, creative independence – than disadvantages. But being self-employed means you’re responsible for finding and paying for your own healthcare and insurance. Good news is, as more people turn to freelance and independent work, more affordable solutions are created for us. But like most things, innovation takes time.
We’ve had many Peeps ask us and each other about the solutions available. So to help save you time on research, we put together this quick guide to finding and choosing insurance as a freelancer.
Freelancers Union Insurance Marketplace
Freelancers Union is not an insurance provider itself. Rather, it offers a National Benefits Platform, which provides a curated selection of health insurance options for freelancers across the US. Its focus on freelancers allows you to find a plan that’s affordable and meets your needs. The platform offers individual health, dental, term life, liability, disability, and travel medical insurance.
Because it’s a marketplace, you have to sign up during Open Enrollment, which is typically November through January. If you miss Open Enrollment, you can still find coverage through your state healthcare exchange if you’ve experienced a life event or if you qualify for Medicaid. Example life events include getting married, pregnant, losing your job with benefits, etc.
State healthcare exchanges
When it was signed into law in 2010, the Affordable Care Act (i.e. ACA or Obamacare) implemented state-specific Health Insurance Exchanges. The Exchanges are online price comparison websites where consumers can purchase health insurance that counts as minimum essential coverage, receive federal subsidies, and be granted exemptions. They’re similar to the Freelancers Union Marketplace but different in that they’re available to anyone who doesn’t have insurance through work.
According to this article in Time, the average 2016 ACA plan on the federal marketplace cost $396 a month before tax credits. If you don’t qualify for any tax credits, you could owe more than $4,700 a year for premiums alone – before incurring actual medical expenses. After tax credits and subsidies, however, the average American with a federal marketplace plan is paying $106 per month. For example, Peep Jessie in California said that she pays $160/month. Peep Sarah in Maryland says she pays $122/month through her state’s marketplace.
To qualify for the subsidy, you must earn less than 400% of the poverty level – that’s $47,520 for individuals and $97,200 for a family of four in 2016. To get the credit, you must buy a health plan available through your state’s marketplace.
The Time article mentioned above cites studies indicating that ACA plans offer 34% less health care providers offered in-network than off-exchange plans (2015). The positive flip-side is that the ACA plans had 40% lower premiums than similar off-exchange plans (2014). Just like Freelancers Union, you’ll have to wait till Open Enrollment to apply. Find your state’s marketplace and apply here.
Oscar Health is a private, affordable health insurance provider. It offers plans to individuals, couples and families living in parts of New York, New Jersey, California and Texas who don’t already receive health insurance from an employer. The company makes healthcare and insurance simple to understand and does what they can to lower costs each year. Although coverage is limited to three states now, the company is expanding rapidly.
Peep Shannon who’s based in New York pays $125/month. She says that her plan isn’t perfect but that it covers the basics and acts as a security blanket if anything was to happen.
Short-term health insurance
Temporary health insurance through private providers is a short-term hack that has been used by many freelancers. Although the Time article strongly discourages freelancers to use this hack, it’s good to know about if you’re in a pinch. If you just left your full-time job and are still navigating the transition into a freelance career, for example. Note that HHS has implemented rules capping short-term insurance coverage at three months.
The reason experts warn against using short-term insurance is because these plans don’t meet ACA standards, so they aren’t actually considered “insurance.” This means they can discriminate against people with preexisting conditions, refuse to cover services like preventive care and prescription drugs, and put annual or lifetime caps on benefits. You’ll still have to pay the ACA tax penalty if you don’t have other minimum essential coverage.
Disability for freelancers
Freelancers Union offers disability insurance through Guardian Life. But there are other options if that’s not a good fit. Peep Rasha says that if you’re unable to work, see if you qualify for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI). He warned that it’s a long process, requiring tolerance for extreme bureaucracy. Honestly, that’s to be expected with government programs, unfortunately.
Rasha added, “If you can perform some work but your income falls below the Federal-established poverty threshold (in New York, it’s approx. $1,300/mon), you qualify for Medicaid via the Healthcare Marketplace at no cost to you. Yup, $0 for medical coverage.”
According to the Social Security Administration, “To qualify for Social Security disability benefits, you must first have worked in jobs covered by Social Security. Then you must have a medical condition that meets Social Security’s definition of disability. In general, we pay monthly cash benefits to people who are unable to work for a year or more because of a disability.”
Visit the website to learn more about eligibility.
Why you need health insurance
The Affordable Care Act requires everyone in the US to have health insurance. In 2016, the fee for not having health insurance (if you can afford it) is $695 per person or 2.5% of your income, according to healthcare.gov. However, a benefit of the ACA is that insurance companies can no longer refuse coverage or charge you more for a pre-existing condition, making coverage more affordable.
Also, the ACA capped the amount of money insured Americans will ever be required to pay for in-network care. The limits are $6,850 for an individual plan and $13,700 for a family plan. Whereas, people without insurance have no such limit on their out-of-pocket costs.
Aside from obvious financial reasons, having health insurance gives you a safety net. It allows you to take care of yourself with things like annual checkups and examinations. It gives you peace of mind if something did happen.
We know not all of our readers are in the US, but this post would be a monster if we tacked every country. We suggest researching your country and region’s options through your local government’s website. Or, post to the CloudPeeps Facebook Group to see if a fellow Peep can point you in the right direction. There are Peeps living across the globe!
*Above photo from Awesome Wave.*
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