When you’re making the decision to go full-time freelance, consider what your health benefits will look like once you take the leap. As a full-time employee, the company you work for often takes care of your benefits, so many new independent contractors aren’t up to speed on available options when it comes to finding a benefit package for freelancers.
When considering the options for indys, you should keep several factors in mind to determine what type of coverage you want and need. These factors may include age, length of time you’ve worked as a freelancer, income, family size, existing medical needs and future goals. If you’re young, single, fairly new to the freelancing world and working with a smaller income, you’ll want to look for packages offering flexible coverage at lower rates and deals for certain age brackets. If you’re older, have a family and are more established with a higher freelance income, you’ll need comprehensive benefits taking the whole family into account.
How can you go about finding the right benefit package for freelancers that works for you?
Step 1: Understand Your Insurance Marketplace
Find your state’s insurance marketplace or exchange to discover what private insurance packages are available. You can find your state’s exchange on healthcare.gov.
Step 2: Pick Between Various Tiers of Coverage
Understand the basic tiers of coverage: Platinum plans pay for around 90 percent of out-of-pocket costs, Gold plans pay for around 80 percent, Silver 70 percent and Bronze 60 percent. While Bronze plans will have the lowest monthly premiums, you’ll pay the highest out-of-pocket costs for care. Bronze plans are a good option for younger, healthy, single freelancers who don’t work with a large disposable income and just need emergency coverage.
“Catastrophic” plans serve well as bare-bones emergency coverage for those under 30 or who qualify for a hardship exemption.
Step 3: Search for Tax Credits
Understand how your current income level impacts your premiums. Find out whether you qualify for a premium tax credit you can apply against your monthly insurance premiums.
Step 4: Watch out for Penalties
There’s a penalty for not having some form of health insurance come tax time. The penalty hovers around $695 or 2.5 percent of income above the taxable threshold ($10,300). This penalty caps at the national average price for a Bronze plan. If you’re debating whether you should invest in insurance or not, consider that unless your income is extremely low, you may end up paying the equivalent of a Bronze plan anyway.
Step 5: Properly Estimate Your Resources
You can use the Health Insurance Marketplace Calculator to estimate your eligibility for subsidies and how much you can spend on health insurance. Check out the Freelancers Union health benefits page to search by your zip code for options and special offers on different insurance packages.
For those in New York, this page also offers a handy overview of available packages in your area and hotlines you can call specifically dedicated to freelancers. This site is also an excellent resource for dental, life or disability insurance and retirement funds and other benefits.
Insurance and health benefits for freelancers can seem confusing at first, but follow these steps, and you’ll get a good overview of how it works and what options are available to you. You may even find that with greater flexibility your coverage is a better fit for you than the coverage offered through a traditional employer.