Best Health Insurance for the Self-Employed
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The Bottom Line
Self-employed people must factor in the affordability of health insurance plans and available tax write-offs when shopping on the Health Insurance Marketplace. Each insurer operates differently due to state regulations. The Blue Cross Blue Shield affiliate in your area may have the best balance of cost and quality. But if it operates in your state, Kaiser Permanente could be a good alternative if you want an HMO.
Some contractors and freelancers may want the stability of $0 copays for routine physician visits, which you can get with Oscar. Research the plans available in your area and weigh all costs beyond premiums, including deductibles, copays, and coinsurance.
Financial Advisor Insight
“If you are self-employed, see if you qualify for tax credits through the Affordable Care Act,” said Carolyn McLanahan, certified financial planner and member of Investopedia’s Financial Advisor Council. “Work with your accountant or financial planner to structure your income efficiently to get larger tax credits.”
Where to Get Health Insurance for the Self-Employed
- The Health Insurance Marketplace: This is the first place many independent contractors can look for health insurance. One advantage of Obamacare plans is that you may be eligible for a subsidy depending on your income. You can sign up during open enrollment, which usually runs from Nov. 1 to Jan. 15. If you miss that, you may still sign up if you have a qualifying life event.
- The COBRA (Consolidated Budget Reconciliation Act) allows you to stay on your previous employer’s health plan. COBRA can be expensive because, as a sole proprietor, you may be responsible for costs your employer previously covered.
- Medicaid is a public health insurance program mainly catering to low-income individuals and families. It provides comprehensive coverage for little to no cost. You qualify depending on your income and state-specific eligibility criteria.
- Your spouse’s health plan: If you’re married to someone with employer-sponsored health insurance, getting coverage through their plan can be more cost-effective than buying individual coverage because employers often cover part of the cost of health insurance for their employees.
- Short-term health plans: These plans provide temporary coverage and are typically less expensive than an Obamacare plan. However, they offer more limited coverage and can deny coverage for pre-existing medical conditions.
- Indemnity health insurance: This coverage can pay for some of your medical bills but is not a replacement for major medical insurance. These plans have pre-determined coverage levels for each type of medical service and may not cover everything that an Obamacare plan does. You could also be denied for having a pre-existing medical condition.
Note
The Biden administration finalized a rule, effective June 2024, that lets people with a projected household income at or below 150% of the federal poverty level get a special enrollment period for health insurance through the Marketplace. Most people with these income levels qualify for help paying for premiums. The rule could be helpful for gig workers facing tight margins after tax season.
How Much Is Health Insurance for Self-Employed People?
The cost of health insurance for independent contractors can vary depending on your plan, location, and age. The average monthly premium for an Obamacare plan is $477. More comprehensive plans usually cost more, but subsidies can help you save. Nearly three-quarters of HealthCare.gov enrollees can select a 2025 plan that costs less than $10 a month after factoring in premium tax credits. It’s important for gig workers to carefully compare plans and consider both their up-front premium costs and potential out-of-pocket expenses.
If you have a net profit for the year, you may be eligible for a tax deduction for premiums you pay on a health insurance policy for yourself and your spouse and dependents.
Research Insights
“Another consideration alongside plan type is metal tier. The tiers–bronze, silver, gold, and platinum–don’t refer to the plan’s quality but rather the relationship between monthly premiums and out-of-pocket costs, like deductibles, coinsurance, and copays. Typically, the higher the metal tier, the lower your maximum out-of-pocket contribution. Once you meet this limit, you will be fully covered for any additional care you receive. A gold or platinum plan could better suit your needs if you have ongoing health issues and need frequent care or expect to undergo prolonged treatment.”
–Shanker Narayan, Investopedia Research Analyst
Why You Should Trust Us
Investopedia collected and analyzed hundreds of key data points from nine companies to identify the most important factors for readers choosing a health insurance company for the self-employed. We used this data to review each company for state availability, customer satisfaction, costs, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999, and has been helping readers find the best health insurance companies for the self-employed since 2020.
Frequently Asked Questions
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The Health Insurance Marketplace considers you self-employed if you make money from your business but don’t have employees to report on a W-2 form at year’s end. Business owners with employees must use a different small business insurance marketplace—the SHOP Marketplace—to find insurance for staff. However, you’re still considered self-employed if you hire independent contractors.
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Your Marketplace application requires you to estimate your self-employment net income or profit after expenses for the following year. Estimate this amount based on your past net income history, expectations, and industry standards. If your income changes dramatically over the year, you must update this estimate in the marketplace. The marketplace can ask you to prove your self-employment income with a spreadsheet or accounting software program.
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If you’re self-employed and have a net profit for the year, you can take an income tax deduction for your health insurance costs—specifically, the premiums you pay. This deduction is an adjustment to your income rather than an itemized deduction. Form 1040 or 1040-SR and Schedule SE offer instructions on calculating and claiming the deduction.
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Obamacare plans may offer a premium tax credit based on your income if you earn between 100% and 400% of the federal poverty level. You can use any or all of the tax credit to help pay your premiums. However, determining how your premium tax credit interacts with self-employment deductions can be complicated. Consult a tax professional or use the IRS’s Publication 974 for helpful worksheets.
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Blue Cross Blue Shield is our pick for the best health insurance company in Texas. It offers plans in every metal tier, including catastrophic, many of which include dental coverage. Its gold plans have relatively low deductibles, but premiums are high for bronze and silver plans.
How We Chose the Best Health Insurance Companies for the Self-Employed
To identify which health insurance companies to review, we analyzed business and market insight databases, considered health insurance company market share, and researched user-generated data from Google to determine public interest and trends in health insurance companies and plans.
We collected data from the National Committee for Quality Assurance (NCQA), an independent organization that rates health care plans on quality and patient satisfaction. We also gathered data from state and federal government health insurance marketplace websites and databases, and directly from companies via websites, media contacts, and existing partnerships. The data collection process took place between Sept. 29 and Oct. 23, 2023.
We then developed a quantitative model that scores each health insurance provider based on 27 criteria that fall into four major categories and are crucial in evaluating the company’s offerings and benefits. We weighted the four categories as follows for this article:
- Plan Quality & Customer Satisfaction: 15%
- Plan Features: 40%
- Cost: 30%
- Availability: 15%
Read our full methodology for reviewing health insurance companies.
Guide to Health Insurance
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