Health Care for Freelancers: 7 Options

Health Care for Freelancers: 7 Options

Health care for freelancers is ridiculously expensive — and the cost prevents many eager professionals from going freelance. Are you in that boat?

Losing your employer’s health insurance is understandably nerve-wracking, but the good news is there are other ways to cover your medical expenses as a freelancer.

Let’s explore some of your options:

Note: This article contains affiliate links. If you make a purchase through one of the links, I’ll earn a commission at no additional charge to you.

Health Care for Freelancers: Other Available Coverage

Depending on your situation, you may be able to transition to another health insurance plan without too much fuss. Are you:

  • married? Review your spouse’s employer-sponsored health insurance plan (if available).
  • under age 26? Ask your parents about joining their medical plan.
  • a veteran? Contact the VA about your health care benefits.

If none of these apply, you can still obtain health care coverage as a freelancer on your own from a variety of sources.

COBRA

COBRA allows you to keep your now-former employer’s health insurance plan, typically for up to 18 months. The good news? You’re already familiar with the coverage. The bad news? You need deep pockets to afford it!

As an employee, your company probably pays a pretty large percentage of your premium for you. Under COBRA, you’re responsible for the entire amount. Plus, you could be charged up to a 2% administrative fee.

COBRA can help you ensure that there are no gaps in your medical coverage. But – there are cheaper ways to cover your health-related expenses.

Note: If you decide to enroll in COBRA, you must do so within 60 days of leaving your employer.

Health Insurance Marketplace

The Health Insurance Marketplace allows you to find and apply for new coverage. Similar to COBRA, you must enroll in a plan within 60 days of quitting your job.

As a new freelancer, your income may be low enough to qualify for a subsidy. If that’s the case, you could get health insurance on the cheap! Use this tool to see what kind of financial assistance you may be able to get.

Don’t qualify for a subsidy? You can lower your monthly premium by choosing a high-deductible plan. Of course, if you need medical care, you’ll have to pay a boatload out of pocket before the plan kicks in. That means, you need to have the money in the bank just in case — or be comfy with the risk.

A high-deductible plan often comes with one big perk: a Health Savings Account (HSA). An HSA allows you to save for future medical expenses. The main advantages of the account are that you can:

  • deduct the contributions on your taxes (2020 limits: up to $3,550 as an individual or $7,100 as a family)
  • earn tax-free interest or investment gains
  • make tax-free withdrawals for qualified medical expenses

You can learn more about HSAs from this IRS publication or by speaking with an accountant or qualified financial planner.

Health-Share Plan

If the price of a Health Insurance Marketplace plan gives you sticker shock, consider enrolling in a health-share plan. It’s not health insurance, but a cost-sharing program with other members.

You pay your monthly “share” into a collective pool of funds. Then, when you incur a medical expense, you apply to get funding to cover it.

A health-share is generally less expensive than health insurance — especially if you don’t qualify for a subsidy. But, there are some things that you need to be aware of:

  • There’s no guarantee that the plan will pay out (also unfortunately true of traditional insurance!).
  • There are lots of coverage limitations. (I was unpleasantly surprised to see mental health services excluded in two major plans – linked below.)
  • Many plans have a religious underpinning that influences plan eligibility and coverage guidelines.

That said, if you’re OK with the coverage exclusions and how the program operates, a health-share could be a good way to mitigate potential health care costs. Medi-Share and Liberty HealthShare are two popular health-share options (though other organizations exist).

Direct Primary Care Plan

A direct primary care plan is also not insurance. It’s a monthly membership that grants you unlimited access to a primary care physician. Here are some of the perks:

  • Same-day appointments
  • 24/7 doctor availability by phone or text
  • Discounts on specialist visits, medication, lab work, and Xrays
  • No deductible
  • Low membership fee – often under $70 per month

The downside? There are coverage limitations so the plan is best suited for everyday care – not major or chronic conditions.

For more information and to see if there is a participating provider near you, visit the Direct Primary Care Coalition.

Supplemental Coverage

Supplemental coverage can augment an insurance plan — or it can help reduce your liability if a medical event occurs while you’re uninsured. Though there are lots of supplemental coverage products on the market (health-shares and direct primary care plans fall under this category, too), let’s look at two options:

AFLAC

That cute (yet annoying) ducky you see on TV peddles all sorts of supplemental coverage. Depending on your needs, you can apply for: accident, dental, cancer, life, short-term disability, vision, hospital, and critical illness plans. (Pricing varies by plan.)

When you experience a qualifying event (defined by the plan), you submit a claim to the company. Then, if approved, you’ll receive a pre-determined amount of cash depending on what medical care you received.

Freelancers Benefits

For a flat $19.99 per month, you’ll get:

  • 24/7 access to a network of physicians via telemedicine (phone or app) – NO copay!
  • free or deeply discounted prescriptions (some medications excluded)

While the plan won’t help you with a major medical emergency, it makes dealing with routine illnesses easy and affordable. Because it’s telemedicine, you can see a board-certified physician in your state without ever leaving your house.

Catastrophic Plan

Under 30 and don’t visit the doctor often?

A catastrophic plan may be right for you. Intended to prevent economic ruin due to a medical emergency, the plan features a low premium with a high deductible.

Since the deductible is so high, you’ll likely have to open your wallet for routine care. However, the plan does provide certain preventative services (like medical screenings) for free. And it covers 3+ primary care visits annually — even if you haven’t met your deductible.

Self-Insure

Don’t like any of these options?

You can self-insure. However, it’s risky because you’re on the hook for any and all medical bills you incur. But, if you’re relatively healthy and don’t mind rolling the dice, you could save money going this route.

My plea to you if you self-insure: Keep tabs on your health. Cough up the money for an annual physical – including lab work. Early detection of an issue is key for your longevity — and your bottom line. And, if you’re experiencing a true medical emergency, finances be damned! Just get the care you need, OK?

Full disclosure: I self-insure. Even though it’s worked for me, I wouldn’t necessarily recommend it to you. You have to be very comfortable with risk.

Replacing Other Benefits

You might be wondering — what about the other employer-sponsored coverage I’m losing? (Think vision, dental, life, and disability plans.)

Discussing how to replace those benefits could be a blog post in itself (and might be at some point!).

But, to get you started, here are some resources to check out:

  • Freelancer’s Union (you may be able to get health insurance through here, too, but availability seems limited)
  • Policygenius (an insurance marketplace where you can easily get quotes from multiple insurers at once)

Final Thoughts on Health Care for Freelancers

Figuring out how to cover all of the expenses associated with health care for freelancers is a nuanced and personal decision. Before making any commitments:

  • understand your risk tolerance and your medical care needs
  • set a budget for the expense – and account for it in your overall budget
  • shop around for the best rate and coverage
  • be sure to read all of the fine print (every plan has its own rules)
  • chat with other freelancers to get honest opinions about what works for them

While this blog post gives you quite a few options to consider when it comes to health care for freelancers, it’s not an exhaustive list. Nor is it a recommendation for or endorsement of any particular choice.

However, I’m here to help in any way I can. So, please let me know if you have any questions or would like to see an option added to the post.

Learn by listening? Download this podcast episode about health care options for freelancers.

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