The gig economy has led to many advancements and breakthroughs in how the workforce operates. Freelance work allows workers to take ownership of their work, and demand a premium for their services, without being subjected to the whims of a company. But freelance work also comes with some extra headaches, like having to figure out your own retirement plan, how to schedule a workday and schedule, and choosing your own health insurance plan. There are a lot of insurance plans out there for freelancers, and choosing one can feel daunting, so here are a few tips to help you select the perfect insurance plan as a freelance worker.
Understand Your Costs
There are a lot of costs that come along with an insurance plan. From premiums to deductibles and other fees and charges, it can seem like each plan is designed as a never ending web of expenses that you need to stay on top of. It doesn’t have to be this complicated. Simply keep a check on deductibles and monthly costs for the insurance plans you are comparing. A deductible is the amount that you are expected to cover for a doctor’s visit or health care costs before your insurance takes over the rest. Your monthly fees are what you pay every month to maintain coverage. These are the major costs that you have on your plan and should be the uber one determinants on cost for you and your family.
Use an ACA Exchange
Thanks to the Affordable Care Act passed in the U.S. during the Obama years, there are now ACA exchanges in every state that help you compare individual and family health care plans that comply with the coverage rules and regulations of the Affordable Care Act. Using an ACA exchange will help you make sure that your plan that you select for yourself and/or your family is fully ACA compliant so as to avoid tax issues later in the year. ACA exchanges allow you to see and compare the plans and providers in your state offering individual plans so you always know what is available, what it covers, and what the costs are to you.
Consider a High-Deductible Plan
As discussed above, the two aspects of cost associated with a healthcare plan are the deductible and the monthly payment. The deductible is the cost that you are expected to pay out of pocket before your insurance comes in and helps cover the rest of the cost of your healthcare costs. There are plans that have high deductibles, aptly called high-deductible plans. These are a good idea to consider if you are a healthy, young person who does not have many or any prescription medication needs and who does not expect to incur large healthcare costs. These plans charge a significantly lower premium in exchange for asking for a much higher deductible for healthcare coverage that is not preventative in nature. These plans can save tons of money for people who do not have large health care costs.
Make Sure You Have Specialist Coverage
Every plan is different in what it covers and what it does not cover. One of the most common differences in coverage across health care plans is what specialist care they cover and what they do not. Healthcare plans should provide specialized care such as dermatology services. You should also prioritize plans that cover mental health, chiropractic services, and any other specialist service that you might need, so that you don’t end up in the position of needing specialist care that is not covered by your health insurance plan. You can find all of this information in the plan breakdowns that are available online, just make sure to do your research and find plans that cover what you need.
Make Sure to Get Your Subsidies
The Affordable Care Act mandates that most Americans get and maintain active health insurance plans, but the Affordable Care Act also offers tax credits for individuals who provide their own insurance, like freelancers. So, while the premiums for many plans can cost a few hundred dollars a month, the average American pays only $106 per month after the tax credits apply. Any individual or family that earns less than 400% of the poverty line ($47,520 or $97,200 respectively) qualifies for the subsidies If you are a freelancer that falls within this category, then you should make sure that you get your subsidies from purchasing a plan that is on the exchanges, it could save you thousands of dollars per year.
Don’t Skimp on a Short-Term Healthcare Plan
There are plans known as short-term healthcare plans that are available from insurers not offered on the government or state exchanges that offer ACA compliant plans. These plans offer significantly lower premiums than traditional longer term insurance plans. But these short-term plans have terrible drawbacks. First, they are not ACA compliant, so they can discriminate against those with preexisting conditions, or not cover preventive care or prescription drugs, and cap your total benefits. These plans also do not legally count as insurance, meaning that you will still be subject to the tax penalty for not having insurance. Whatever savings these plans seem to offer, they will end up costing you much more money in the long run.
Consider Bronze Plans or Catastrophic Plans
The usual tax credit applications for insurance coverage are calculated based on the cost of a silver plan – the middle tier of plans available through the exchanges. But there are plans that cover less – sometimes a lot less – for much lower monthly premiums. The skimpiest of plans are called catastrophic plans, that are great for young people (you must be 30 or younger to qualify) who are healthy, as it covers a few primary care visits and preventive services, and not much else. This leaves you a huge deductible, but if you aren’t expecting to have major healthcare costs, this can save you money. There are also bronze plans, which are a step above catastrophic plans, and cover around 60% of costs. Both of these plans still offer tax credits, just not as many as a silver plan. These plans can save you a ton of money if you are young and healthy.
Make Sure You Hit the Deadline
One of the drawbacks of the ACA is that you can now only enroll in healthcare plans through the exchange during a limited window of time. This is meant to discourage people from waiting to buy health insurance only once they have gotten sick. This means that you typically only have a few months of the year , from November through the end of January, to sign up. Make sure you don’t miss the deadline, or you can be hit with major tax penalties in April. There are exceptions for “qualifying life events” that can qualify you to sign up at other times during the year, but don’t bank on these exceptions.
Getting a health insurance plan as a freelancer is far from easy. But thanks to changes to the health insurance market in recent years, it has helped to centralize some of the decisions. Follow these eight pieces of advice, and you will be prepared to choose the best insurance plan for you.
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