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How do I get healthcare as an independent contractor?

If you work for a business as a 1099 consultant/contractor, then that company in the United States (US) is not legally required to offer you healthcare coverage. If you own your own business (such as a LLC or as an INC) and do not have employees, then you also qualify as a 1099 consultant/contractor for the purposes of this post on healthcare insurance. What’s the difference between being an employee and being a 1099 consultant contractor? Read this.

Healthcare laws in the US have changed in the past few years and are likely to continue to change. Healthcare laws and availability of different types of healthcare plans/options also differ between states. Make sure you check out the most updated information for your state and your situation at Healthcare.gov.

When can I get health insurance?

You can only sign up for health insurance during a specified time every year called “Open Enrollment” unless you have a “qualifying life event” such as you got married, adopted a baby or had a baby, got divorced, if someone whose health insurance covered you died, some specific changes in residence, losing health insurance (such as losing a job that provided health insurance), becoming a US citizen or leaving jail. Open Enrollment dates may change slightly every year but is generally held in the November/December time period.

How do I pay for health insurance?

Health insurance can be expensive, but it is an important insurance to have to protect your health and that of your loved ones. Even if you are healthy, you should have insurance not just for regular check-ups so that you stay healthy but in case of a catastrophic event such as an injury.

If your medical expenses (including insurance costs) exceed 10% of your income, then you can deduct that cost on your taxes. Read more about general tax information here. Please note, if you make more than what you reported to the government, you may have to pay back some or all of the premium tax credits. If you make less, you could get additional premium tax credits when you file your taxes.

Some important healthcare insurance terms:

  • A “deductible” is the amount you have to pay yourself before insurance will start paying for your medical expenses.
  • The “out-of-pocket maximum” is the amount when the plan says that you’ve paid enough of your own money for the year, that you no longer have a copay, coinsurance, or anything else. Some plans have these, some plans don’t.
  • A “premium” is what you pay per month for your health insurance.

When picking your plan, consider these cost-related issues:

  • Do NOT pick your plan based on premium alone. Many low premium plans will not provide adequate coverage.
  • Multiply the difference in the premium prices by 12 (because it’s for 12 months). If that number is lower than the difference in annual deductible, pick the higher premium. It’s a little more each month, but much cheaper in the long run.
  • Check if there is more than one deductible for different types of medical care.
  • If your deductible is more than you have to spare in your savings account, do not get that plan. You will then either be throwing away money on something that you can’t use because you can’t afford to get past the deductible or be already broke from medical bills.

How to pick the right health insurance?

As a 1099 consultant/contractor, you can access the Individual Marketplace, the contents of which differs depending on the state where you are a legal resident because different states have different laws. All plans in the Individual Marketplace which you can buy for yourself and/or to cover your family are prohibited from excluding treatment based on pre-existing conditions.

You can review these plans yourself online or you can work with an agent or broker in your area. Agents and brokers are experts in health insurance and can help you find the coverage you need. Many of these work at no cost to you but confirm that before you start working with someone. Find an agent in your area at this link.

In addition to cost-related considerations listed above that are important to review before picking a plan, also consider:

  • What is available to you through the Marketplace, even if you have another job or situation such as a spouse or parent that provides other health insurance options.
  • Only use plans that allow coverage (it won’t be full, but some) of out-of-network providers to avoid potentially paying huge bills if you end up needing to go to the hospital and get sent to one that is out of network.
  • Do not assume you will not use your insurance. Illness and injury can happen to anyone and you can’t always prevent/fight through it.

 

Researching healthcare and then budgeting to pay for it can seem overwhelming along with all the other things you need to do for yourself as a 1099 consultant/contractor. Do your research and work with an agent or broker who can make this process easier for you.  Don’t not get coverage because it’s “too hard,” an injury can happen at any time!

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