Self-employed people have to cover all expenses that many people take for granted. The biggest of which is health insurance. So how much is self-employed health insurance?
Health insurance depends on many different things and the cost can be different from person to person. But the biggest factors on self-employed health insurance costs are who you buy it from and what level of coverage you’re looking for. In this article, we’ll walk through everything that makes up the total price you pay for insurance before getting into some of the most popular plans out there for self-employed workers.
Health insurance is one of the biggest expenses that you will face as a self-employed worker. The prices will vary drastically from person to person, but an average self-employed person can expect to pay anywhere from $335/month up to $1,618/month depending on the company and the level of coverage.
All the information in this article comes directly from myself searching for self-employed health insurance. During my search, I learned about everything that goes into the cost for insurance, which is more than just the monthly premium! The plan details and costs that you find here come directly from the companies themselves.
What Else Goes Into Health Insurance Price Besides the Monthly Premium?
Whenever we think about how much insurance costs, we are typically focusing on the monthly insurance premium. If you were to ask a friend or coworker what they pay for insurance, that’s almost always the number that you’ll hear. But that isn’t the entire story when it comes to health insurance costs.
Let’s take a look at a few other things that will affect how much self-employed health insurance will truly cost you before we get into specific plans.
The deductible on your health insurance plan is the amount that you have to pay for covered healthcare services before the insurance kicks in and starts covering a portion of the costs for you. If, for example, you have a $2,000 deductible, you’ll pay the first $2,000 worth of health services for the year and then the insurance will start covering some of the cost after that.
Copays & Coinsurance
Copays and coinsurance are often misunderstood and interchanged with one another, but they are not the same things. In the end, both of these aspects of your insurance will greatly affect how much you have to pay in total using your specific plan.
Coinsurance is the amount — usually a percentage — that you pay alongside what the insurance covers after you’ve met the aforementioned deductible. For example your plan might cover 75% of a certain service and you’d be responsible for the other 25%.
A copay, while similar, is a fixed amount that you must pay for certain health services. This could be something like $50 per specialist visit, for example. Copays are usually required to be paid before and after you’ve met the deductible.
How Much is Self Employed Health Insurance?
Health insurance prices will depend on several factors and will be different for everyone. But the two most important factors on the price of self-employed health insurance is the company you buy it from and the level of coverage you desire. Let’s take a look at some of the different plans offered by a couple of the biggest names in self-employed health insurance.
For the sake of this comparison, we will be looking at the average cost for a reasonably healthy self-employed adult (30 year old male) looking to purchase individual health insurance for themselves. From this, you can extrapolate as needed to get a quick estimate for what you can expect to pay based on coverage and company.
Individual health plans from Cigna are available for you to buy from your state’s health insurance marketplace and range from Bronze to Gold on the marketplace’s metal tiers. These plans are available to any self-employed worker that qualifies to use the health insurance marketplace. Let’s take a look at three different options and how much they cost on average:
Bronze: Cigna Connect 7150
- Monthly Premium: $335
- Deductible: $7,150
- Out-of-Pocket Maximum: $8,550
The Bronze tier of marketplace insurance plans are just a step above what’s considered “catastrophic” coverage. These tiers offer maximum value for people that do not intend on using the insurance much, which is why the deductible is so high.
With this plan, after you meet the deductible you can expect to start paying about 50% coinsurance on just about every service that they cover. So if you meet the deductible, you can expect to hit the out-of-pocket maximum soon after.
Silver: Cigna Connect 2900
- Monthly Premium: $532
- Deductible: $2,900
- Out-of-Pocket Maximum: $8,550
Compared to the Bronze plan listed about, the Cigna Connect 2900 is a Silver-tiered plan that offers much more coverage. But the premium sticker shock might be a tough pill to swallow — nearly $200 more per month.
But as you can see, the deductible has dropped considerably, all the way down to $2,900. This decrease of over $4,200 will more than make up for the increased monthly premium if you know you are going to hit the deductible over the course of the year. The coinsurance requirements for this plan are also lower, usually between 25-40%.
Gold: Cigna Connect 1000
- Monthly Premium: $665
- Deductible: $1,000
- Out-of-Pocket Maximum: $7,000
The monthly premium for this Gold-tiered plan is certainly high at $665/month, but look how much lower the deductible is — just $1,000. Gold-tiered plans like this one offer great value for anyone that knows they will be using their insurance regularly and knows they’ll hit the deducible.
Once you reach your $1,000 deductible, this plan will start covering the majority of your healthcare costs. Primary care and specialist visits have fixed copays of $20 and $60, respectively. And other than that, you’ll only need to pay 25% coinsurance on most services.
On the flip side of Cigna (who is known for their affordable rates) we have UnitedHealthcare (UHC). While UHC certainly offers some of the best coverage in the country with one of the largest arrays of in-network providers, you will be paying for that convenience. UHC offers individual health insurance plans for self-employed workers through their state’s health insurance marketplace. The five levels of coverage that they offer and the differences in price are outlined below.
UHC Compass Catastrophic
- Monthly Premium: $483
- Deductible: $8,150
- Out-of-Pocket Maximum: $8,150
This Catastrophic-tiered plan is exactly what it sounds like — just a plan to cover anything catastrophic that happens. The high deductible and out-of-pocket maximums are the same, meaning that once you hit the $8,150 deductible, you will not have to pay anything else out of pocket for the year. This means a 0% coinsurance and $0 copays after you reach the deductible.
UHC Compass Bronze
- Monthly Premium: $850
- Deductible: $5,500
- Out-of-Pocket Maximum: $6,500
Even though this is Bronze-tiered coverage, you can start to see how expensive insurance from UHC can be — $850 per month! With the Compass Bronze plan, you have a $5,500 deductible before you have to start paying 50% coinsurance on nearly everything up until you hit the $6,500 annual limit.
UHC Compass Silver
- Monthly Premium: $1,057
- Deductible: $1,300
- Out-of-Pocket Maximum: $7,900
For over $1,000 per month for the premium, you might expect some quality coverage. And that’s exactly what the Compass Silver plan offers. After reaching the very low $1,300 deductible, you will only have to pay copay amounts up until the out-of-pocket maximum for the most part.
UHC Compass Gold
- Monthly Premium: $1,329
- Deductible: $600
- Out-of-Pocket Maximum: $4,000
As the premiums are getting higher and higher you can see the deductible getting lower and lower. After hitting this $600 deductible, you will only have to pay very small copays — $10 to $150 for most things — until the $4,000 annual maximum. After that, you’ll owe nothing other than the premium.
UHC Compass Platinum
- Monthly Premium: $1,618
- Deductible: $0
- Out-of-Pocket Maximum: $2,000
The best option you can get from UHC is undoubtedly the Compass Platinum plan. Although it’s expensive monthly, there is a $0 deductible and $2,000 out-of-pocket maximum. That means that all things told, the most you could spend in a year on covered services no matter what is $21,416. So if you end up having a lot of medical bills during the year, this could save you a substantial amount of money in the long run.
How Does Age Affect Self Employed Health Insurance Cost?
One last thing that will have a substantial effect on the monthly cost of your health insurance as a self-employed person is age. You may have noticed that for the prices found above, we used a male that’s 30 years old. We had to specify that because of how much age can potentially alter the monthly premiums that you have to pay.
The rule of thumb is that as you get older, your insurance premiums go up. It’s also more of an exponential growth the older you get rather than a linear one. To understand how age can affect the price, let’s take a look at the table below. This table considers our 30-year old applicant as the standard price.
All the ages that follow show a percentage increase, which is the expected increase in price, on average, just due to age when compared to the standard price for the 30-year old.
As you can see, the older you get, the more you can expect to pay on insurance. For example, let’s say our standard 30-year old is paying $400 per month for his self-employed health insurance. Someone who is 50 years old can expect to pay roughly 57% more for the same plan. This means their premium would be closer to $628 per month.
So it’s important to recognize how big of an effect age has on the price you will pay. From this age-insurance table and the above plan comparisons, you should have everything you need to get an idea of what you can expect to pay for self-employed health insurance.