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What Is Self Employed Health Insurance?

What Is Self Employed Health Insurance? | Very Good Coverage

Being self-employed is great, but you’re responsible for everything on your own — including getting health insurance. So what exactly is self-employed health insurance?

Being your own boss when you’re self-employed is one of the best things imaginable in the workforce. But having to handle all of the responsibilities of both employer and employee can be daunting. One of the big-ticket items is health insurance. How do you get it? How does it work? And most importantly, what is self-employed health insurance? In this article, you’ll find out everything you need to know about self-employed health insurance, so keep reading!

Self-employed health insurance is a healthcare plan for someone who is self-employed. These plans are usually found in the healthcare marketplace, through spousal coverage, or with private coverage. If you qualify as self-employed, you’re granted a bevy of benefits for self-employed health insurance, including tax deductions and plan flexibility.

Everything in this article is compiled from years of research as well as hands-on experience. Being self-employed myself, I’ve had to go through all of this research myself when I was just starting. What a stressful time that was! To make it easier for you, we’ve come up with the answers to all of your questions below about self-employed health insurance!

What is Self Employed Health Insurance?

As the name implies, self-employed health insurance is simply insurance for people that are self-employed. Whether you’re an independent contractor, a freelancer, or you run a small business with no other employees, you are considered self-employed. But we’ll get more into what qualifies as being self-employed a bit later. If you’ve ever had a job before that you got your health insurance through, you might be wondering how self-employed health insurance is any different.

The biggest difference between self-employed health insurance and the typical health insurance that the vast majority of people have is that self-employed people do not get an employer subsidy on their insurance premiums. Employers will usually cover a portion of their employees’ health insurance premium as one of the benefits of working for them. This means that health insurance for self-employed people will typically be much more expensive than what people that get insurance through their work have to pay.

There are a few other differences as well between regular health insurance and self-employed health insurance. These mainly include things like where you get it, how you pay for it, and especially what options you have available.

So let’s take a quick look at a few of the main options that self-employed people have when it comes to health insurance. The three main options include:

  • Spousal Coverage  — Tagging yourself onto your spouse’s employer-subsidized health insurance plan can be the easiest and most affordable way for a self-employed person to get health insurance.
  • Health Insurance Marketplace  — Following the Affordable Care Act, the health insurance marketplace was created as a way to ensure everyone in the US had access to healthcare, which of course includes those who are self-employed.
  • Private Health Insurance  — Always an option for anyone, private health insurance for self-employed people just means going out to any of the major healthcare companies out there and finding a plan that best suits them.

Who Qualifies for Self Employed Health Insurance?

Being self-employed is one of the most freeing things that a person can do. Having the ability to work for yourself and earn your own income is a blessing and something that all self-employed people should be proud of themselves for. But there isn’t really a clear-cut definition of what exactly counts as self-employed.

So for the purpose of this discussion to see who qualifies as self-employed, we’ll be using the requirements set forth by the IRS. Per the IRS, a person can be considered self-employed if they meet at least one of the following conditions:

  • Someone who works a trade or business as a sole-proprietor or independent contractor. This can include almost endless possibilities such as freelancing, consultant work, contract employee, and more. As well as anyone that owns a limited liability corporation (LLC).
  • Someone that is in business for themselves even if it’s just part-time. If someone is in business for themselves, that means they are earning income for themselves and have no other employees.
  • The caveat to the “no other employees” is someone that is a member of a partnership of any of the above-listed requirements.

So if you fall into any of these camps, then you are considered self-employed and therefore will qualify for self-employed health insurance!

What Does Self Employed Health Insurance Cost?

As you just read about above, there are quite a few different options when it comes to self-employed health insurance. And with that in mind, it’s tough to come up with an accurate cost for what self-employed healthcare will cost. It will depend entirely on each person and their own specific situations. But there are a few things to keep in mind as well as general rules of thumb to help give you an idea.

Health insurance plans are largely based on the following things: insurance company, desired coverage, number of people on the plan, deductible, maximum out-of-pocket costs, current health conditions, age, and where you live. If you’re buying a high-quality plan for your entire family in San Francisco, you can expect to pay significantly more than a single person buying basic coverage in Mississippi, for example.

To give you an idea, you can expect to pay anywhere from just a couple hundred dollars per month in premiums up to over a thousand dollars. It all depends on the above criteria. The best thing to do is have an idea in mind for what you’re looking to get out of a plan and then look around and get some prices.

I Just Lost my Job and Need Self-Employed Health Insurance

For one reason or another, you were laid off or decided to leave your job. It happens to the best of us. But you’ve had a business idea in mind and you’re running with it. Great, welcome to being self-employed!

One of the issues you’re facing now is the lack of health insurance. You had great coverage at your old job, but that’s gone now and you fear that you’ve missed the enrollment period for the plans in the health insurance marketplace (which runs from November 1 - December 15). At this point, you have a couple of different options to make sure you have coverage as soon as possible.

To start, if you lost your job then you will still be able to enroll in the healthcare marketplace insurance plans because that counts as a qualifying life event in the eyes of the government — along with getting married, getting divorced, or having a baby. These types of life events enable you to enroll in a health plan even though it’s outside of the typical enrollment period stated above. So if you’re in this boat and want to look for a plan in the marketplace, it’s not a problem!

Another option you have — and one that is far less common than it used to be — is to use COBRA coverage to roll your previous health insurance from your job into your own plan. This works by converting the employer-sponsored plan that you had through work into an individual plan that self-employed people can use. Same quality coverage that you had before. Sounds great, right?

The issue with this is that your old employer is no longer going to be paying some of the monthly premium for you, and you will be charged the full premium amount. That said, COBRA coverage is typically very expensive and you’ll have better options finding a quality health plan in the health insurance marketplace or even the private healthcare industry.

What are the Pros and Cons of Self Employed Health Insurance?

Maybe you’re already self-employed and looking to get health insurance. Or perhaps you’re on the fence about leaving a secure job with good benefits to start your own thing but you’re afraid of losing your employer-sponsored insurance. No matter where you are in relation to self-employed health insurance there are pros and cons of it just like all other things in life. Let’s take a look at a few advantages and disadvantages of self-employed health insurance.


  • Flexibility — You have all the options in the world to sift through rather than being limited to the plans supported by your employer. Of course, you could always opt-out of an employer-sponsored plan, but then you’d miss out on the subsidized premiums.
  • Tailored to you — Going along with the aforementioned flexibility, you can find a plan that works perfectly for you and your family. Whether you need coverage for the whole family or just a barebones HDHP for yourself, you can get the best coverage for your needs.
  • Tax-deductible — In most cases, self-employed health insurance premiums are tax-deductible. This is usually true regardless of if you itemize your expenses or not when it’s tax time.


  • Typically more expensive — Since you don’t get the employer-subsidized premiums, it will typically be quite a bit more expensive to have self-employed health insurance compared to an employer-sponsored plan.
  • May have to wait for open enrollment — If you are self-employed and just decide to get insurance, you might have to wait for open enrollment before you can join. This is unlike a regular job where you can enroll at any time of the year once you gain employment.


Greg McKnight

Read more about Greg McKnight

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