Employer-sponsored health insurance is the most common type of coverage in the U.S.[0] But if you’re self-employed, you likely need to obtain your own health insurance, unless you’re offered coverage by your spouse’s employer (or a parent’s health plan, if you’re under 26).
This is true whether you’re a sole proprietor, freelancer, or an independent contractor such as a driver for a service like Uber, Uber Eats, or Lyft.[1]
If you’re self-employed, your coverage options might include ACA Marketplace plans, COBRA, or Medicaid. The best choice will depend on what’s available to you and whether you’re between jobs or planning to be self-employed long-term.
An ACA Marketplace Plan
The Affordable Care Act (ACA) made it easier for self-employed people to obtain comprehensive health insurance, and about a quarter of all Marketplace enrollees are self-employed.[2]
Here’s what you need to know:
- Essential health benefits: All plans sold in the individual health insurance market will cover the ACA’s 10 essential health benefits (EHBs). So the coverage is comprehensive.
- Marketplace subsidies: Depending on your income, you may qualify for advance premium tax credits (subsidies) that will reduce your monthly premiums. You have to enroll through the Marketplace in your state to qualify for subsidies.
- Medical history doesn’t matter: In the individual market, your medical history won’t affect your premiums, eligibility for coverage, or the benefits you receive.
- Limited enrollment periods: You can sign up for individual-market coverage during the annual open enrollment period, which runs from 1 to Jan. 15 in most states. You may also be able to enroll due to a qualifying life event, such as losing employer-sponsored health coverage, which triggers a special enrollment period.
Coverage under your spouse’s plan
If your spouse’s employer offers health benefits, they likely allow spouses to enroll as well.[3] Enrolling in your spouse’s employer-sponsored plan might be a good option for you. Here’s what you need to keep in mind:
- Premiums and coverage details: Your spouse’s employer may or may not subsidize the cost of adding a spouse to the plan. And the cost will also depend on the specific benefits that the employer offers. You’ll want to know the premium cost and coverage details ahead of time, so that you can compare it with other options.
- Enrollment periods: You can join the plan during the open enrollment period that your spouse’s employer offers (dates vary by employer), or during a special enrollment period triggered by a qualifying life event.[4]
- Special enrollment timing: If you lose employer-sponsored coverage, you’ll have a 30-day special enrollment period to enroll in your spouse’s plan.[5]
COBRA
COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) is federal legislation that allows individuals who work for an employer group of 20 or more employees to continue to purchase their group health insurance coverage for up to 18 months if they lose their job or their employer-sponsored coverage otherwise ends. (Coverage can continue for up to 29 or 36 months in some situations.) If you’re losing employer-sponsored health insurance and the plan is subject to COBRA, you’ll have the option to keep your group coverage for up to 18, 29, or 36 months, depending on the circumstances.
Some factors to consider:
- Continuity of coverage: If you’ve already spent some money during the calendar year on deductibles, copays, etc. choosing COBRA will prevent you from having to start over mid-year with a new plan’s deductible and out-of-pocket maximum.
- Premium costs: You’ll keep the same coverage, but your employer will no longer be paying part of the cost. So you’ll have to pay the premium you already paid plus the amount your employer used to cover on your behalf, as well as a 2% administrative fee.[6] So the premium for your health insurance under COBRA might be a lot more than you were used to paying.
Learn more: Deciding between COBRA and a Marketplace policy
Medicaid
If your income is low enough to qualify for Medicaid, you will be able to obtain free or low-cost health coverage.
- Eligibility: In most states, adults under 65 with household income up to 138% of the federal poverty level can qualify for Medicaid.[7] In 2024, in the continental U.S., that’s $20,782 for a single adult and $43,056 for a household of four.[8]. Even if your household income is above those levels, your kids might qualify for Medicaid or CHIP.[9]
- Enrollment and disenrollment: Medicaid enrollment is available year-round for eligible applicants. If your income increases in the future and makes you ineligible for Medicaid, that will trigger a special enrollment period during which you can enroll in a private plan.
- Estate recovery: If you’re 55 or older, be aware of your state’s Medicaid estate recovery
Short-term health insurance
Short-term health insurance is not a long-term solution for self-employed individuals. But if you’re only facing a short coverage gap before another plan takes effect, here’s what to know:
- Limited duration: Short-term health plans for coverage periods beginning on or after September 1, 2024 are limited to no more than four months in total duration, including renewals.
- Coverage limitations: Short-term plans generally do not cover all of the essential health benefits (EHBs), have caps on how much they’ll pay in benefits, and usually exclude coverage for pre-existing conditions.
How much is health insurance for the self-employed?
The cost will depend on a variety of factors, including your income and the type of coverage.
- If you enroll in Medicaid, you probably won’t have to pay a premium.
- If you enroll in a Marketplace plan, your cost will depend on the plan you select and whether you’re eligible for an income-based premium subsidy. The average premium paid by Marketplace enrollees in 2024 was about $106/month, after subsidies were applied.[10] But the specifics will depend on your circumstances, including where you live, how old you are, and how much you earn.
- If you join your spouse’s employer-sponsored plan, the cost will depend on the plan and whether the employer subsidizes spousal coverage.
- If you choose COBRA, the premium will likely be the full cost of the group coverage (including the amount your employer previously paid), plus an administrative fee of up to 2%. You’ll get a COBRA election notice that explains the details.
- If you opt for short-term health insurance, the policy can cover you for up to a total of four months, including renewals. (Not all plans offer renewal. If they don’t, the duration will be capped at no more than three months.) The cost will depend on the plan you select, your age, gender, and location.
Do self-employed people qualify for premium subsidies?
Your eligibility for a subsidy will depend on your household income, but the vast majority of all Marketplace enrollees qualify for advance premium tax credits (subsidies).[11]
You can use our calculator to understand whether you’re likely eligible for a premium subsidy. If you’re eligible for a subsidy, you will need to enroll via the Marketplace (exchange) in your state to receive it, as subsidies are not available for non-Marketplace plans.
What should I think about when shopping for health insurance?
There are several factors to keep in mind when you’re looking into your health insurance options:
- How much will you have to pay each month for the coverage?
- How much is the total out-of-pocket cost exposure if you have a large claim?
- How much are you likely to spend out-of-pocket in an average year?
- Do you need a plan that has certain medical providers in its network, or are you flexible about seeing new providers?
- If you plan to travel, do the plans you’re considering have provider networks outside your local area? (In an emergency, health plans provide out-of-network coverage,[12] and the No Surprises Act will prevent you from getting a surprise out-of-network bill for emergency care.[13]
- If you take any prescription drugs, you’ll want to make sure the plans you’re considering will cover those drugs. Or you can talk to your doctors about alternative medications.
Learn more:
How can I choose the best health insurance to meet my needs?
Should I use an insurance broker?
If you’re enrolling in health insurance, you can complete the process on your own if you like. But a broker can be a valuable resource, and there is no cost to use a broker – your premiums will be the same either way. If you’re using a broker, be sure to ask them whether they represent all of the insurers that offer coverage in your area, as some brokers do not.
In addition to helping with the plan selection and enrollment process, a broker can also help you after your coverage is in effect. For example, brokers can help with understanding the benefits available to you, and can contact the carrier on your behalf with your prior authorization to assist with difficulties with a claim, prior authorizations, addressing billing errors, etc.
Learn more:
