by Sydney Frazer from Stride Health
Health insurance is just one of the things you have to think about as a freelancer. While full-time employees generally have their health insurance plan picked for them, people who work for themselves are oftentimes left in charge of figuring out health insurance without much guidance. From comparing plans to qualifying for subsidies, these can be difficult waters to navigate. However, following a few simple tips can make this process much easier and understandable. Consider these five tips to make life a bit simpler for yourself and help your family feel more secure.
1. Know your options:
People who work for themselves can find health insurance through a few different sources, including COBRA, the government marketplaces, or their spouse’s plan. However, with the introduction of the Affordable Care Act in 2010, most people who need individual and family plans choose to buy it through the government marketplaces.
The Affordable Care Act (ACA), more commonly known as Obamacare, was enacted to help all Americans get access to affordable health insurance. The ACA requires health insurance plans to be sold on the health insurance marketplaces, also known as exchanges. States can choose to set up their own marketplace or take part in the federal marketplace. Private insurance carriers then sell their plans on the marketplaces and are mandated to cover certain benefits by the ACA. In order to qualify for a subsidy that will decrease your monthly premium, you are required to buy insurance through the exchanges. All of the exchanges, both federal and state, allow you to compare health plans and determine if you qualify for a subsidy. If you are interested in comparing plans that are on the exchanges versus plans that aren’t or receiving guidance throughout the application process, you might want to consider using a broker like Stride. You can find more on that below.
2. Understand how health insurance can be more affordable:
The ACA provides affordable coverage to anyone who isn’t offered health insurance from another source like an employer, their parents, Medicaid, or Veterans Affairs. If you are a middle-income household, you can apply for a government subsidy to help pay for your health coverage. Subsidies that exceed your premium are credited back to you on your tax return at the end of the year.
Subsidy eligibility is based on four criteria:
Income - Your modified adjusted gross income (MAGI) must be less than 400 percent of the federal poverty level to qualify for at least one subsidy. What is MAGI? MAGI is your income minus expenses and personal deductions, plus non-taxable Social Security benefits, tax-exempt interest, and foreign income.
Family size - This number includes yourself, your spouse if you are married, and anyone you plan to claim as a tax dependent in 2019. Even if your dependents don’t need coverage, still include them in this number.
Filing status - If you are married, but filing separately, you will not be eligible for a subsidy. In order to qualify for a subsidy, you must file jointly if you are married.
Citizenship status - Subsidies are available to United States citizens and immigrants living in the U.S. legally.
There are two different type of subsidies you can qualify for:
Premium Tax Credit - This lowers the amount you pay for your monthly premium. Everyone with an income between the Federal Poverty Line (FPL) and fours times the FPL qualifies for this subsidy!
Cost-Sharing Reduction (CSR) - This decreases the amount you have to pay for deductibles, copayments, and coinsurance. If you qualify for the cost-sharing reduction, you automatically qualify for the premium tax credit. Qualifying for a CSR plan differs by state. For instance, in California those between 138 percent and 250 percent of the FPL qualify for a CSR plan.
Subsidies might sound confusing, but taking the time to understand them will pay off in the long run, literally. In fact, the average American who received the Premium Tax Credit in 2016 had their health insurance premium reduced by 73 percent.
3. Use a broker:
Navigating the exchanges can be confusing and it can be incredibly time-consuming to compare all the different options available to you. By working with broker, you can get expert, unbiased information that will allow you to make an educated decision. Brokers don’t work for insurance carriers; this means they are on your side. Furthermore, most brokers are free, are familiar with a wide range of carriers, understand pricing models, and can help you find a plan that fits your needs.
Many people worry that they will end up paying more for a plan if they work with a broker instead of buying directly from the exchanges. However, this is a common misconception. In reality, plan prices brokers give you are the exact same as the prices on the exchanges. In fact, brokers oftentimes help you save money by guiding you through estimating your income so you receive the subsidies you deserve.
Working with a broker helps you beyond the application process. Brokers are able to get issues solved with your carrier throughout the entire life of your plan. As issues come up throughout the year, whether it be a billing discrepancy or a delayed reimbursement, brokers work with carriers on your behalf to get them resolved. Not only does this save you time, but it also gives you peace of mind knowing someone who understands the intricacies of health insurance is advocating for you. Additionally, brokers can help you find in-network doctors and answer questions about your benefits throughout the year.
4. Familiarize yourself with the must-know terms:
Health insurance is filled with jargon. Understanding just a few of the key terms can make navigating these waters much easier.
Premium - the amount you pay each month to have your plan regardless of whether you “use” it or not
Deductible - the amount you pay for health care before your insurance kicks in; this is in addition to your premium
Copayment - the flat-fee you pay for every treatment
Coinsurance - the percentage of the bill you have to pay; you start paying coinsurance after you have met your deductible
Metal tiers - the different levels of coverage; each tier (Bronze, Silver, Gold, Platinum) covers a different percentage of medical expenses
5. Know your deadlines:
You can’t just buy health insurance whenever you want to. Purchasing health insurance is limited to a specific window, which is known as Open Enrollment Period. If you live in a state that operates on the federal exchange, Open Enrollment runs from November 1 through December 15. However, if you live in a state that operates its own exchange, these dates might vary. You can find those dates listed on your state exchange website.
The only exception to Open Enrollment period is if you have a qualifying event. Qualifying events, which range from turning 26 to losing job-based coverage, qualify you for Special Enrollment Period. Special Enrollment simply means that you can purchase health insurance anytime outside of Open Enrollment.
Health insurance is one of the most important purchase decisions you will make as a freelancer. Not only does it help guarantee the health and wellbeing of you and your family, it also helps build a sense of economic security. By following the five tips outlined here, you are well on your way towards making an informed decision that will benefit both you and your family.