The Freelancer’s Health Insurance Guide
Freelance life is pretty great, but there’s one employee-life perk we haven’t managed to get over: employer-sponsored health insurance. Bummer. This means you must purchase an individual health plan to protect against unexpected (and very expensive) medical bills, and to avoid paying a government fine ($695 in 2016 for individuals).
Your health plan has to fit your lifestyle, but it also needs to be extremely cost-effective and easy to choose. Use these six tips to get a head start on finding your best plan. Remember, you must enroll in a health plan by Dec. 15th for a Jan. 1st start date. (The 2016 open enrollment period ends January 31st, 2016, so make sure to get your health insurance shopping done now!)
#1: Learn the basics
Don’t know how health insurance works? Not sure what “deductible” or “coinsurance” mean? You’re definitely not alone – that’s why guides like this exist. In just a few minutes, you’ll be an expert on basic health insurance features, how doctor networks function, and more technicalities that will help you make smart choices.
#2: Know your income, and cash in on discounts
Your income probably isn’t fixed, so it might be take some effort to figure out how much you make in a year — but that’s worth it, because correctly reporting your income when you apply for health insurance can qualify you for some serious government discounts. These can make your monthly premium significantly cheaper, perhaps as low as $10/month.
#3: Evaluate your risk-profile
Risk is a crux of the health insurance decision game, especially if you’re a healthy person. You’ve probably noticed your monthly payments will be far less with a high-deductible plan, but look at that deductible (how much you pay before insurance kicks in), and honestly ask yourself: Am I OK paying that amount if I need an unexpected, minor medical procedure? Remember: it doesn’t take much to max out a $7,000 deductible — that’s about the price of a broken nose.
#4: Consider a Health Savings Account (HSA)
An HSA is a savings account that can only be used for certain health-related expenses, and therefore isn’t taxable. Consider this: If you’re an average individual paying about 25% of your income in taxes, you can effectively stash away $100 in your HSA while only reducing your take-home pay by $75. That’s like getting $25 for free. HSAs are a very effective way to save (tax-free) for future medical expenses.
#5: Let your health expenses work for you at tax time
Being self-employed, there are many different expenses you can deduct at tax time. Doing this correctly can actually save you thousands of dollars. These deductions include your health insurance premiums (monthly payments) and sometimes even your other medical costs.
#6: Comparison shop. Do the math.
The last trick to finding your best plan is to understand your medical care usage and associated costs. If you don’t see the doctor often, a more expensive plan with lots of benefits may just waste your money.
However, if you take prescriptions and see specialists, the cheapest plan may cost you more in the long run. Not a numbers person? Let Stride do the math for you; it will just take them a few seconds, and I’ve heard they’re into that stuff anyway.
Matt is a freelance writer/photographer managing content and community at Stride Health. He joined the Stride team because he believes it's the best healthcare resource for independent workers. Matt has been documenting his experiences on the road at 63mph.com.
This post is sponsored by Stride Health.
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