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Self-Employed Health Insurance Options in California

If you’re self-employed, a considerable financial concern will be finding affordable California self-employed health insurance coverage. Though the cost of health insurance for self-employed workers always seems to be rising, you may be able to deduct 100% of health insurance premiums you pay for yourself, your dependents and your spouse, up to set limits.

Use this guide to help you navigate your options for California health insurance as a self-employed worker or small business owner. We can help you find the affordable health insurance you need to protect your health and the health of your loved ones.

Self-Employed vs. Small Business

Before you can find the best health insurance plan for you, you need to determine whether you need self-employed health insurance coverage or small business health insurance coverage.

Self-Employed Health Insurance

If you are a self-employed worker, you can enroll in high-quality, flexible individual health insurance coverage. You are considered a self-employed individual if you have a business that makes money but does not have employees. Self-employed individuals are often considered independent contractors, consultants or freelancers.

As a self-employed California resident, you can fill out an application for a health plan, which will help you determine whether you are eligible for:

  • Low-cost or free coverage: Completing an application will help you determine whether you are eligible for low-cost or free coverage through Covered California or Medicaid, which will also depend on your household’s size and your income.
  • A premium tax credit: Filling out an application can help you determine whether you qualify for savings like a premium tax credit. What you qualify for will vary based on your household size and income.

While filling out the application, you will need to estimate your net income. Your savings depend on your estimated net self-employment income for the year you are obtaining coverage rather than your income from the previous year.

You can then select from different health care coverage categories. Those include health plans with low premiums that are most useful in worst-case scenarios to health plans with higher premiums and lower out-of-pocket costs if you receive health care services.

Small Business Health Insurance

On the other hand, if your business has an employee other than yourself, you may need small business health insurance. Employees are typically workers whose income is reported on W-2 forms.

When shopping for small business health insurance, you will want to find a plan that fits your budget and your employees’ budgets. You choose what level of coverage is offered and how much you will contribute to their health insurance premiums. You will also select from preferred provider organization (PPO) and health maintenance organization (HMO) plans from various providers.

When you choose small business health insurance, you can offer your employees financial protection and peace of mind in the event of illness or a major accident. You can also control costs by selecting the health plan that best fits your budget and employees’ needs.

Best Health Insurance Options for the Self-Employed

Side hustles and self-employment are on the rise. If you are one of the millions of Americans who are self-employed, you may be concerned about whether you can find affordable, quality health insurance.

Generally, you can sign up for a health plan during open enrollment. This open enrollment period begins Nov. 1 every year and typically ends in December. A qualifying life event may also allow you to enroll in a health insurance plan. Qualifying life events include:

  • Losing previous health insurance
  • Having a child
  • Getting married

Below, we break down how to find the best health insurance for self-employed California workers.

The Cost of Health Insurance for Self-Employed Workers

A few factors can influence the cost of a self-employed health insurance plan that is compliant with the Affordable Care Act, including:

  • Location
  • Age
  • Deductible
  • Tobacco use
  • Income level
  • Plan category
  • Individual versus family plans

Some states have set rules that determine how much each of these factors can affect your monthly premiums. Premiums for tobacco users and older workers can be significantly higher. If you live in an urban area, you may pay more for health insurance than someone who lives in a rural area. But insurance companies cannot charge you more for health insurance based on your medical history, current health status or gender.

A health plan that has a lower premium may be called a high-deductible or catastrophic plan. With this type of plan, you will pay a lower monthly premium. But if you do need health care services, you will pay out-of-pocket for some costs before your insurance begins covering costs. If you are young and in good health, this may be a good option for you.

Other health plans have a higher premium but lower deductibles. If you are older or have a pre-existing condition and know you will need ongoing prescriptions or care from specialists, you may want to consider this type of plan. More coverage may mean you pay less over time.

Coverage Options for Self-Employed Workers

Whether you are working a temporary side gig or own a business can influence what type of health insurance is the right option for you. When you’re your own boss and in charge of everything, this involves various considerations. To help you determine what self-employed health insurance plans may be right for you, understand a few of your options.

For example, if you are laid off from your full-time job, you may decide to do some freelance work while you apply for full-time employment opportunities. In this case, you may need a short-term health insurance solution to protect you in the time between full-time employment. Examples of that and other options include:

  • Short-term insurance: If you want to save on your premium, you may consider short-term health insurance. You can usually have this insurance for a few months, and you can sign up for a plan outside of the open enrollment period. Your premium will be low, but your out-of-pocket costs will be high and your plan may not cover any pre-existing conditions you have.
  • COBRA: Another option for temporary health insurance is COBRA from the Consolidated Omnibus Budget Reconciliation Act. This option allows you to remain on your employer-based plan from your old job for a period. Since you no longer have an employer who is paying some of your premium, you will be paying more for your insurance.
  • Industry-specific insurance: Depending on your industry, you may be able to find discounted health insurance through a freelancers union. Industry-specific plans are available for multiple types of professionals. If you find a plan for you, read the fine print to avoid paying more for less coverage than you would get from another plan.

On the other hand, you may decide you want to be self-employed long term. In this case, you may look at alternative coverage options. The right health plan for you depends on who needs coverage and how much money you are making, but you may consider:

  • Private health insurance: Some insurance carriers offer plans aimed at self-employed people who need good health care coverage at an affordable premium. For a plan that provides a range of benefits, such as access to in-network hospitals and providers for preventative care and annual checkups, speak with an insurance agent. They can help you find the best health plan at the most affordable rate.
  • Health insurance marketplace: The health insurance marketplace can help you determine whether you qualify for a lower health insurance premium, tax credits or Medicaid. If you are a low-income earner, you may qualify for Medicaid, which is health insurance sponsored by the government. You may also be eligible for the Children’s Health Insurance Program, which is for children and similar to Medicaid.
  • Partner’s health insurance: If you are married or have a domestic partner, you may want to consider joining their employer-based health insurance plan. If you think you may be eligible for your partner’s employer-based plan, your partner can speak with their insurance company or human resources department to ask about adding you to their plan. This option can be affordable and convenient, as an employer typically helps cover the cost of the plan.
  • Health care sharing ministry: You may also be able to cover your health care costs through a health care sharing ministry. Note that health care sharing ministries are technically not health insurance. Rather, these are groups of people who are part of an organization like a ministry. You all pool your money into a fund to cover the major health care costs for the group’s members. There may be limits on what a ministry may be willing to pay for, and they may not cover pre-existing conditions.

Your specific circumstances may also influence what health insurance options are available to you, like if:

  • You are a young adult: If you are a young adult, you may be able to stay on your parent’s health insurance until you turn 26.
  • You are a student: If you are also a student, you may be able to get a plan specifically for students.
  • You have a disability: If you have a disability, you may qualify for Medicare.
  • You are in the military: If you are a retired or active military member, you may be eligible for TRICARE.

Weigh the pros and cons of each of the options available to you when deciding what self-employed health insurance plan is right for your situation.

Tax Considerations

If you are self-employed or a small business owner, the prospect of paying your health insurance premiums may seem daunting. Fortunately, you may qualify for a tax write-off for health insurance in California.

Self-Employed Health Insurance as a Deductible Business Expense

When you file your yearly tax return, you may be able to deduct your health insurance premium, which is the amount you pay every month for the health insurance plan. As a result, you can subtract your total yearly expense from your adjusted gross income. This expense can either increase your refund or decrease your bill.

Since this is considered an above-the-line deduction, you can implement it regardless of whether you decide to take the standard deduction or to itemize your deductions. The caveat is that you cannot deduct something higher than your yearly net profit. This restriction means if your small business lost money, you wouldn’t benefit from the tax deduction.

Amount of Premium Tax Credit

Your premium tax credit amount depends on the estimated income you include on your application. You can opt to apply part or all of your tax credit to your monthly premium. Your tax credit will be sent directly to your health insurance provider so you will pay less every month. This option is known as taking an advance payment on your premium tax credit.

If your income changes, it is likely that your premium tax credit will also change. When you experience a change in your income, you should report it as soon as possible, whether:

  • Your income decreases: If your income decreases, you may be eligible for a larger premium tax credit. In this case, you may want to consider increasing the amount you take in advance on your tax credit. This choice will give you a lower premium bill every month.
  • Your income increases: If your income increases, you may be given a lower premium tax credit. As a result, you may want to choose to reduce how much of your tax credit you take in advance every month so you do not end up taking more tax credits than you actually qualify for.

At the end of the year, if you have taken more advance payments than you are eligible for on your premium tax credit, you may need to pay back the money after you file your income tax return. This payment is referred to as reconciling the premium tax credit you are eligible for and the advance payments if your premium tax credit is based on your final yearly income.



Request a Free Quote for Self-Employed Health Insurance

Are you a self-employed California resident? If you are seeking health insurance for the self-employed in California, look no further than Health for California. Our application process is accurate and an easy, fast and free way to apply for self-employed health insurance in California.

Our agents are available at any time to help you and answer all of your insurance-related questions. If you are uninsured in California or you want to switch health insurance plans, get a free quote for self-employed health insurance from us at Health for California.


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