Finding the right health insurance for independent contractors can seem daunting. Independent contractors aren’t considered “employees,” so they typically don’t receive company-provided benefits, like health insurance. Instead, they have the task of finding their own coverage.
If you’re wondering how to get health insurance as an independent contractor, rest assured. You have options, and short-term health insurance could be your most cost-effective choice.
What Is an Independent Contractor?
To start, independent contractors fall into the bucket of self-employment. They complete work for a specific business or multiple companies, but they’re not traditional employees. Independent contractors provide their services for particular timeframes as agreed upon in their contracts. In some cases, employers offer them full-time positions when their contracts end.
Also, companies do not withhold federal or state income taxes from independent contractors like they do from regular employees. Instead, independent contractors pay self-employment taxes and receive 1099 forms from each of their clients each tax year. Here are some examples of independent contractors in the workforce:
- Graphic designers
- User experience consultants
- User interface designers
- Adjunct professors
- Content writers
If you’re thinking some of the jobs above sound like full-time gigs, you’re right. Independent contractors can be hired as graphic designers, SEO specialists, and project managers in corporate settings. However, their benefits and taxes are different, and companies hire them to work for a specific time period.
Health Insurance for Independent Contractors
Now, how can you find the right health insurance that checks all of your boxes as an independent contractor? Here are some questions to consider?
- What type of coverage do you need?
- Do you have any pre-existing conditions?
- How much do you want to pay per month?
- Do you need mental health treatment?
- Are you planning a pregnancy?
These are all important factors to weigh when researching health insurance plans. You need to know what fits your budget and gives you the coverage you plan to use. There are many different types of health insurance out there for independent contractors. Let’s break down two popular choices to help you decide what kind best fits your personal needs.
Affordable Care Act (ACA) Health Insurance
ACA-compliant health insurance plans include coverage for all essential health benefits, so if you choose to go this route, know that you’ll have coverage for:
- Ambulatory patient services
- Emergency services
- Pregnancy, maternity, and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
They also include additional benefits, like:
- Birth control coverage
- Breastfeeding coverage
ACA-compliant health insurance plans include essential health benefits as minimum requirements. They may also include dental coverage, vision coverage, and medical management programs for needs like back pain, diabetes, and weight management.
Here’s an example of someone that should consider ACA-compliant health insurance:
Say that you recently started graphic design work as an independent contractor, and you’re looking for health insurance. You have asthma and get chronic migraines about once a month, and both conditions require medication. Your medical needs classify as pre-existing conditions, so you’ll want comprehensive health coverage to avoid expensive out-of-pocket medical bills.
The scenario above speaks to someone who should consider ACA-compliant health insurance. ACA major medical plans can be more expensive than other options, but if you need the coverage listed above, you’ll pay less for your health insurance than you would out of pocket. Also, the ACA has tax subsidies that you can apply for to see if you qualify for a reduced health insurance plan.
Keep in mind that you can typically only get ACA-compliant health insurance from the marketplace during the yearly open enrollment period – unless you have a qualifying life event. Starting a new job is an example of a qualifying life event that could allow you to enroll for coverage during a special enrollment period.
Short-Term Health Insurance
Next, short-term health insurance is one of the most affordable coverage options out there. It has lower monthly premiums than many ACA health plans, and you can apply at any time.
Some key differences between short-term health insurance and ACA health plans are that short-term plans don’t include coverage for pre-existing conditions, nor do they cover all essential health benefits. So, if you have pre-existing conditions, you’re planning a pregnancy, or you like to see your therapist weekly, you won’t receive benefits to help you pay for these noncovered services.
Also, did you know that you can keep a short-term health plan for up to a year and renew it up to two additional times, depending on your location? That could mean three years of affordable short-term health insurance! So, what does it over? You can expect benefits for unexpected medical accidents, like:
- Emergency room care
- Ground ambulance trips
- Emergency surgery
Plus, short-term health insurance includes benefits for more basic medical care, like:
- Doctor visits
- Urgent care
- Home health care
- Prescription medications*
Here’s an example of someone who could benefit from short-term health insurance:
Say you’re 26 years old and just got kicked off of your parents’ health insurance plan. You’re working as an independent contractor at a marketing consulting firm. You need health insurance, but you don’t want to spend a lot of money on your monthly premium. You don’t have any medical conditions, aren’t planning on having kids any time soon, and you rarely go to the doctor.
Being the responsible adult that you are, you’re looking for coverage that could help you during a medical emergency. You’d also like benefits to see a doctor in case you get sick.
Short-term health insurance could be the right health care solution for the person above. It’s cost-effective, has flexible coverage options, and can be applied for any time.
The Gig Economy and Health Insurance
The gig economy is on the rise. As of 2017, more than half of millennials worked a gig job, like independent contracting. Also, millennials are now the largest piece of the adult population, and their work needs are evolving. Working in the gig economy can offer more flexibility, autonomy, and work-life balance, which millennials crave from their careers.
What does this mean for the future of health insurance? Studies show that 54% of millennials would avoid seeing a doctor just to save money! They’re looking for affordability, convenience, and flexibility from health insurance providers. That’s why short-term health insurance is becoming more and more popular, especially now that it offers renewability options.
So, if you’re an independent contractor looking for affordable health coverage and you don’t have any pre-existing conditions, then check out short-term health insurance through Vera Health! When it comes to millennials, flexibility is key, and short-term health plans through Vera offer flexible coverage for flexible lifestyles. Give us a call at 888-499-1187 to speak with a Vera Health expert, or visit us online to learn more today!
* Prescription drug benefits are state-specific.
* Telemedicine is available through a LIFE Association membership.
This coverage is not required to comply with federal market requirements for health insurance, principally those contained in the Affordable Care Act. Be sure to check your policy carefully to make sure you are aware of any exclusions or limitations regarding coverage of preexisting conditions or health benefits (such as hospitalization, emergency services, maternity care, preventive care, prescription drugs, and mental health and substance use disorder services). If this coverage expires or you lose eligibility for this coverage, you might have to wait until an open enrollment period to get other health insurance coverage.