Need Health Insurance? Here Are 6 Options

One of the very first questions people ask when they are about to become a freelancer is, “Where do I get health insurance?” And that’s in normal times—never mind in a pandemic. The Trump administration promised to pay hospitals for treating uninsured coronavirus patients, but the out-of-pocket cost for all other illnesses remains sky high. If you’re uninsured, the average cost of hospitalization for pneumonia with no other complications is $9,763. With major health complications, that cost jumps over $20,000.  

As the great Whitney Houston said, “It’s not right, but it’s okay.” (It isn’t really okay either, but that’s for another day.) Here are six ways you can get health insurance, with pros and cons for each of them.

1. COBRA

If you leave a job with health insurance, you can may be able to buy health insurance through your employer, thanks to the Consolidated Omnibus Budget Reconciliation Act, or “COBRA”.

Pros:

If you’re busy setting up your freelancing business, this can be the fastest and most user-friendly way to get coverage. It also gets you a health insurance plan you’re already comfortable with, since you can keep the same policy you had in your job. It may also give you access to better coverage, like a PPO (for out-of-network coverage), which can be harder to come by as a freelancer.

Cons:

First, you only have about 2 months after leaving your job to opt into COBRA, so don’t procrastinate on this decision. Second, COBRA is not a long-term solution. Most people can only use COBRA for 18 months after leaving their jobs. Third, COBRA is expensive AF. When you get health insurance through work, your employer usually pays for part of the cost. With COBRA, you will pay the employer’s share, plus a 2% administrative fee. That means a family health care plan could cost over $20,000 a year. Don’t worry, there are other options.

2. Direct

Healthcare.gov is a government-provided portal through the Affordable Care Act that aggregates multiple insurance providers in your state, allowing you to compare quotes and select the plan that works best for you.

Pros:

One of the biggest advantages of buying health insurance directly is that it’s often much cheaper than COBRA. Also, unlike COBRA, buying health insurance directly is a long-term solution since there’s no set expiration date.

Cons:

First, there are just two times you can purchase this insurance: 1) if a Qualifying Life Event makes you eligible to buy new health insurance (like losing your insurance because you lost your job), or 2) if it’s Open Enrollment Period. This year, Open Enrollment lasts from November 1 to mid-December. The actual end date depends on your state. A few states, including California and Massachusetts, are offering open enrollment now in response to the pandemic. The second drawback is the type of coverage offered. Many of these plans are HMOs, which make you pay full price if you see a healthcare provider outside of the plan’s approved network. These approved networks are usually small, and may only include some doctors from a specific state or region.

3. Professional Organizations

As a freelancer, you may be able to join an organization like the Freelancers’ Union or the National Association for the Self-Employed (“NASE”), which helps members buy insurance together. 

Pros:

Unions offer a variety of insurance options, that even can include PPOs (depending on your residence and income), by getting a group of freelancers to purchase together. This increases the group’s bargaining power with the insurance company, lowering the price for each person buying insurance.

Cons:

First, the eligibility requirements to join each association vary. Second, there may be a fee associated with joining the association. Third, group insurance policies vary and may operate a bit differently than other plans, for example, some NASE plans require you to visit a freestanding facility for all bloodwork instead of any lab affiliated with a hospital. 

4. PEOs

If you have created a company for your freelance business, you might be able to buy health insurance through a PEO, or Professional Employer Organization, like Justworks or TriNet.

Pros:

You may access better insurance plans, like PPOs, which allow you to get treated by doctors outside of your insurance network. Also, unlike COBRA, this can be a long-term solution, since there is no inherent expiration date as long as your business is around. 

Cons:

First, if you don’t already have a corporate entity and payroll set up, you’ll have to do some legwork before purchasing. Second, you usually need at least two employees from different households to buy health insurance to be eligible. Third, you may have to pay the PEO for HR management plus the cost of insurance, but that may still be cheaper than other options.

5. Medical Cost Sharing

In medical cost sharing, you make monthly payments to a shared community fund like Knew Health or Sedera, which will then be used to pay for medical expenses if and when they arise.

Pros:

These plans can be up to 70% cheaper than traditional health insurance, so they can be a good choice for young, healthy people with low medical expenses. You’ll also be supporting organizations trying to shake up our ailing healthcare system.

Cons:

First, these plans aren’t available in every state. Second, even though there is no longer a federal penalty for not having health insurance under the Affordable Care Act, your state might still impose a tax. Third, these plans limit what they cover, so you’ll want to read the fine print carefully. Lastly, ladies, you have to be a member for at least 12 months before some plans will cover maternity expenses, so plan accordingly if you think you could become pregnant.

6. Medicaid 

If you are low income, on SSI, pregnant, have a disability, or meet other criteria, Medicaid may be an option for covering your healthcare expenses.

Pros:

It’s free, or very low-cost, and can offer pretty robust coverage.

Cons:

First, there are strict eligibility requirements and the application process can be fairly involved. Second, if your business grows (and, hopefully, it will!), you may need to find another insurance plan.

There you have it, six ways to buy health insurance as a freelancer. The situation is changing rapidly, so we will keep you updated as we come across new ways to get coverage. Where do you buy health insurance? Leave a message in the comments!

Thumbnail photo by Anna Shvets from Pexels