How to Get Health Insurance as an Independent Contractor

This post was created in partnership with Stride, the leader in helping freelancers and independent workers find and enroll in affordable health insurance.

If you’re an independent contractor, you’re used to doing it yourself: filing your own taxes, building your own business, and handling your own retirement planning. At the risk of adding to your to-do list, you’ll probably need to find, enroll in, and pay for your own health insurance too.

Getting the right health plan at an affordable price can have as much impact on your finances as properly filing your taxes, and an even bigger impact on your health. But that doesn’t mean this task has to be as complicated as it seems.

Here’s why finding the right health plan in 2022 is worth the effort—and how to make it easier on yourself.

Why having health insurance is a smart financial move

Health plans charge a monthly fee, so you might be tempted to think of health insurance as a liability, like your car payment or your cell phone bill. After all, it’s an expense you’ll owe someone every month, right?

While health insurance does generally cost money now, you can consider health insurance an asset because it protects you from having to pay much larger medical expenses when you need care later.

Lower medical bills and fewer surprises

You might be thinking that you won’t need medical care anytime soon. Perhaps you’re young and healthy, or you have so far managed to avoid seeing the doctor very much. But many medical needs aren’t predictable. Who knows if or when you’ll come down with pneumonia ($187.34), have a broken arm ($2,500), or discover you have a genetic disease like cystic fibrosis ($131,000 per year)?

Health insurance helps by costing you less money out of pocket for these (and many other) services in several ways. Your plan negotiates lower prices for its members and helps cover a percentage of these lower prices. Additionally, health plans cap the total amount you’ll have to spend on medical costs each year. That’s like a triple discount on healthcare.

An overall healthier life

In addition to paying for medical expenses when you’re sick or injured, health insurance also helps lower your medical bills by preventing the need for a lot of services in the first place. Health insurance does this by covering 100% of preventative care.

Preventative care includes things like annual checkups with your doctor, screenings for depression and alcohol abuse, and testing that suspicious mole you hadn’t noticed until last week. These services can catch medical conditions early and make treatment faster and easier—or prevent you from needing care altogether.

Why health insurance costs less than ever before

While health insurance can be an asset, it’s also an expense that many people try to avoid. However, the monthly cost of your plan, called a premium, will likely be less than you think.

The American Rescue Plan allows more people than ever to qualify for financial assistance and more aid to go to those who need it most. According to the Centers for Medicare and Medicaid Services, four out of five Americans will now qualify for Affordable Care Act plans for $10 or less per month in 2022.

If you’ve considered buying a health plan in the past but couldn’t stomach the price tag, you should shop around again now. You might like what you find.

Advance Premium Tax Credits

Most of the available aid comes in the form of Advance Premium Tax Credits (APTCs). When you apply for coverage, you can apply for an APTC, which is based on your income.

If you qualify, your tax credit will be automatically applied to your monthly health insurance premiums, lowering your bill without any extra effort. The hardest part is accurately estimating your income if you don’t earn the same amount of money each month—and many independent contractors don’t.

How to properly estimate your income to get the lowest price

How much you pay for a health plan will depend on your annual income, or, more specifically, your modified adjusted gross income (MAGI). Your MAGI is your entire income minus certain deductions and credits, such as business expenses, self-employed retirement plan contributions, and the Child Tax Credit.

Since you may not know your annual income until the end of the year, you’ll have to estimate it. To get an idea of how much you’ll earn next year, start with your MAGI from this year or last year, whichever you expect to more closely match next year’s income. Then estimate up or down, depending on whether you expect to earn more or less.

It’s important to estimate as accurately as possible. When you file your taxes, you will report how much Advanced Premium Tax Credit you received based on your estimated income. If you underestimate your income, you could end up with a larger tax bill, and you’ll need to repay the difference.

If you overestimate your income, you may be eligible for more premium tax credit and, in turn, could see a bigger tax refund or a lower tax bill when you file your taxes. But in the meantime, the monthly price for your plan will be higher. More importantly, a higher price tag now means you might unnecessarily opt for a cheaper plan that doesn’t fully cover your needs, which could negatively affect both your finances and your health.

Don’t worry about knowing these tax laws. TurboTax Self-Employed will ask you questions about you and your business and give you the tax deductions and credits you are eligible for. If you have questions, you can connect live via one-way video to a TurboTax Live Self-Employed tax expert to get help along the way or get matched to a dedicated TurboTax Live Self-Employed tax expert with experience in self-employment taxes to get your taxes done from start to finish. TurboTax Live Self-Employed tax experts are available in English and Spanish, year-round and can review, sign, and file your tax return or do them from start to finish. All from the comfort of your home.

What to look for when choosing the best plan for you, and how to find it

There are four main things to consider when choosing a plan:

1. Network type: Some plans, like HMOs, cover you only if you use their network of doctors, pharmacies, and other providers. With other plans, like PPOs, you can go outside the network at a higher cost. Usually, the more restrictive the network, the cheaper the plan.
2. Metal tier: Plans are divided into metal tiers based on how much of your medical expenses they cover. Bronze plans cover about 60% of your costs, silver cover 70%, gold cover 80%, and platinum cover 90%. In general, bronze plans are the least expensive and platinum plans are the most expensive.
3. Drug coverage: Whether your prescriptions are covered and how much you’ll pay for them varies, so make sure you check each plan’s list of covered drugs (called a formulary) for your specific prescriptions. This can be challenging if you’re comparing a lot of plans, but if you go through Stride Health, you can input your drugs and quickly see which plans will best cover them.
4. Doctors: Not all physicians take all health plans. If you have a favorite doctor you want to keep seeing, call their office and get a list of accepted plans—then shop among those plans. Or, input your doctors into Stride to limit your search to only plans that your favorite providers accept.

How to get the most from your plan once you’re enrolled

Once you find and enroll in the right plan, use it! All that preventative care we mentioned only keeps you healthy if you actually receive that care. So call your doctor for a checkup. It’s the best way to get the conversation started if you have more aches and pains than you used to, a cold that won’t go away, weight loss goals, or other concerns.

You can also get the most out of your health plan by having access to a team of experts who can help answer your benefits, coverage, or claims questions, like the Member Experience team at Stride.