The Affordable Care Act has helped millions of self-employed Americans find the best health plan within their budget. However, they should be aware that there are other ways too using which they can save money on health insurance. Self-employed like freelancers, small business owners, and solopreneurs have options to reduce their health insurance costs beyond the ACA’s subsidy.
Some of the popular means through which self-employed can save money on health insurance are discussed below:
Maximize Savings on Health Insurance
For all self-employed, health insurance is a significant expense, but there are ways through which you can save money on this necessary business cost. One popular way to save money on health insurance is by deducting their premiums. Self-employed Americans should be aware of the fact that their health, dental, and qualifying long-term health insurance premiums are tax-deductible business expenses. The deduction was available before the ACA, and it is still available. Whether the deductibles are available to self-employed or not depend upon several factors that are discussed below:
- Their businesses show a profit in the given year because the deduction can only amount as much as they earn from their business.
- Self-employed individuals cannot combine their income from multiple businesses to show cash-flow positive.
- Deductions are offered to only those self-employed, who have no other health insurance.
Cost Sharing Can Lower Your Premium
Self-employed individuals having income within 100 to 250 percent of the federal poverty level may qualify for an additional subsidy for some health plans, besides the subsidy offered to them on marketplace coverage. This subsidy is termed as cost-sharing reduction and applies only to marketplace plans of the silver category. With this subsidy, silver-level coverage comes within the reach of the low-income self-employed individuals. Thus, self-employed individuals, who were capable of buying a Bronze plan with this cost-sharing reduction applied may be able to buy Silver plans having costs comparable to Bronze plans. By being self-employed, individuals not necessarily have to confine themselves to low-quality and inadequate health insurance. Besides ACA subsidies, there are other ways to save money on health insurance.
A Bronze Plan Might Still Be More Affordable
While shopping for health insurance coverage, self-employed individuals might have discovered that catastrophic plans are expensive compared to bronze plans, and it is probably because Bronze plans allow them to apply a subsidy to their monthly premiums if they qualify for it. Thus, catastrophic plans can be great for small business owners and freelancers, who are in their 20s to find affordable coverage. Self-employed Americans should be aware that subsidy eligibility may allow them to pay less or nothing while buying an even better insurance product.
Catastrophic Coverage for Under 30
Before coming of the Affordable Care Act, self-employed individuals only have the option to either buy expensive health insurance or forgo it entirely, hoping that they will not fall ill. The only solution available to them was to purchase a catastrophic plan to protect themselves from expensive healthcare costs. These plans offered minimal coverage, and have high deductibles, though premiums were low. However, due to the ACA requirement that mandated all health plans to include minimum essential coverage, catastrophic health plans that were popular with self-employed individuals no longer exist. Self-employed individuals who are under 30 can still obtain catastrophic coverage just like before. Catastrophic plans available today offer all essential health benefits, though the number of primary care visits and preventive care services is limited before insurers start paying the deductible. Catastrophic plans have the lowest premiums on the market, but individuals having this plan will not be eligible for federal subsidies.