Life as a freelancer is different then when you were an employee in ways both great and small. Obviously you now get to make all the decisions as to what work you do. That means picking and choosing projects at your discretion, and truly building a business that fits your expertise and passion instead of working in whatever role middle or upper management needs filled. You’ll also be able to control your own hours, set up your own working situation and potentially enjoy a flexibility you’ve never had before. Add on to that the fact that the only ceiling on your earnings potential is the one you set through hard work and determination, and the life of an independent contractor has a lot of perks. Health insurance, however, isn’t always one of them. Gone are the days when you enjoyed insurance as part of your salary and benefits package. You are now on your own to figure it out. Here are a couple of the different health insurance options you’ll find available as an independent contractor.
First of all, there are the stopgap options. If you were recently an employee and are leaving to start your own business, talk to your previous employer about continuing your insurance for a certain period of time. Small business owners will often make a concession, especially if you have a long track record with that company. You’ll have to pay it out of pocket, but it will certainly be affordable. In most cases, your company insurance will continue to be valid until the beginning of the following month. So if your last day is early in the month you’ll have several weeks of insurance coverage. You should also look into COBRA right away. That’s basically a government service that extends your health insurance for up to a year after you leave full-time employment. It is often more expensive than what you paid in the past, but it will take care of things for the near future.
At some point you will have to come up with long-term solutions, and this is where it can get a bit tricky. First of all, are there any existing policies that you could be covered under? For example, if you are married you can usually get picked up by your spouse’s health insurance coverage. This is often the case even if their insurance is provided by their employer. Look into that first, as paying for additional coverage under an existing plan will definitely be the cheaper option for you. If you are under twenty-five and an independent contractor you could also potentially be covered under your parents’ policy, so check with them if that is a viable option. Finally, are there any unions, guilds or organizations you are (or could become) a member with who provide health insurance for their constituents? Again you will have to come out of pocket, as you always will from now on. But any of these policies will afford you a quality level of care at a low price tag.
If none of the above fit the bill, you’ll have to look into new policies. First of all, can you set up your own group plan? If you have an LLC or other business entity you could work with an insurance company to set up a group plan. You often only need two employees or more to make this work, so many people take this option with a spouse or other loved one they could set up as an employee of the business. Your last option would be to purchase individual health insurance. But this will be your most expensive choice.
If that is the route you end up going, definitely look for a plan with a high deductible. For most people that are young and healthy, insurance is really just something to keep you covered in case of an unexpected emergency. So you’ll be fine with a high deductible as long as you don’t need much lab testing or many doctor’s visits beyond the annual physical. This will always make your monthly fee cheaper. Also consider setting up a savings account specifically for your health plan, or taking out a credit card that only pays for doctor’s visits. They aren’t perfect solutions, but they should make it more affordable for you.