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What You Need to Know About Health Insurance If You’re Self-Employed

In the United States, approximately 16 million workers identify as being self-employed. Self-employment can offer many benefits, including greater flexibility and being your own boss. It also provides an entryway to entrepreneurship and small business ownership.

HealthPlans of NC

Health Plans of NC, Kelly Quinn

While being self-employed can bring many benefits, it also brings greater financial responsibility. This can include managing your taxes and ensuring you’re adequately covered for your healthcare. Many people in North Carolina and the US rely on employer-sponsored healthcare plans to meet their health insurance needs. However, as more people move into self-employment avenues, individual healthcare plans are becoming more necessary.

Financial considerations for self-employed people

If you’re considering becoming self-employed, it’s essential to understand the financial impacts and stresses of managing your own business.

Saving enough money

Many people who own businesses worry they won’t be able to save money and maintain a consistent income level to manage their financial commitments. This includes not saving enough to fund a comfortable lifestyle in retirement. 

Accessing affordable healthcare

In a recent survey, over 70% of people working for themselves said their biggest concern was accessing affordable health care. With so many people in North Carolina and across the US relying on their employers for health insurance coverage, finding coverage at an affordable price point is a legitimate concern for many self-employed people.

Managing tax affairs

If you’re starting out working for yourself, it can be challenging to fund the total tax bill from your income if you’ve typically worked for an employer. Setting your services at the right price can help ensure you can still earn a profit and manage your expenses.

Health Care Plans For Self-Employed

Several options are available to support you if you’re self-employed and looking for affordable health insurance. Talking to a local health insurance agent specializing in North Carolina can be helpful, as many health plans differ from state to state. 

COBRA Health Insurance

When you finish working for your employer that provides a group insurance plan, there’s a limited time when you can opt-in for COBRA. This continuation of coverage means you can maintain health coverage for you and your family through your previous employer. To qualify, you need to have been part of your company’s group health insurance plan. Regardless of why you left your job, getting COBRA coverage is possible. You’ll need to arrange a letter from your employer or the insurance company outlining your right to continue insurance coverage under the employer’s plan. There’s about a two-month window to decide whether to continue your coverage under COBRA. There can be some limitations on this. For example, suppose you worked for a business with less than 20 employees or a religious organization. In that case, you cannot obtain COBRA coverage as both business types are exempt from COBRA requirements.  

Essential Things To Know About COBRA

The cost of your COBRA plan depends on what insurance you had from your previous employer. Given that your former employer will have covered most of the premium for your insurance, it may be a shock how much the COBRA plan costs. In addition to covering the total cost of your insurance plan, you may also need to pay up to 2% extra for administrative fees. You can likely use a COBRA plan for around 18 to 36 months. However, knowing that you’re no longer eligible for COBRA coverage under an employer’s plan if they go out of business is essential. You’ll also cease coverage if you can’t make premium payments or if you become eligible for Medicare. Enrolling in a new group health care plan will also stop your COBRA plan. While COBRA coverage is a short-term solution, it can offer you the best option to avoid periods of disruption in your healthcare coverage. 

Purchasing Health Care Insurance Through the Insurance Marketplace

With the initiation of the Affordable Care Act (ACA), you can compare and buy individual health insurance plans on the insurance marketplace. You can purchase insurance annually during the open enrollment period between November 1 and December 15. However, check the dates, as this year’s open enrollment period was extended to January 15. The only way to purchase outside this period is if you meet a ‘qualifying event.’ These can include losing health care coverage via your employer or Medicaid, Medicare, or CHIP, coverage through your partner’s insurance, divorce, death, new family members, or if you move. Other qualifying events include getting US citizenship, being released from jail, joining or leaving AmeriCorps, changing income impacting insurance coverage, or being accepted into a recognized tribe. 

What To Consider When Choosing Health Insurance

If you’re self-employed or considering becoming self-employed, understanding some health insurance basics can make choosing the right plan much easier. Here are a few options to consider when you’re searching for self-employed health insurance plans in North Carolina:

  • Health Maintenance Organization (HMO): requires you to choose a primary care provider (PCP) who will refer you to other providers when necessary. Unless you need OB/GYN care or experience an emergency, your PCP will need to refer you to other providers if you need to see a specialist. These plans offer no out-of-network coverage and are a good choice if you don’t travel a lot and can maintain the same doctor for your care.

  • Preferred Provider Organization (PPO): this plan doesn’t require you to choose a PCP or need referrals to medical specialists. It offers coverage for out-of-network providers and is suitable for people who regularly travel. These plans are a good choice if you have uncomplicated healthcare needs. 

  • Health Savings Account (HSA): These plans allow you to use your HSA to pay for health care expenses and COBRA premiums. They are noted on the Marketplace and typically have higher premium costs.

Tiers and Categories Of Insurance Plans

In North Carolina, there are three basic levels of health insurance plans. Typically, the cost of your premium increases as your plan moves up levels. The lower health insurance levels, or tiers, have higher deductibles than the more expensive plans. 

  • Bronze plans: the cheapest coverage that offers 60% coverage of your health care costs. 

  • Silver plans: medium coverage, offering you 70% coverage.

  • Gold plans: offers 80% coverage. 

Some states also offer a Platinum plan, which provides 90% coverage if you live outside North Carolina.  Aside from the basic tiers, there are also ‘catastrophic health plans.’ These are a cost-efficient way for healthy people to get coverage for unforeseen illnesses and accidents. These are typically only available if you’re under 30 or qualify for a hardship exemption. 

Discover the Costs Involved with Health Insurance Plans

It’s essential to consider more than just the cost of monthly premiums when finding the right NC self-employed health insurance. In addition to premiums, consider your plan’s deductible, which can significantly impact your budget. Your deductible refers to the out-of-pocket expenses you must meet before your insurance plan covers your medical costs. Once met, you are responsible for a coinsurance % until you meet an annual out-of-pocket maximum. Researching different healthcare plans for self-employed people is vital to budgeting adequately for your insurance. Your deductible can be in the thousands for low-tiered plans, so buying a low-tier option may not be the best option for you despite having lower premiums. Also, consider your copay and coinsurance %, the portion of medical care you need to pay yourself outside of the deductible. First, look at the fine print of your NC self-employed health insurance to determine what percentage you’re required to pay for different services. Then, investigate service costs in your area to work out if you’re comfortable paying higher copays and coinsurance. You may prefer paying a higher premium to anticipate your medical expenses better.

Discover Savings Options For Self-Employed

If you're self-employed, you may be eligible for tax credits via the Marketplace, which can lower your premium cost. Tax credits are based on the income estimates for the coming year. If you make between 100 and 400% of the federal poverty level, you automatically qualify for a tax credit in any state in the US, including North Carolina. It’s also worthwhile checking if you qualify for a ‘Cost Sharing Reduction (CSR).’ On the Marketplace, they’re referred to as ‘extra savings.’ They are a discount you can take advantage of to lower your coinsurance payment, deductible, and copayment requirements. You must enroll in a Silver-tier plan if you qualify, which you can establish by answering questions during the application. It can mean a lower out-of-pocket maximum limit, so you won’t have to pay as much before your insurance covers your medical costs. Use any tax credits you qualify for, but be mindful that you may need to pay back the difference between your income estimate and what you earned at the end of the year. This can also mean getting money back if you estimate less than you earned. To qualify for these cost-saving options, purchase your health insurance using the Marketplace. Our knowledgeable NC health insurance agents can help with this.

Other considerations

In addition to private health insurance for self-employed NC, there are some other options to consider:

  1. Medicaid: depending on where you live, there may be options for accessing extended Medicaid coverage.

  2. Joining a family member’s health insurance plan: If you are younger than 26 or have a spouse with employer health care coverage, you can ask a family member to add you to their plan.

  3. If you’re out of the country: If you spend considerable time outside the US, you may wish to consider arranging travel insurance or International Health Insurance Coverage. 

SEE ALSO: What Freelancers Need to Know About Health Insurance

Assistance getting the right coverage

If you need help accessing the best self-employed health insurance in North Carolina, it’s worth getting guidance from an experienced and licensed health insurance agent. Our agents help people in North Carolina with their insurance. They can answer any questions about self-employed health insurance plans in North Carolina. So contact us today to find out your options or compare plans.

Ready to get started?

See plans and pricing today.

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