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What Freelancers Should Know About Health Insurance

In 2021, around 59 million Americans worked freelance, representing over one-third of the entire US workforce. Although many people take freelance gigs to supplement their primary employment, about 28% of Americans who worked in freelancing in 2020 did freelance work as their full-time occupation. And Upwork, an online freelancing platform, believes that these numbers will continue to grow as more people turn to freelance. Regardless of whether this trend is a part of an overarching lifestyle choice, as many social pundits suggest, this shift does have significant implications for areas like health care coverage.

HealthPlans of NC

Health Plans of NC, Kelly Quinn

In recent US history, many people in paid employment rely on employer-sponsored health care plans for health insurance. However, as the future of work shifts from more traditional arrangements into a freelance (or gig) economy, there’s an increased need for individual health care plans.

If you’re working as a freelancer in North Carolina, our locally based health insurance agents can help you find the right coverage for your needs.

Things That Keep Freelancers Awake at Night

Although there are clear benefits associated with working as a freelancer, there are also stresses related to this type of work. Research indicates some of the areas freelancers worry most about include:

  1. They won’t be able to save enough. This fear was the number one concern for 76% of freelancers interviewed in a recent survey. Since the nature of freelance work means selling yourself repeatedly, there is a risk of not being able to earn enough to cover monthly living costs and save for the future. 

  2. Not enough retirement money. This was one of the major concerns identified by freelancers, who worried they won’t have enough savings when it’s time to retire.

  3. Unable to maintain a consistent income. Because freelancers in North Carolina often engage in short-term work with clients, they can worry about generating the level of income they need. 

  4. That they won’t be able to find affordable health care. 72% of freelancers indicated that they were most concerned about being able to afford health care. Since many workers rely on their employers for insurance coverage, freelancers are genuinely worried about finding ways to afford health care coverage. 

  5. Making a fair wage. Freelancers can often struggle to obtain a salary that allows them to live the way they wish. Those who are new to freelance work often find it difficult to determine a fair price for their services. 

  6. Being taxed at a high rate. Some freelancers struggle with covering the total tax bill for their income. Freelancers can’t work at the hourly wage they’re used to, as they’re also now responsible for all the taxes associated with their income. 

Health insurance options for freelancers

Luckily, a few options can support freelancers to find affordable health care. Health care coverage options differ from state to state, so talking to a local North Carolina health insurance agent can be an excellent option to get the best freelancer health insurance coverage for you.

COBRA Health Insurance

Luckily, there are a few options that can support freelancers in their pursuit of affordable health care. Although you will find that your health care coverage options will differ from state to state, there are a few consistencies we can discuss.

If you leave a traditional work situation in which your employer provides a group insurance plan, you have a limited amount of time to opt-in for COBRA or continuation coverage. This coverage allows you to continue health care coverage for yourself and your family members through your former employer. To qualify for COBRA coverage, you must have participated in your company’s group health insurance plan while working there. Whether you quit your job voluntarily or find yourself without insurance coverage due to a reduction in your work hours or involuntary termination, you can obtain COBRA coverage.

As a “qualified beneficiary” you should receive a letter from your employer or the insurance company they use, informing you of your right to continue insurance coverage under your employer’s plan. You will have approximately two months in which to decide whether or not you wish to continue your coverage under COBRA. If you were employed by a religious organization or a small business with less than 20 employees, you may not be able to obtain COBRA coverage as these organizations are generally exempt from COBRA requirements.  

What You Need to Know About COBRA

The cost of a COBRA plan will depend on the type of insurance you had through your former employer. You may be surprised by the cost of your COBRA plan since your employer will have covered much of your plan’s premium cost during your employment. You’ll now be responsible for covering the total cost of your insurance plan, and you may also pay more for administrative fees.

You can expect to use a COBRA plan for 18 and 36 months. However, there are a few instances when you cannot get COBRA coverage for the entire time. For example, suppose your previous employer goes out of business. In that case, you won’t be eligible for COBRA coverage on their health insurance plan. If you cannot make your premium payments, you can also find yourself without coverage. If you become eligible for Medicare or enroll in a new group health care plan, your COBRA coverage will cease.

Although COBRA coverage is only intended to be a short-term solution, it’s often your best option for maintaining health care coverage. 

Purchasing Health Care Insurance Through the Insurance Marketplace

With the Affordable Care Act (ACA), individuals are given the option of comparing and purchasing individual medical health care insurance plans. You will find that you can buy your freelancers health insurance plan during the open enrollment period. This event takes place between November 1 and December 15 each year. However, the open enrollment period was extended through January 15 this year, so it’s essential to check.

If you experienced what is referred to as a “qualifying event,” you’ll be able to obtain an insurance plan outside of the open enrollment period. Qualifying events include a loss in health care coverage through your employer or Medicaid, CHIP, or Medicare, loss of coverage through your partner’s insurance plan, changes that impact your household (such as a divorce), death, an addition to the family, or a change in your residence. Some additional qualifying events include obtaining citizenship in the US, being released from jail or prison, joining or leaving the AmeriCorps, a change in income that impacted your insurance coverage, or being accepted into a recognized tribe. 

Things to Keep in Mind When Choosing Health Insurance as a Freelancer

Understanding some basic insurance information can help you choose the right health insurance for freelancers. Getting advice from a special freelance health insurance agent can also be helpful to make sure you get the right level of coverage for your needs. Here are a few types of insurance plans available to you.

  • HMO: A Health Maintenance Organization plan requires you to choose a primary care provider (PCP) who will refer you to other providers when needed. Unless you need OB/GYN care or experience an emergency, your PCP will need to refer you to other providers when you need to see a specialist. These plans don’t offer out-of-network coverage, so they are best suited for someone who doesn’t plan to travel regularly and can see the same doctor.

  • PPO: A Preferred Provider Organization plan doesn’t require you to choose a PCP. You don’t need referrals to see medical specialists. These plans offer coverage for out-of-network providers and are a good option if you live a more mobile lifestyle. These plans are also better for people with uncomplicated health care needs. If you have complex health care needs, you may be better served by having a PCP to support your complex care needs. 

  • HSA: A Health Saving Account eligible plan allows you to use your Health Saving Account to pay your health care expenses. Unless you’re paying for COBRA premiums, you can’t use HSAs to pay your health care premiums. You can identify these plans on the Marketplace, and they usually have higher premiums.

Understanding Tiers and Categories Associated with Insurance Plans

There are four basic tiers associated with health insurance plans. You will generally find that the premium costs and plan coverage increase as you move up the tiers. Bronze plans are the least expensive and offer 60% coverage of your health care costs. Silver plans provide you 70% coverage, while Gold offers 80%. You will get the most coverage (90%) when you buy a Platinum plan. In North Carolina, there are only three tiers available for you to choose from; Bronze, Silver, and Gold.

You will also find that the lower health insurance tiers have higher deductibles than the more costly plans. Aside from the basic tiers, you can also find what is referred to as “catastrophic health plans.” These plans are a cost-efficient way for healthy people to protect themselves from the potentially crippling costs of unforeseen major illnesses and accidental injuries. You should note that you must be younger than 30 years old or experience a situation that qualifies you for a hardship exemption to qualify for this option. 

One of our licensed health insurance agents in NC can help you work out the best option for you.

Educate Yourself about the Costs Associated with Your Health Insurance Plan

When we talk about the cost of health insurance, most people only think about the monthly premium cost. However, the deductible associated with your insurance plan can significantly impact your ability to stay within your monthly budget. Your deductible is simply the out-of-pocket costs you are expected to meet before your insurance plan starts covering your medical expenses. You can expect your deductible costs to be higher if you choose a lower-tier health insurance plan. 

You may be surprised that your deductible for a low-tiered plan can run as high as $8700. So, if you’re a freelancer who wants to limit your monthly medical costs, buying a low-tier insurance plan may not actually be in your best interest. 

The other cost to be mindful of is your copay and coinsurance percentage amounts. Your copay refers to the portion of your medical care you need to pay yourself. Your coinsurance percentage is the portion you pay on top of your deductible.  Be sure you understand how much you are expected to pay for services you think you might need. If you have a plan that requires you to pay a percentage of the cost of care, for example, 50% of any tests and x-rays, finding out local costs for these services can be helpful. You may find that you’re more comfortable paying a higher premium if your overall cost of anticipated medical expenses is high. 

Make Yourself Aware of Savings Options

As a freelancer, pay particular attention to premium tax credits. When you buy your health insurance through the Marketplace, you may find you’re eligible for a tax credit. This credit will lower your premium costs based on your income estimates for the coming year. If you make between 100 and 400% of the federal poverty level, you’ll qualify for a tax credit in North Carolina and in all 50 states. 

It’s also worth finding out if you qualify for a ‘Cost Sharing Reduction (CSR).’ Referred to as ‘extra savings’ on the Marketplace, a CSR is a discount that can lower your deductible, coinsurance payments, and copayment requirements. If you qualify for this discount (which can be determined when you answer questions on the Marketplace application), you’ll need to enroll in a Silver-tier plan to get these savings. This discount also means you’ll be eligible for a lower out-of-pocket maximum limit, meaning you’ll have to pay less before your insurance plan starts covering all your medical costs.   

You can use any or all of the tax credits you qualify for. However, be aware that if there are discrepancies in your earnings, you may have to pay back the difference at the end of the year. On the other hand, if you earn less than anticipated, you’ll get the difference back when you file your taxes. In addition, to qualify for these cost-saving options, you must use the Marketplace to purchase your health insurance. Our NC health insurance agents can access the tools to assist with this extra step.

Other Options to Consider

There are some additional options to consider when looking for health insurance for freelancers:

  1. Medicaid: If you live in a state with extended Medicaid coverage, this may be an option.

  2. Join a family member’s health insurance plan: If you’re under the age of 26 or have a spouse with health care coverage, consider having a family member include you on their plan.

  3. Out-of-country coverage: If you’re lucky enough to be a globe-trotting freelancer, you may want to consider insurance coverage for when you’re not in the US. If you make short trips, travel insurance may be sufficient. If you find yourself in the enviable position of traveling for long stints while pursuing your freelance career, you’ll want to consider International Health Insurance Coverage. 

SEE ALSO: Self-Employment and Health InsuranceWhat Freelancers Should Know About Health Insurance

Help to get the right plan

If you’ve been searching for special health care for freelancers, then it’s a good idea to talk to a health insurance agent who can talk you through the various options available for healthcare for freelancers. Compare plans now or get in touch with us today.

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