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A Practical Guide To Health Insurance For Independent Contractors

It's not easy to get personalized and affordable health insurance as a self-employed independent contractor. Here's a quick guide to assess the best options.

There are many perks to being an independent contractor, including setting your hours and the ability to work for multiple clients at once. However, a significant drawback can be how hard it is to find health insurance. Health insurance for independent contractors can take work to navigate.

Here’s what to know.


Independent contractors don’t qualify for 1099 employee benefits

As a 1099 employee, you’re not considered a part of the companies you serve. Even if you work full-time for a specific business, they’re under no obligation to offer you any benefits, including parental leave, paid time off, or health insurance.

Legally, any full-time U.S. business employer with 50 or more employees must offer a health insurance plan to cover routine doctor’s visits and medical emergencies. The employer builds in the premiums to paychecks. Many employees are willing to sacrifice pay for the peace of mind it provides.

However, 1099 employees don’t have the advantages that W2 workers have. If a company offers benefits, you must report them as taxable income. What a contract can provide you with depends on the state. The more spread-out employees are, the more complicated trying to provide insurance becomes.

Thankfully, there are ways to get insured without the help of an employer.


Federal Programs

There are a few options offered through the federal government that can benefit independent contractors.


ACA Marketplace

The Affordable Care Act created the Health Insurance Marketplace, accessible online via Healthcare.gov, allows non-employee sponsored (ESI) proviers to post policies anyone can purchase.

To qualify for the marketplace, a plan must cover ten “essential” medical services.

  1. Emergency Care
  2. Overnight Hospital Stays
  3. OBGYN and Newborn Care
  4. Urgent Care Visits
  5. Prescriptions
  6. Mental Health and Substance Use Treatment
  7. Rehabilitation and Habilitation Services and Devices
  8. Preventative Screenings and Chronic Disease Management
  9. Pediatric Dental and Vision Care
  10. Bloodwork and Other Laboratory Testing

While all must offer coverage for these scenarios, the extent of coverage depends on which plan you choose. If you select a plan through a marketplace, the provider can’t deny you based on a preexisting condition and cannot place a lifetime or annual cap on your coverage. Each state has a dedicated ACA hub for its residents, with most using healthcare.gov.

Open enrollment runs typically from November 1 through January 15, though you can also apply. There are several special enrollment options for certain circumstances, like changing from a W2 to a 1099 employee.


Medicaid and Medicare

One of the advantages of being an independent contractor is that you can work from home with a flexible schedule. It can be a great career choice for someone unable to work in an office setting or on a work site. More retired people seek more income and 1099 work can become supplemental income.

Medicaid is a needs-based federal insurance program that can meet the needs of disabled or low-income workers. The coverage is free, and enrollment is year-round. Learn more at Healthcare.gov.

Medicare is a program offered to those 65 and over adults in the U.S., funded partly by taxpayers. As a beneficiary, you will pay based on the plan you want and your tax history. Learn more at Medicare.gov.


Private Options

The following are options for directly purchasing an individual insurance plan outside of government options.


Direct Enrollment

You can bypass the government by purchasing health insurance directly from the insurer or through a private exchange. These direct enrollment websites let your broker purchase through an insurer’s private website. It’s a newer practice and the benefits for independent contractors are uncertain, though it could be worth browsing if you get overwhelmed by government marketplaces.



Short-term insurance plans don’t often offer comprehensive coverage but can help fill the gap when becoming an independent contractor. They’re generally affordable and meant for generally healthy people with a low risk of a major medical event. Depending on the plan, short-term insurance can last a few months to more than a year. While you have a short-term plan, you likely won’t get coverage for prescription, mental health, or preventative care, so you’ll need to weigh your needs with the potential benefits to decide if it’s worth getting. The plans you can get depend on your state, with twelve states and Washington D.C. banning them.


Limited Benefit

Limited benefit insurance plans offer low-cost coverage best used as an interim or supplementary option. You can use it to help fill in the gaps of another plan, with some specializing in covering accidents or critical health conditions. They can cover preexisting conditions your other private insurance plan doesn’t. You can also get a low-premium, high-deductible catastrophic health plan that can help cover a sudden, severe injury or illness. Indemnity plans can help you avoid major medical debt if you have an extended hospital stay.


Group Insurance

Some groups outside of your employer will offer insurance options. There are two main forms to consider.


Membership-Related Organizations

If you belong to a union or guild, they might offer group plans for independent contractors. They’re often low-cost and can be a suitable option for employment-provided plans. If you still attend, you could get health coverage through your college or university. Many allow you to pay for the insurance through a separate fee in your annual tuition. Since these plans are exclusive to a group, you can easily find other members to share their experiences with. You also can take advantage of a more traditional process.


Health Care Sharing Ministries

This method of health coverage relies on a group of individuals paying into a fund, which then gets distributed based on need. Health care sharing ministries are almost always religious, but you don’t always have to belong to a religion to join. These ministries can be useful, but it’s vital to thoroughly research one before joining. Some require that you don’t have a preexisting condition or engage in activities not accepted by the religion backing it. You might not get sufficient coverage just because you pay into the fund with other members.


A Family Member’s Plan

In certain circumstances, you can get on a parent’s or spouse’s plan.


Parental Insurance

If you are 25 and under and a parent has insurance, you can get on their policy until your 26th birthday 7. Many employee-sponsored and independent insurance options let users add children, which is helpful as you begin a career as an independent contractor. You can remain on the plan regardless of whether you aren’t financially dependent, don’t live with them, or get married.


Spouse’s Insurance

You could get on their plan if your spouse has employee-sponsored insurance instead of finding another. Most insurers have family plans to provide for you and any children you have. Depending on the options, you could pay less for one family plan than the two of you would pay for individual plans.


Securing health insurance as an independent contractor

It can be hard for independent contractors to secure health insurance. Knowing your options and thoroughly investigating them can help you find the best plan.


Beth Rush is the career and finance editor at Body+Mind. She has 5+ years of experience writing about the power of human design to reveal entrepreneurial potential and time management strategies. She also writes about using the emotion of awe to activate our leadership prowess. You can find her on Twitter @bodymindmag. Subscribe to Body+Mind for more posts by Beth Rush.


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