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Actions Health Insurance Plans for Self-Employed People: Why They Matter
Lots of people get the wrong idea about freelance and self-employed careers. They assume that because there's no set schedule, a freelancer can take days off whenever they want.
That can be true to a certain extent, but there's another side to that coin. A self-employed individual can't take a paid vacation, extended sick leave or even a sick day. If they don't work, they don't get paid. That's why health insurance plans for self-employed people are so important.
Self-employed and freelance workers need to protect their health — which starts with a reliable health insurance plan. Here are a few more reasons why anyone in this situation should have coverage.
Deduct the cost on your taxes
Self-employed workers and freelancers pay hefty tax bills throughout the year. One way to reduce that tax burden is to utilize as many deductions as possible.
Unlike the 9-to-5 crowd, self-employed individuals can deduct the cost of monthly premiums Opens in new window on their taxes. This applies whether they use the standard deduction or itemize.
Self-employed workers can deduct 100% of the cost of monthly premiums for themselves and their family members if their spouses don't qualify for an employer-sponsored plan.
Consumers who buy their own health insurance often sign up for a high-deductible plan because of the low monthly premiums. High-deductible plans are eligible for health savings accounts (HSAs), which are special savings accounts that can be used for medical bills and other health-related costs.
Contributions to an HSA are tax-deductible, making it another option for self-employed individuals looking to pay fewer taxes. Plus, HSA withdrawals are tax-free if they're used for qualified medical expenses. The funds in an HSA never expire and can even be invested in mutual funds and exchange-traded funds (ETFs), similar to an IRA or 401(k).
Provide financial stability
A report from the National Institutes of Health found that those without health insurance spent a larger portion of their income on medical bills Opens in new window. You may think you're saving money by not paying for medical bills, but this often leads to more out of pocket expenses.
If you don't have insurance and get diagnosed with cancer or a major chronic illness, you may end up owing tens or even hundreds of thousands in out-of-pocket treatment costs.
If you avoid the doctor because you don't have health insurance, you might delay getting treatment. This could eventually result in a more extreme diagnosis, requiring more expensive interventions. Health insurance plans for self-employed individuals may seem expensive up front, but paying for a plan tends to be less costly than not being covered at all.
Protect your health
Delaying a trip to the doctor can not only lead to a bigger bill — it can permanently impact your health. Those without health insurance are less likely to go to the doctor Opens in new window when something is wrong, allowing minor ailments to grow into major illnesses. In addition, people without health insurance generally have a higher mortality rate. This is why it's so important to obtain coverage: Both your livelihood and your health depend on it.
Footnotes
Zina Kumok is a freelance writer specializing in personal finance. She has written for the Associated Press, Indianapolis Monthly and more. She also writes a blog about how she paid off her student loans in three years.
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