Health care spending is a major expense for many households. However, when you work for “the man,” your health care costs are often subsidized by your employer. The situation is different when you’re a business owner or self-employed. Managing health care costs when self-employed takes a little more planning.
Are You Eligible for a Subsidy Under the ACA?
The first thing to consider is whether or not you are eligible for a subsidy under the Affordable Care Act (ACA, also named Obamacare). If you meet certain income requirements and can purchase health insurance coverage via one of the health care exchanges, you can get a bit of a discount on your health premiums. It’s important to make sure you are accurate, though. If you end up claiming a larger subsidy than you are entitled to, it will come back to haunt you at tax time.Can You Make Do With a Less Expensive Plan?
You might not need the most expensive health plan. Review your needs to determine if you might be able to get by with less coverage. Because my son is on my ex’s health insurance plan, I only have to worry about my own plan. I have few health care needs, so a “bronze” level plan on the health exchange is adequate. This is a less expensive plan. It doesn’t cover some health care services, but they are services I don’t use. Double-check your needs and get the least expensive plan that will meet them.Is a High-Deductible Plan Right for You?
One of the best ways to manage health care costs when self-employed is to choose a high-deductible plan. This means that you will have to pay more out of pocket for your care. On the other hand, you can see a quite substantial decrease in your monthly premium payments. If you have an emergency fund built up that can handle the up front costs you will have with a high-deductible plan, it can be worth it to get the high-deductible plan to improve your cash flow.
Self-employed people need to plan the health care by themselves. Chayjitti Hongmanee/ShutterStock
