What does it mean to be self-employed?
If you have a business that makes an income for you and you are the owner, then you are self-employed. If you do have some employees, even if it is just one, you qualify as a small employer and can use the SHOP Marketplace for small businesses for health care coverage for yourself and your employees.
What are the coverage options for the self-employed?
A law that passed in 2010, known as the Small Business Jobs and Credit Act, provides for 23 million self-employed individuals who will become eligible to receive an important tax break just by purchasing health insurance. By deducting the new tax credit from an individual’s Self Employment Tax, small business owners will be encouraged to purchase health insurance. With these business owners making up 78 percent of all American small businesses, this is a significant piece of legislation.
In order to qualify for the tax credit on health insurance for the self-employed, the health insurance costs being claimed must have been paid during the tax year. By addressing affordability - the single most important aspect of buying health insurance for self-employed individuals – this new tax law will be saving small business owners up to 15 percent on individual health plans. The tax savings does have a few restrictions, however, including a self-employment wage limit.
If you're self-employed or a small business owner, you can also use the individual Health Insurance Marketplace. By doing so, you’ll be able to enroll in a health coverage program that is great for those who own a small business and need to ensure themselves or a couple of people.
If you’re self-employed with no employees, maybe you’re a freelancer or contractor, you can enroll through the Marketplace after you’ve filled out an application. This will tell you if you qualify for any tax credits or other savings, which again are based on income and household size. You may also qualify for some type of free or low-cost plan as well.
There are several types and categories of health care coverage you can choose from. Plans range from premiums that are low with high deductibles for emergencies or tragedies, as well as more expensive plans that have much lower deductibles for people who use health care services or visit doctors’ offices more often. It’s important to really evaluate your health care usage before deciding which plan to purchase. Although one plan may initially cost less, if you or your family member make many doctors visits, you could end up spending more on deductibles if your medical insurance isn’t the best option for you.
Be prepared when applying or filing for deductions.
When it comes time to fill out your Marketplace application for the health coverage you’ll purchase, you’ll end up having to estimate your income for the following year. Marketplace savings bases your coverage on the upcoming net income estimate rather than the previous year’s income, so you’ll need to make sure you feel confident in your estimate or ask an expert to help you determine what you think it will be. Because you’re self-employed it isn’t always easy to guess how much money you’ll make in the upcoming months as you’re not salaried, so be cautious in your estimate. You don’t want to underestimate extremely, but you also don’t want to assume you’ll make a lot more money than you do.
What happens if you don’t get health insurance?
Whether or not you’re employed, you must have health insurance. If you do not have at least the minimal essential coverage based on what the government says, you’ll have to pay a penalty. One thing to keep in mind, even if money is tight, is that if you opt out of having insurance, you’ll be paying both the penalty as well as the cost for any medical needs you have while uninsured. Most times, no one plans to have to go to the doctor, and an emergency can happen to anyone. While it may seem like you’re winning by skipping out, you could end up putting yourself in debt if the unexpected happens.
When cost is what is going to stop you from getting insurance, it’s important to see a broker to get an Arizona medical insurance quote, as he or she will be able to help you evaluate your options.