At a glance
- Self-employed people with no employees usually buy coverage through the individual Health Insurance Marketplace, on HealthCare.gov or a state Marketplace.
- Savings are based on an estimate of household income for the year; for self-employment that means net income, after business expenses.
- Metal levels (Bronze, Silver, Gold, Platinum) describe how a plan splits costs with you, not the quality of care.
- When income changes during the year, updating the application helps avoid owing money back at tax time.
Where self-employed people buy coverage
People who work for themselves, such as freelancers, independent contractors, gig workers and sole proprietors, do not have an employer offering them a plan. HealthCare.gov explains that if you are self-employed with no employees, you can use the individual Health Insurance Marketplace to enroll in flexible, high-quality coverage, and you may qualify for savings based on your income. In states that run their own Marketplace, HealthCare.gov sends you to the state's site.
The Centers for Medicare and Medicaid Services (CMS) runs the federal Marketplace and oversees the rules plans must follow there. Plans sold on the Marketplace cover a standard set of essential health benefits, and they cannot turn you down or charge you more because of a pre-existing condition.
If your income is low, the same Marketplace application checks whether you or your family qualify for Medicaid or CHIP. The Medicaid and CHIP pathway explains those programs.
Estimating income that changes
The hardest part of the application for many self-employed people is the income question. Marketplace savings depend on your expected household income for the coverage year, not last year's, and self-employment income is rarely steady.
HealthCare.gov explains that self-employed people report their net self-employment income: business income minus allowable business expenses. Its page "What's included as income" describes what to count. Reasonable ways to build an estimate include:
- starting from last year's net self-employment income on your tax return;
- adjusting for work you have already lined up, clients you have gained or lost, and any change in expenses;
- adding other household income, such as a spouse's wages, that also counts.
An estimate will rarely be exact, and HealthCare.gov expects that. What matters is making the best estimate you can and updating it when things change, as explained below.
Worked example (invented)
A freelance designer had a slow first half of last year and a busy second half. For the coming year, they take last year's net figure from their tax return, add a new monthly contract they have already signed, and subtract the cost of new software they will need. They use the result as their estimate and set a reminder to revisit it halfway through the year. This example describes no real person.
How the premium tax credit works
The main form of Marketplace savings is the premium tax credit, which lowers what you pay each month for a plan. HealthCare.gov explains that how much you qualify for depends on your household size and expected income, and that the Marketplace application calculates it.
You can usually choose how to receive it:
- In advance, paid straight to your insurer each month to lower your premium, or
- When you file your federal tax return, as a credit for the full year.
If you take the credit in advance, it is reconciled when you file your taxes, by comparing the advance payments with the amount you actually qualified for based on your final income. If your income turned out higher than estimated, you may have to repay some of the advance payments. If it turned out lower, you may get more back. For people with uneven income, this reconciliation is the reason estimates and updates matter. Some people choose to take only part of the credit in advance to reduce the risk of owing money; that is a personal decision worth discussing with a qualified tax professional.
What the metal levels mean
Marketplace plans are grouped into four main categories named after metals. HealthCare.gov explains that the categories are based on how you and the plan split the costs of your care, and have nothing to do with the quality of care.
| Category | Plan pays, on average | Pattern |
|---|---|---|
| Bronze | About 60 percent | Lowest monthly premium, highest costs when you get care |
| Silver | About 70 percent | Moderate premium and moderate costs when you get care |
| Gold | About 80 percent | Higher premium, lower costs when you get care |
| Platinum | About 90 percent | Highest premium, lowest costs when you get care |
The percentages are averages across a typical population, not what any one person will pay. HealthCare.gov also describes catastrophic plans, available to people under 30 and to some people with a hardship exemption, which have low premiums and very high deductibles. Comparing plans also means checking the network for your doctors and the list of covered drugs, which differ between plans in the same category.
Extra savings on Silver plans
HealthCare.gov explains that people whose income falls within a certain range may qualify for cost-sharing reductions, which lower deductibles, copayments and coinsurance. These extra savings are available only if you enroll in a Silver plan. The Marketplace application tells you if you qualify. Because the income ranges are tied to the federal poverty guidelines, which are updated each year, this site does not state them.
Keeping your application current
HealthCare.gov asks Marketplace enrollees to report changes to their income and household as soon as possible, and it lists the kinds of changes to report: income changes, marriage or divorce, a new child, gaining an offer of other coverage, and moving, among others. For self-employed people, a significant change in income, up or down, is the main reason to update.
Updating changes the amount of any advance premium tax credit going forward, which reduces the gap that has to be settled at tax time. Some changes, such as a move or a new child, may also open a Special Enrollment Period that lets you change plans.
When you can sign up
Being self-employed does not open a special sign-up window on its own. You can enroll during the yearly Open Enrollment period, or outside it if a qualifying life event, such as losing other coverage when you leave a job to work for yourself, gives you a Special Enrollment Period. The enrollment periods pathway explains both, and the lost my job pathway covers leaving job-based coverage.
Questions to take to official help
Have these answers ready
- What was your net self-employment income on last year's tax return?
- What work and expenses do you expect this year, and what other income does the household have?
- Who is in your tax household?
- Which doctors and prescriptions do you need a plan to cover?
HealthCare.gov or your state's Marketplace, and the Navigators they list, help with applications at no cost. Questions about how the credit affects your tax return are for a qualified tax professional.
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