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Chapter
5

Get healthcare and insurance coverage

In the last step, you wrote your PTO policy. Today, you’re going to learn how to get set up with insurance. We’ll note that much of this step is geared toward freelancers based in the United States.

Healthcare 101

The United States system is not set up to make healthcare and insurance easy for self-employed people. You’re going to have to do a lot of research to figure out what’s best for you, price- and coverage-wise.‍

Everyone’s situation is different depending on your health, what state you live in, and who your dependents are if you have any.  This part of the guide is tailored to U.S. freelancers, other countries have different setups altogether. ‍

Heads up: this is a long section. I’m going to walk you through the important parts of this step, but it’s a link-heavy section that will need you to do a lot of your own legwork.‍

Tip: In your research, you'll see a lot of healthcare options that require you to give a phone number to see estimates or quotes. I highly recommend you set up a Google Voice number to use because otherwise you'll be harassed by robocalls and texts for years to come. 

Let’s break it down by type of coverage.

Enrolling in a healthcare plan as a freelancer

If you’re in a W-2 job, your employer provides healthcare. That company will typically offer a variety of plans, you choose one and a small portion of the total cost out of your paycheck, while the employer covers the rest. As a freelancer, you’ll need to navigate the waters yourself.‍

First, if your spouse works a W-2 job, you may be able to join their plan. Even if you’re not married, you may qualify as a domestic partner and receive coverage that way. Because that’s paid by the employer, you might save money since employers normally pay into the plan. 

If you’re not married or don’t have a domestic partner, no problem. You should still have access to quality and affordable care under the Affordable Care Act.‍

Healthcare costs vary, but it may be useful to know that for the lowest-cost bronze tier monthly plan, the average premium is $329 per month. The average benchmark premium is $456 per month. 

Open enrollment

You have one important time of year to keep in mind: Nov 1st through January 15th. This is Open Enrollment, which is when you can adjust or change coverage. If you miss it, you’ll have to wait until next year (unless your circumstances fall into a Qualifying Life Event, like having a baby or moving). If you just left your job to start freelancing, you may also be eligible for COBRA coverage, which allows you to stay with the same plan you originally had at your previous job. You’ll probably pay more since your employer no longer pays into your premiums, but it’s worth checking. ‍

Missed Open Enrollment? It’s not the end of the world. You’ll be able to get short-term coverage. It’s worth noting that these plans are usually not great. They don’t have to comply with ACA standards, so they’re just for emergencies until the next Open Enrollment period.

Find your marketplace

Start by researching your marketplace. Some states, like Massachusetts and Vermont, have their own marketplaces. Here’s the link to find your marketplace.‍

I highly recommend checking the Freelancer’s Union to see if they offer a health insurance plan in your area.

Choose a plan

The more time you spend researching, the more likely you are to save money. If you look at all the plans and don’t find one that fits your budget, you may prefer to choose a high-deductible health plan. You’ll pay less per month, but you’ll pay a bigger deductible when you do get care. 

You should also check for the network size. The bigger the network of healthcare providers, the more likely there is to be one in your area. 

How much should you pay for healthcare?

The most important thing is to assess your healthcare spending and pad it for 30% to be safe to account for changes and emergencies.  For example, if you need to go to therapy, will that be covered?‍

Say I assume I’ll need $2,000 per year to cover healthcare spending based on previous years. I add 30% on top, giving me $2,600 per year. This gives me a good number to check against plans and premiums to find the best plan for me.

‍Dental and Vision

The same goes for dental and vision.W-2 jobs offer these plans and sometimes pay into the premium. Most healthcare plans you choose as a freelancer will also include dental and vision, and you might even get a discount for bundling plans. However, if your health care plan doesn't include those, or if it’s too expensive, you can still hunt around for better offers.

Check Healthcare.gov’s website for dental and vision plans. See if your state offers separate marketplaces‍.

Short-term and long-term disability coverage

Remember Dawn? What if, instead of the flu, she had broken her arm and couldn’t work for two months? Ideally, Dawn would be enrolled in short-term disability (STD) coverage. This means that despite being unable to work, she’d be able to get around 60-80% of her typical monthly salary. And it wouldn’t be taxed.‍

I don’t usually like linking to websites that sell stuff as a resource, because they’re not the ideal source of truth in these matters, but Guardian Life (an insurance provider) estimates that you should expect to pay between 1-3% of your annual salary for an STD coverage premium. ‍

Investopedia put together a fairly comprehensive list of good options if you want to check that out. ‍

Now, what if Dawn didn’t just break her arm but suffered a long-term disability condition that meant she couldn’t work for years while she recovered? This sounds like a worst-case scenario, but it does happen. 

Stat: The Social Security Administration estimates that one in four twenty-year-olds will become disabled before they turn 67. It may be worth considering long-term disability coverage, too.

A few things to keep in mind:‍

  • You can pay extra to get a shorter waiting period. Typically, plans will have a “waiting period” when your benefits don’t kick in. For example, the Freelancer’s Union offers a 30-day waiting period and a 90-day waiting period option. 

  • The price typically goes up the older you are but also depends on gender and lifestyle.

  • You may want to look for residual or partial benefit riders. As freelance writers, there are disabilities that affect our ability to work but don’t stop it altogether. If you can still do some work, you may be able to get a portion of your monthly income from coverage while still rebuilding your business.

As a freelancer, you might be eligible through the Social Security Administration and not need to pay premiums at all. The problem is it’s tough to qualify for those benefits, and the SSA only offers long-term disability benefits, not short-term. 

You should also check your state’s policy on short-term disability coverage. Seven states offer a program covering temporary disabilities.

Paid family leave

You may be planning to start or grow a family soon and want to investigate how to take time off. W-2 employees get federally mandated twelve weeks off. Self-employed individuals aren’t so lucky.

The first thing you should do is check if your state offers any paid family leave (PFL) options. For example, Massachusetts offers a pretty comprehensive plan, as do California and Washington. Just search: “paid family leave freelance” + [your state].‍

If you don’t live in one of those states, you can still choose to go with a private short-term insurance provider, which typically covers six weeks after giving birth. 

It’s worth opting into this plan sooner rather than later. For example, contractors in New York have to wait for two years before being able to access paid family leave benefits, and other states have similar policies. At least know what your state’s policy is.

Other types of coverage

Life comes at you fast. As a freelancer, you’re often at the mercy of the whims of fate and circumstance. Even if you’re covered for health, vision, dental, disability, and family, there are still other contingencies you may want to look into.

Professional liability insurance

You’ve probably never had a problem with any of your clients, but it may happen one day that a client wants to sue you for product negligence or even slander. Professional liability insurance (PLI) covers you against those fees and damages. This one is best to keep in mind as you grow, rather than at the start of your freelance career. If you don’t work from home, you may want to get coverage for any injuries that occur on your premises.

Property insurance

No matter where you work, it may be worth protecting against damage done to property, equipment, and content. I know I rely on my laptop, and if it were stolen, this kind of insurance would be critical. If you have renter’s insurance, you may be covered for stolen or damaged property depending on the scenario. Be sure to check your plan!

Life insurance

This is a typical offer under W-2 employment, but worth considering as a freelancer too.‍

Choose your policies and bake it into your prices

Here’s an exercise to help you decide. Maybe you already have insurance coverage, want to change it, or need to get it. Go back to your 1-year, 5-year, and 10-year plans and see if your coverage reflects where you want to be. For example, if you want to start or grow a family, make sure you get paid family leave. 

Here’s a short insurance checklist, based on what we covered:‍

  • Healthcare

  • Dental

  • Vision

  • Short term disability

  • Long term disability

  • Paid family leave

  • Professional liability insurance

  • Life insurance‍

Then do the calculations based on your income and expected expenses to make sure you can pay for health coverage. I highly recommend baking this cost into the price of your services. Add that to whatever the baseline of your desired income.

Here’s your template to determine how much you should earn per year:

If I want to earn $ ______ (salary) per year but expect to pay $____ (healthcare and insurance premiums) per month in insurance premiums and coverage, I should charge prices based on an expected salary of $_____(salary) + $______ (healthcare and insurance premiums) per year.

Tip: remember, some self-employed individuals can take advantage of tax deductions for premiums. We’re not tax experts but check with your tax advisor to see if you qualify.

Recap

In this step, you investigated healthcare and other insurance options. Let’s recap:

  • Which insurance policies have you chosen?

  • What amount did you bake into your prices or hourly rates to pay for your health care and other insurance?

  • What goals from Step One are you prioritizing with your insurance choices?

Next, you’ll learn about another kind of benefit: insurance for your professional development. What, you thought you didn’t have to go to conferences anymore because you were a freelancer?

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