The Best Health Insurance for Self-Employed People

According to the United States Bureau of Labor and Statistics, approximately one in nine people were self-employed in the U.S. in 2009. Many of those individuals accounted for the uninsured population, mostly due to a lack of affordable coverage availability to those who make too much money to qualify for Medicaid and also have no access to a group health insurance plan.

Individual Insurance Restrictions

• As a self-employed individual, you must purchase private health insurance; your coverage benefits may be limited if you plan to become pregnant or have an existing medical condition for which you may not be able to find health coverage. If you receive a preexisting-condition denial after applying for insurance, you may qualify for affordable health private insurance coverage through the federal preexisting-condition insurance pool or a similar insurance pool organized by your state.

Affordability

• Unfortunately, individually-purchased health insurance is typically much more expensive than the group plans available through employers. However, you may be able to curb the costs by opting for a high deductible or a major medical plan that requires a greater out-of-pocket cost when you use the insurance rather than each month when you pay your premiums. Additionally, some high-deductible insurance plans qualify you for a health savings account, to which you can contribute health savings funds tax-free. As long as you only use the money in the account to pay for IRS-qualifying medical expenses, you will pay no federal income tax on the money in a health savings account.

Tax Benefits

• Though you may have to pay more for health insurance as a self-employed person, you enjoy tax benefits that other individually-purchased health insurance policyholders do not. The IRS considers health insurance premiums you pay for you and your dependents to be a qualifying business expense. You can deduct 100 percent of the premiums you pay each year for health insurance on your federal income taxes, which equates to the same tax benefits that employees receive from group health insurance plans through work.

Dependency

• Before purchasing your own individual health insurance, check to see if you qualify for dependency coverage on a spouse's or parent's health insurance policy. In 2010, the federal government mandated that insurers offer health coverage to adult children of policyholders until age 26. Even if you are self-employed and not financially dependent on your parents, you can qualify, assuming you do not have access to coverage through your spouse's employer.