Being self-employed can have a lot of pluses, including a more flexible schedule and the ability to work from home. But when it comes to benefits, not having an employer's health care plan can leave you anxious about what your options are and how you'll be able to afford it.
And with the recent presidential election, many people wonder if the Affordable Care Act, known as "Obamacare," will continue. No matter what changes may occur, they won't take effect until 2018, according to David Wiley, an insurance agent with HealthMarkets in Atlanta.
Here's what else he said you need to know if you're self-employed and are looking for health insurance:
An independent agent can help you navigate the process
Your situation – and the market – can change dramatically from year to year, Wiley explained, so what was a good choice for a health care plan one year may not be the next. If you need help, independent health insurance brokers can lay out all of your options since they aren't affiliated with only one plan.
Your premiums are tax-deductible
If you're self-employed and show a profit for the year, the cost of your health insurance premiums is fully deductible on your personal income taxes. The amount of your premiums can be recorded on line 29 of your 1040 form, and you'll have your adjusted gross income reduced by this amount.
You may receive a subsidy
You may qualify for a subsidy in the form of a tax credit if your net income falls below a certain level, Wiley said. The specific amount changes each year based on federal guidelines, and the amount is paid in advance.
Subsidies cut the cost of premiums by an average of about 73 percent for those who qualified during the open enrollment period from November 2015 and February 2016.
Estimate your earnings carefully
The amount of the subsidy you'll receive – if any – is based on your expected income for the upcoming year. For many self-employed workers, that may be hard to accurately calculate. Estimate to the best of your ability, perhaps erring on the side of overestimating your earnings. Otherwise, if you underestimate, you may have to return part of your tax credit when you file your taxes.
Consider joining a group
Organizations including professional groups, unions and alumni organizations sometimes offer group health insurance plans. In addition, it may be possible to form your own group for this purpose, Wiley said. Forming your own group has very specific legal requirements, so while it may be worth considering, it's not as simple as it may seem.
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