Health Insurance When You Work for Yourself

If you do not have access to a spouse's employer plan, the ACA Marketplace is usually the primary option. Marketplace plans cannot deny you or charge more for a pre-existing condition, they cover essential health benefits including preventive care, and they are the only place you can receive a premium tax credit. Buying an equivalent plan directly from a carrier outside the Marketplace means paying full price with no subsidy available, regardless of your income.

Make a careful, defensible projection of your net self-employment income for the coverage year — after business expenses, not gross receipts — then update it as reality arrives. Last year's total is a reasonable starting point if your work is steady; if you changed direction, gained or lost a major client, or only recently went self-employed, it is not. This is the part of the process worth doing with someone who does it every week.

Self-employed individuals can generally deduct premiums for themselves, their spouse, and their dependents, and it is typically an above-the-line deduction, meaning you do not have to itemise. There are real conditions: the deduction is generally limited by your net self-employment income, and it is typically unavailable for any month you were eligible for a subsidised plan through your own or your spouse's employer. There is also an interaction between the deduction and the premium tax credit that gets genuinely circular. Make sure your tax preparer knows you bought your own coverage — this is not tax advice, and the details deserve a professional with your full return in front of them.

Run the comparison rather than defaulting to it. Employer plans often cover the employee generously and family members far less so, which makes adding a spouse expensive. But if that employer offer is considered affordable under the rules, it generally blocks you from receiving a Marketplace subsidy — which changes the math substantially. This is a case where the cheapest-looking option and the best option frequently diverge, and it is worth having both priced.

If you enroll in a Marketplace plan you will receive Form 1095-A in the new year. It reports your coverage and the advance premium tax credit paid on your behalf, and your tax preparer uses it to reconcile that credit against your actual income. Do not file without it, and check it against what you actually paid — errors happen and are fixable.

Usually not as a long-term plan. They advertise low premiums because they are not comprehensive coverage — they can screen for and decline pre-existing conditions, may exclude significant categories of care, and do not qualify for subsidies. For a genuine gap of a few weeks between coverage they can make sense. As the plan a self-employed person relies on for a year, they are generally the wrong tool.

A different set of options opens up. Small group health plans are available to Utah businesses with a surprisingly small number of enrolled employees, and an ICHRA lets you reimburse employees for individual coverage instead of sponsoring a group plan — which gives you a predictable budget rather than a renewal you cannot forecast. Worth understanding before you need it.