Shopping for Health Insurance When You Are Self-Employed

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self employed man talking on phone
The group health insurance rates at my day job increased 33% this year, after rising just over 30% last year. I have a family of three, and the new health insurance rates are now 11% of my salary, which in my opinion, is too high (while I won’t disclose my actual salary, I will state…

The group health insurance rates at my day job increased 33% this year, after rising just over 30% last year.

I have a family of three, and the new health insurance rates are now 11% of my salary, which in my opinion, is too high (while I won’t disclose my actual salary, I will state that I earn a fair amount).

The new health insurance rates made me think about getting individual health insurance for my family.

Group vs. Individual Health Insurance?

Before we go further, it is important to understand the difference between individual health insurance and group health insurance.

Basically, group health insurance plans guarantee all members of the group coverage, regardless of their health risk.

Because coverage is guaranteed with group plans, they can be more expensive for relatively healthy individuals than an individual plan, which is priced based on your specific health history.

In my case, my family and I are healthy, so it is a good idea to investigate individual health insurance options.

Determine Your Health Insurance Needs To Find The Best Plan

self employed man talking on phoneWhen comparing health insurance plans it’s important to make sure you are not only comparing apples to apples, but also getting the best plan for your needs.

Keep an open mind when comparing health insurance options, whether that is an HMO plan, PPO plan, a high deductible health insurance plan with a health savings account, hybrid, or other.

Finding And Purchasing Health Insurance While Self-Employed

One of the biggest concerns among self-employed individuals is health insurance costs, which can be expensive.

Some self-employed individuals may be eligible for a group health insurance plan if they meet certain criteria, or they may be eligible for other health benefits, such as COBRA benefits.

For example, if you are leaving a traditional job to become self-employed, you may be eligible for COBRA.

If you are not leaving a job that offers health insurance, then ignore the tip regarding COBRA coverage.

Determine Group Health Insurance Plan Eligibility

The first thing you need to do is determine if you are eligible for a group health insurance plan through your spouse, or through a trade group or organization to which you belong or can join.

Group health insurance may be more expensive, but it is also guaranteed coverage and will likely be a better deal if you have pre-existing health conditions, which may exclude you from individual health insurance, or make the premiums too expensive to be a viable option.

You can search your local area for trade groups, unions, or other organizations to join. Another option is to join the Freelancer’s Union, however, health insurance is not available in all states.

You can also search for various groups within your state, such as a farm bureau, which often has lenient membership requirements (meaning you may not actually have to be a farmer).

Ask other small business owners, freelancers, or others who may be able to help you find a group health insurance plan.

Look At COBRA Options

COBRA health coverage is a law that allows individuals to continue using their former group health insurance plan when they leave their company.

Many companies subsidize health insurance premiums as part of their employee benefits package.

Unfortunately, the company subsidy will no longer be in effect when you leave your company- leaving you footing the entire health insurance bill.

COBRA benefits are also only available for a limited time.

Even though you will be responsible for paying the entire bill and will need to find other insurance after a few months, COBRA may be a good option for you while you search for an individual health insurance plan, or while you gain membership to an organization that offers group health insurance.

Search For An Individual Health Insurance Plan

As previously mentioned, individual health insurance may be a less expensive option for people with relatively good health. It’s also worth noting that the term “individual” refers to a non-group health insurance plan, so it could cover just you or you and your family.

To find an individual health insurance plan you can search the websites of specific health insurance companies, or use an aggregator service such as to pull multiple insurance quotes and compare them on the same site.

I found much more efficient than visiting individual sites, and the rates were the same when I ran a spot check.

From there, determine your health insurance needs, run a search, compare insurance prices, and select the best plan based on your needs.

I found several good options, and one plan, in particular, that should save me several thousand dollars per year over my current group health insurance plan.

Visit to view health insurance plans and get a free quote.

The same principles can be applied to getting individual dental insurance. Check out to get a free dental insurance quote.

Consider A High Deductible Insurance Plan and HSA

You can open a Health Savings Account if you have a high-deductible health insurance plan. HSAs offer a tax-advantaged savings account for health and medical-related expenses.

HSAs have annual contribution limits because the contributions are tax-deductible on your federal income taxes.

There are other benefits in addition to the tax deductions: you can invest your HSA and the earnings grow tax-free.

Withdrawals for qualifying medical expenses are tax-free, otherwise, you may be subjected to taxes and penalties, similar to retirement account early withdrawal penalties.

Apply For A Temporary Health Insurance Plan

Temporary health insurance is just that – it is designed to be a short term solution to help bridge a gap between times of employment or while you search for a more permanent solution.

There are some downsides, however.

Many temporary health insurance plans are rife with fine print and exclusions and are often more expensive than a comparable individual health insurance plan.

On the plus side, they do provide coverage should you need it and also help maintain constant coverage, which is important – some individual plans will not accept you if your coverage lapses.

Don’t Let Coverage Lapse!

Make sure you have your new health insurance coverage in place before canceling your previous health insurance plan, especially if you will be going from a group health insurance plan to an individual health insurance plan.

Coverage may be limited or more expensive if you have a lapse in health insurance coverage.

Sign Up For The Plan That Best Meets Your Needs

Your next step is to go out and get some quotes, then compare the health insurance options you find.

Before signing any contracts or agreements, be sure to investigate the company, the plan, and read the fine print.

Health insurance is there to protect you, and the last thing you want is to discover the protection you thought you had doesn’t really exist.

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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Ryan says

    I had an individual high deductible plan with a HSA account for two years and I really appreciated the tax benefits. In fact, the tax savings pretty much paid for the insurance! The only downside was reading about recision rates and worrying about what might happen if I ever did get truly sick.

  2. David says

    Also, don’t ever get sick and then try to get self-employed insurance. You won’t be able to get it, trust me on that one.

  3. Jenny says

    Excellent post. I’ve been shopping around for insurance for the past couple of weeks. One other resource I found was (National Association for the Self-Employed). I haven’t received my quote yet, but it looks promising.

    • Marie at Detour Services says

      Jenny, when you get your quote back, be wary of a company called Mega Life and Health. Just do a quick search, and you’ll see all the lawsuits and complaints out against them. I’m sure there are legitimate plans and offers out there, but the connection of these two organizations is worrisome and worth a second look.

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