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Working as a freelancer and small business owner means that you are responsible for paying for your own health, liability, life and all other forms of insurance coverage. This can be a costly expense, but necessary, especially considering current and future health needs. Without insurance, you may be obligated to pay 100 percent for out-of-pocket costs of anticipated expenses or unexpected medical emergencies, and that can run into thousands of dollars, if not more. Insurance will protect you against damages, losses and legal action that may come from a dissatisfied client or customer.
Without insurance, you risk jeopardizing your health or losing your business and source of income. So what are your best insurance options as a freelancer and where should you begin looking for the right coverage?
Health Insurance Options for Freelancers
Unless you have a spouse or domestic partner that’s working and has an employer-sponsored plan that you can be on added to, or you are under 26 years old and can still be part of your parent's insurance, you’ll need to shop around for your own health plan. Luckily, there are a number of options to consider:
Affordable Care Act (ACA)
This government healthcare act has been in effect for over 10 years and has helped provide insurance options to millions of formerly uninsured Americans. The act created a healthcare marketplace at both the state and federal levels allowing individuals to find a plan that meets their needs and budget. There are 37 states that are members at the federal level and 15 at the state level.
Market health insurance can even help subsidize your payments depending on your annual income. For an example of how this works, visit the site and see which subsidies you can claim. To help make the process of finding insurance less stressful, the site has been designed to be user-friendly, allowing for easy enrollment and making changes to existing plans.
Short for Consolidated Omnibus Budget Reconciliation Act, COBRA allows individuals to continue their employer-sponsored health plan even after leaving their job. Coverage under COBRA can last for a period of up to 18 months. If you're new to freelancing and are happy with the coverage provided by your former employer, COBRA will allow you to keep the same doctors and level of coverage you had with your work plan. Keep in mind this option involves paying hefty premiums.
This government-backed medical plan has been around for over 50 years and helps provide coverage to Americans aged 65 and older. This plan covers about 50 percent of the medical expenses of those enrolled, leaving participants to find supplemental coverage to help cover the remaining costs.
Private Health Insurance
In addition to the options listed above, private health insurance coverage is also available. If you are interested in seeing what plans are available with Aetna, UnitedHealth, Human, Cigna or any other major healthcare providers, you can apply directly on their sites or an independent insurance agent can help navigate you through the private health plan that would best serve your needs.
Make sure to also look into group and union health insurance through organizations such as the Freelancers Union, AARP Health or Alliance for Affordable Services. Be sure to check and see if you need to join these organizations and pay dues before you begin reviewing coverage options.
What to Consider When Choosing a Health Plan
Finding your own health coverage can be costly. Unlike an employer-sponsored plan, which covers a portion of this expense, you are responsible for the full premium amount as a freelancer. Here are some key considerations — and questions to ask — when making a decision on your healthcare plan:
- Will the cost of the premium fit your freelance budget? Freelancing often comes with unpredictable income, so choose a plan that you can afford.
- What is the co-pay for an office visit? Is your primary doctor part of the plan you are looking into?
- How much is the co-pay to see a specialist?
- What costs are involved with urgent care or an emergency room visit?
- Are there out-of-pocket expenses and deductibles that need to be met for the year?
- Is the annual checkup free?
- Is prescription drug coverage offered? If so, how much does the plan cover?
- Are the medicines you are taking covered under the new plan? Are you responsible for a co-pay? Is there a deductible?
- Does the plan offer vision and dental coverage?
- What are the pregnancy benefits?
- Does the plan include discounted services for preventive care?
- Is your hospital included in the network?
- Does the plan include a concierge or member support service if you have questions regarding your policy?
All these are important considerations to make when choosing the right healthcare plan. A mistake can be costly, and signing up for a plan will lock you in until the next open enrollment period, which can be several months away.
Liability Insurance for Freelancers
In addition to health insurance, you may want to consider liability insurance for your freelance business. Here are two common types.
General Liability Insurance
As a freelancer and small business owner, protecting your assets, reputation and work is critical to ensuring your company’s prospects for continuous operation of services and growth. There is a certain level of risk in running any small business, which can range from an accidental fall outside your home to a breach in terms of service. Every self-employed individual can also still fall victim to injury and loss of business through slander and the defamation of character. By having general liability insurance, you gain protections against legal actions that can harm your business and answer lawsuits and other legal activities that would otherwise prove costly, if not prohibitively expensive.
Professional Liability Insurance
Professional liability insurance applies to freelancers that are certified and licensed in their job and work as accountants, bookkeepers, financial advisors or life coaches where advising people is a key role of the service. This type of insurance coverage provides protection if, for whatever reason, a client sued you for offering poor advice or acts of negligence due to errors or omissions.
Other Types of Insurance for Freelancers
Freelancers and small business owners can also consider additional insurance plans to help protect their investments, including:
- Commercial Property Insurance, which will cover damages to your building or office, as well as the cost for replacing or repairing expensive equipment.
- Short-Term Disability Coverage to help if you have a short-term injury or illness, such as a broken bone or an operation where the recovery time is expected to last a few months.
- Long-Term Disability Coverage, which is essential if you suffer a serious injury that can affect your ability to work for several months or years.
- Cyber Liability, meant to protect against breach of your online information or the information of your clients and customers as a result of a malicious attack by hackers.
- Life Insurance to help provide for your family in the event of your death. Depending on your age and health, the cost for this type of insurance will vary. The younger and healthier you are, the lower the premium costs.
To work as a successful freelancer or small business owner, you’ll need to make sure that you are “covered” in case something goes wrong. A health event or legal action can derail your business and affect your income and future prospects. Having insurance will help provide a blanket of protection that can support you and your business through difficult times and can also give you the ability to get back on your feet and back to work.
Peter Mavrikis is an author and editor with over 25 years of experience in publishing. He has worked as the Editorial Director for Barron’s Educational Series, as well as Kaplan Test Prep, where he ran the test prep, foreign language, and study guide.
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