4 Strategies For Entrepreneurs and Gig Workers Who Want to Take Control of Their Healthcare Leverage these must-know healthcare tips to find the right policy and save on your taxes.
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When I was 19 years old, living at home with my parents and running my first business out of my bedroom, healthcare was the last thing on my mind. But as I grew up and started a family, I had to learn more about healthcare so I could be ready and informed in the event of a health crisis in my home.
What follows is an overview of how to find an affordable policy that will cover you, your employees and your family, plus how to lower your taxes at the same time.
1. Start with the right policy
If you can't get on your spouse's plan, you'll likely be responsible for finding your health insurance. Exploring the health insurance marketplace, or exchange, is a great place to start. This marketplace allows gig workers and entrepreneurs to compare their state's health insurance options. From there, you can easily make an enrollment decision.
If you're struggling to understand the differences between plans, the marketplace site should have a "navigator" available to walk you through the benefits and drawbacks of each option. They can also help to answer any questions you might have.
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2. Know your plans and premiums
As an entrepreneur or gig worker, you'll want to strike the right balance between picking a good policy and selecting a policy you can afford. But here's the thing: A policy with a lower monthly premium won't necessarily be the most affordable. All plans in the health insurance marketplace fall into one of the five following categories:
Catastrophic plans are only available to people under the age of 30 who qualify for what's called a "hardship exemption." They're ideal for those looking to schedule a major procedure but who won't need to use their insurance frequently.
Conversely, bronze plans feature low monthly premiums and high deductibles, while platinum plans offer high premiums and low deductibles. (Silver and gold plans, if you haven't already guessed, fall somewhere in the middle.)
So, to save money on your policy, start by determining how often you'll need coverage. Then, you can figure out what plan best suits your needs. Other cost-saving strategies include figuring out how much of a health insurance subsidy you can obtain and seeing if you qualify for a premium tax credit.
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3. Deduct, deduct, deduct
Since 1987, the self-employed health insurance deduction has helped independent workers cut back on their healthcare costs. Gig workers and entrepreneurs can deduct their monthly health insurance payments if they are:
Unable to receive coverage from an employer or spouse
Fully self-employed (i.e., working freelance as a designer or running a new startup)
Earning a business profit (meaning their income is higher than their business expenses)
You can deduct medical expenses including:
Fees or payments to doctors
Payments to inpatient facilities (i.e., hospitals, drug and alcohol treatment centers)
Transportation to-and-from essential medical care (i.e., ambulance, fuel costs, etc.)
Itemize these deductions. Note: if you're a single filer with deductible expenses totaling less than $12,400 in 2020, you'll want to take what's known as the standard deduction instead.
4. Set up a Health Savings Account
Consider setting up an HSA to manage your healthcare expenses. An HSA is a government-backed savings account that will allow you to set aside money pre-tax to cover qualified healthcare costs.
HSAs have a lot of benefits. For you, as an entrepreneur or gig-worker, it can lower your taxes and help you pay for out-of-pocket costs that insurance might not cover. You can use it to save for retirement too.
It's important to note that in most cases, however, HSA funds can't be used to cover your insurance premiums. You'll also want to make sure your health insurance plan is HSA-eligible (which you can do in just a few clicks by visiting the exchange website).
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Whether you're a solopreneur or oversee a large staff running a major business, you can easily leverage these four tips to lower premiums, increase tax incentives and improve hiring, retention and satisfaction by having happier, healthier employees. As the great essayist and philosopher Ralph Waldo Emerson said, "health is wealth."