Health Insurance for Freelancers and Contract Workers

Getting adequate (and affordable) health insurance can feel like a nightmare when you're self-employed. Here's a guide to help you find the right plan for you.

Health insurance is a major stressor for many workers, particularly freelancers and contract workers. The cost—and the less-than-user-friendly system—can be extremely overwhelming for those on their own when researching and funding health care.

When I quit my job to freelance full-time and moved from the United States to Canada, I had a lot of questions. Did I maintain my health insurance? Could I secure coverage abroad? How could I, now that I didn't have an employer providing it? 

After much research, I've learned that all health insurance options are not created equal. And depending on your unique circumstances, you may have various eligible options to comb through. But keep in mind: Plans and coverage laws vary by state, so Health can't recommend specific plans for your situation and location. 

Still, here's what you need to know about the main options available to freelancers, links to specific exchange sites, and definitions of important health insurance terms. Additionally, learn about fees and costs and what factors to consider before choosing health insurance as a freelancer or contract worker.

COBRA Health Insurance Plans and Eligibility

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers and their families to continue group health benefits through a former workplace. COBRA is a great option if you've recently left your job or are considering freelancing. The benefits of COBRA last for a limited time while you secure a new plan.

Who Qualifies for COBRA?

A "qualified beneficiary" is an individual eligible for the plan. Typically, that's you, the former employee, and potentially your partner or dependent children. 

To be a qualified beneficiary, you must be enrolled in the insurance plan before the "qualifying event." The qualifying event refers to whatever happened to make you eligible for COBRA, including:

  • Quitting your job 
  • Being involuntarily terminated
  • Taking a reduction in your hours 

If you're eligible for COBRA, you should receive a letter from your employer or insurance company asking you to opt-in or waive the continued coverage. Normally, you'll have 60 days to decide. And note that you can change your mind as long as it's within that 60 days.

COBRA does not include life and disability insurance. And religious organizations and companies with fewer than 20 employees are typically exempt from COBRA requirements.

COBRA Costs and Coverage

COBRA costs depend entirely on the type of health insurance you hold at your former workplace. 

However, the bill may be a shock if your employer formerly covered most or all of the premium. You will now be responsible for 100% of the cost. Additionally, you may notice an additional 2% for administrative fees. Check with your human resources (HR) department for specific information about how much you can expect to pay.

If you have a health savings account (HSA), you can use it to pay COBRA premiums. Requiring continued coverage is the only instance you can use an HSA to pay insurance premiums.

Depending on the qualifying event, coverage can last from 18 to 36 months. However, your coverage may terminate prior to that for the following reasons:

  • The employer ceases to offer coverage—including going out of business.
  • You fail to pay premiums on time.
  • The qualifying beneficiary becomes entitled to Medicare or joins another group health plan, like a new job with insurance coverage.

COBRA is only meant as a transitional option. You may want to consider continued coverage if you:

  • Don't want a disruption in health care while leaving a job 
  • Have pre-scheduled appointments or procedures you don't want to jeopardize losing on a new plan
  • Are the primary insurance provider for your family

The Department of Labor FAQs on COBRA is a great resource for common questions if you need additional information.

Purchasing Your Own Plan Through the Insurance Marketplace

The Affordable Care Act (ACA) created a federal marketplace, or exchange, where individuals can search, compare, and purchase insurance plans. 

Choosing a plan is done during the open enrollment period, between November 1 and January 15 of each year. However, if you want your coverage to begin on January 1, you must enroll by December 15 of the previous year. To ensure coverage, you'll need to be prepared to pay your first premium by the first day of the year.

The one exception to open enrollment is if a qualifying event occurs during the rest of the year, you're eligible to get coverage outside of open enrollment, referred to as a special enrollment period.

You may be eligible for enrolling during a special enrollment period if you meet one of the following:

  • Got married
  • Had a baby, adopted a child, or placed a child for foster care
  • Got divorced or legally separated 
  • Someone on your previous plan recently died 
  • Changed residencies
  • Gained membership in a federally recognized Native American tribe 
  • Gained status as an Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder
  • Became a U.S. citizen
  • Left jail
  • Began or ended service as a member of AmeriCorps 

The main public exchange available is the federal marketplace, a database of health insurance plans open to those of all types of employment in 36 states. The following states each have state exchange websites:

All plans offered through government exchanges must cover 10 essential health benefits, birth control, breastfeeding, and pre-existing conditions.

States may add additional requirements. For example, New York opens special enrollment periods for people who become pregnant. The insurance company Cigna created a resource in 2021 that outlines state-by-state additional coverage.

To start your insurance plan search, go to the exchange for the state where you live and click "browse and compare plans." You'll enter your biographical information and estimated annual income. And you'll have the option of additional filters. You should add a filter for any specific providers you want to be included in your coverage. Make sure to enter the specific healthcare provider's name and not the clinic for the best results.

You'll see the prices and projected government aid based on income from the previous year. So, if it's your first year freelancing, you'll need to come up with an estimate.

Try to be as honest and realistic as possible. If you project too high and don't make that much, you'll lose out on financial assistance. Alternatively, if you estimate too low and make more, you'll need to repay tax credits at the end of the year.

To avoid paying too much or too little, you can update your information on the federal exchange if you have a significant change in income. Or, if you live in a state that runs its marketplace, go to the state site linked below:

Things To Know Before Choosing a Plan

There are several different types and tiers of health insurance plans that come with varying costs and coverage. Here's what you need to know about your options on the federal marketplace.

Type of Plan

Health Maintenance Organization (HMO)

HMO plans require you to choose a primary care provider (PCP). A PCP is a general practitioner who acts as the gatekeeper and must refer you to all other health providers except emergency healthcare providers and OB-GYNs. 

HMO plans are not flexible and offer no out-of-network coverage. In other words, if you see a healthcare provider not part of the HMO, you are responsible for the costs. HMOs are best if you're looking for a low-cost option or want a specific healthcare provider to manage your care.

Preferred Provider Organization (PPO)

No PCP is necessary for a PPO plan, meaning you do not need a referral to a specialist. PPOs cover visits to healthcare providers that are in-network and out-of-network. But the costs will be higher if you choose a healthcare provider who is out-of-network than one who is in-network.

PPO plans are good if you're mobile, don't have a lot of health concerns that require a point-person PCP, or get care across state lines.

HSA-Eligible Plans

HSA-eligible plans allow you to pay for healthcare expenses, except for your monthly premium (unless you qualify for COBRA), with funds in your HSA.

Remember: HSAs often have higher insurance premiums than HMO and PPO plans. The marketplace will notify you if a plan is eligible.

Flexible Spending Account (FSA)

An FSA allows you to put untaxed money (up to $3,050 per employer) into an account that you can later use for out-of-pocket healthcare costs. Your employer may also add to your FSA. Also, you can submit claims to your FSA via your employer for reimbursement. 

Keep in mind that if you have an FSA and are leaving your job, the money is essentially "use or lose," unlike an HSA. With an HSA, your savings carry over.

Insurance Plan Categories and Tiers

Health insurance plans are broken down into five tiers. As a general rule, premium costs and coverage increase with each level. However, the low-level tiers also have high deductibles, a set amount you pay for services before your insurance plan starts to pay. 

The five tiers include:

  • Bronze plan: This is the cheapest plan, with 60% coverage of expenses. Bronze plans are often best for healthy, young freelancers who don't have regular prescriptions (outside of birth control) or care.
  • Silver plan: This plan provides 70% expense coverage of expenses. Silver plans are slightly more expensive than bronze plans but can be cheaper if you qualify for aid.
  • Gold plan: This plan provides 80% expense coverage of expenses. Gold plans are best if you have a lot of health needs. While they're more expensive than bronze and silver plans, gold plans have low deductibles and high coverage.
  • Platinum plan: This plan provides 90% expense coverage of expenses. Like gold plans, platinum plans are expensive but have low deductibles and high coverage.
  • Catastrophic plan: These plans have the cheapest premiums and highest deductibles. But a catastrophic plan can be a very affordable option to protect against worst-case scenarios while still paying for routine care out of pocket. Only eligible individuals qualify, including people under 30 or those with a hardship exemption.

There isn't much difference in cost between plans from different insurance companies in the same tier. The distinction is where you're covered for care. So, filters for specific healthcare providers you want are essential to ensure your coverage. If you don't have regular healthcare provider appointments, consider whether it's worth paying a bit more for a larger network.

Some companies, such as Molina, have a small network and can thus negotiate lower premiums. Those companies may be good if you're OK with fewer options than other plans. Others, like Premera Blue Cross, have large networks, which come with more expensive premiums.

Additionally, major companies, like Kaiser Permanente, usually require you to seek services at their centers. However, they cover some individual healthcare providers at non-Kaiser clinics. 

Plan Costs and Payment

Depending on your type and tier of health insurance, the costs of your monthly premiums and deductibles will vary. Still, there are a few ways to save money on health insurance costs.

Premiums and Deductibles

In addition to monthly premiums, keep in mind that you'll pay out-of-pocket expenses until you meet your deductible. 

In 2022, individual monthly premiums ranged from $221 in Maryland to nearly $621 in West Virginia for bronze plans. For gold plans, those costs ranged from $296 in Maryland to $839 in West Virginia. But keep in mind that you should expect the cost of your monthly premium to increase for each additional dependent on your plan.

Note that cheap plans can have deductibles as high as $7,000, while high-tier plans can be $2,000 or less. The costs depend on your age, health, and needs.

As long as you pay attention to premiums, deductibles, co-pays, and the cost of specialist services, there shouldn't be any hidden costs. 

Just make sure to check whether the plan charges a flat fee or a percentage for tests, prescriptions, and other services. For example, you'll need to decide whether you're okay with always paying $30 for X-rays or prefer a plan to pay 50% of each facility charge for an X-ray.

Ways To Save Money

There are ways to get those costs down. A cost-sharing reduction (often referred to as "extra savings") is a discount that lowers how much you pay out of pocket for deductibles, co-pays, and co-insurance. If you qualify, you'll be required to enroll in a silver plan.

Eligibility is based on income, so you'll need to estimate as accurately as possible as a freelancer. You can check your eligibility here.

Premium tax credits are slightly different. Tax credits lower your premium but not other costs. Eligibility is based on income estimates. But you qualify in all states if you make between 100% to 400% of the federal poverty level. If you make above 400%, you can qualify in some instances. You can use some, all, or none of the tax credit to help pay your monthly premiums.

However, since you're only estimating your income as a freelancer when you apply, you'll need to pay the difference back if you qualify for less or no credit at the end of the year. On the flip side, if you qualify for more, you'll receive the difference as a refund when filing taxes.

You must also sign up through the federal marketplace to use the above benefits. Don't get sucked into private exchanges because they're claiming to be more "user-friendly."

Also, you can consult a broker, who can apply and recommend specific plans. Also, navigators can help you apply (but can't recommend specifics) in your state. You can find brokers on the federal marketplace. They're typically free to consult.

Or, you can visit the following links to each state's qualified broker lists:

Other Health Insurance Options

Beyond plans available on the federal marketplace or through private insurers, there are other ways to obtain health insurance, depending on your situation. 


Medicaid can be a good option if you meet the following criteria to qualify:

  • You're a United States citizen or legal immigrant between the ages of 19 and 64.
  • You don't qualify for Medicare, which is only available for people 65 and older. 
  • You can provide proof of income that is below your state's threshold.

You can also check if you're eligible for a children's health insurance plan (CHIP) if you have a child. Note that those programs vary in name by state, so check state on the federal marketplace and the official Medicaid website for additional state-by-state details.

A Family Member’s Plan

If you're under the age of 26 or an eligible spouse, you might be able to join a family member's plan. The family member would need to talk directly with their HR department or insurance provider to determine whether they can add you to their insurance plan.

Options for Out-of-Country Coverage

If you are traveling outside of the United States, you'll probably want to ensure you're covered abroad. If you are mostly taking short trips, purchasing travel insurance may be all you need. World NomadsAllianz, and Roam Right are great, affordable options.

If your job allows you to work from home permanently and you're considering traveling to different locations while working, you'll probably want international health insurance. 

Note that international health insurance is not the same as travel insurance. Instead, international health insurance covers you in another country where you'll live for months or years. CignaAXA, and GeoBlue are reliable options.

A Quick Review

Getting health insurance coverage as a freelancer takes time and research to find the right plan for you and any family members. 

Understanding the types of health insurance plans, categories and tiers, costs, and payment requirements can help determine which insurance option is best for you. Also, insurance brokers and navigators are available in many states if you need additional assistance.

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  1. Department of Labor. Continuation of health coverage (COBRA).

  2. Department of Labor. FAQs on COBRA continuation health coverage for workers.

  3. Centers for Medicare & Medicaid Services. COBRA coverage & the marketplace.

  4. Department of Labor. COBRA continuation coverage.

  5. Centers for Medicare & Medicaid Services. Health savings account (HSA).

  6. Centers for Medicare & Medicaid Services. When can you get health insurance?.

  7. Centers for Medicare & Medicaid Services. Special enrollment period (SEP).

  8. Centers for Medicare & Medicaid Services. Special enrollment opportunities.

  9. Centers for Medicare & Medicaid Services. What marketplace health insurance plans cover.

  10. Internal Revenue Service. Questions and answers on the premium tax credit.

  11. Centers for Medicare & Medicaid Services. Health maintenance organization (HMO).

  12. Centers for Medicare & Medicaid Services. Preferred provider organization (PPO).

  13. Centers for Medicare & Medicaid Services. Using a flexible spending account (FSA).

  14. Centers for Medicare & Medicaid Services. The health plan categories: Bronze, silver, gold & platinum.

  15. Centers for Medicare & Medicaid Services. Bronze health plan.

  16. Centers for Medicare & Medicaid Services. Silver health plan.

  17. Centers for Medicare & Medicaid Services. Gold health plan.

  18. Centers for Medicare & Medicaid Services. Platinum health plan.

  19. Centers for Medicare & Medicaid Services. Catastrophic health plans.

  20. Kaiser Family Foundation. Average marketplace premiums by metal tier, 2018-2023.

  21. Centers for Medicare & Medicaid Services. Cost sharing reduction (CSR).

  22. Centers for Medicare & Medicaid Services. Premium tax credit.

  23. Centers for Medicare & Medicaid Services. Advance premium tax credit (APTC).

  24. Centers for Medicare & Medicaid Services. The children's health insurance program (CHIP).

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