Finding Insurance When You’re a Freelancer
Freelancing will always involve some risk, but there’s no need to take on more risk than you must.
Unlike working for someone else, working for yourself means setting up all the benefits you used to get through your employer. If you’re making the switch to self-employment, here are some pointers for finding policies to protect your health, your income, and your new business.
Health Insurance for the Self-Employed
No matter what type of business you’re in, if you’re self-employed or a freelancer in the US, you’re going to have to become an expert on your health insurance options.
Depending on how many insurers offer plans in your area, you may have plenty of coverage options or next to none. Costs can vary from sort of reasonable to jaw-dropping. Benefits can vary dramatically from one plan to the next. And of course, the health insurance landscape can change depending on politics, so what works today may not apply in a year or two.
For now, though, here are some places to look for coverage that offers you the best combination of cost, benefits, and participating providers.
- Get covered by someone else’s policy. If you’re married, in a domestic partnership, or young enough to stay on your parents’ health insurance, going with their coverage may be your best bet in terms of cost and ease of enrollment.
- Check out the marketplace. Even if you don’t qualify for a subsidy, you can still buy a plan on Healthcare.gov during the open enrollment period. Note that once you buy a plan through the marketplace, you’ll need to notify them each year if you buy a plan somewhere else. Otherwise, you’ll be automatically enrolled in a marketplace plan that you’ll have to cancel.
- Contact insurance companies directly. You may be able to buy an individual plan directly from an insurer. This will almost certainly cost more than a marketplace plan, but it can be a good option if the insurer’s network includes the doctors and hospitals you prefer and the local marketplace plans don’t.
- Talk to your payroll service provider. Some offer small group and individual health insurance policies for their clients as part of their benefits-administration services.
- Go to class. Some community colleges and universities offer affordable, low-deductible health insurance to students taking as few as three credit hours, even via distance learning. This might be cost-effective even with tuition and fees factored in—and depending on the classes you take, it can help you with your professional development.
- Talk to other self-employed people in your industry and city to find out about local and industry-specific options. You can also pull together a group of friends or peers to split up health insurance research tasks and share information. I’ve done this with a group of about half a dozen friends, which is how I learned about some of the school insurance programs.
Whatever option you choose, read the benefits, limits and exclusions carefully before you enroll to avoid costly surprises later.
For example, one academic plan I looked at recently would have saved me more than $1,000 a year on premiums, had a deductible in the hundreds rather than the thousands, and it included my preferred doctors. Unfortunately for this EpiPen-carrying allergy patient, the plan specifically excluded allergy treatment, so my risk of unreimbursed ER bills and medication outweighed the lower premiums. You’ll also want to find out ahead of time if you’re locked into the plan for a full year or if you can change plans mid-year if you find a better option later on.
Disability Coverage for Solopreneurs
Compared to health insurance, disability coverage doesn’t get much attention, but it should. Health insurance may cover most of your medical bills, but if you’re too sick or injured to run your business for more than a few weeks, how will you pay your rent, utilities and grocery bills?
A disability policy can give you up to about 60% of your take-home pay (not your business gross) while you’re unable to work, and the monthly premium for many plans costs less than a couple of delivery pizzas. The catch is that it’s not always easy to qualify for disability coverage as an independent worker.
The first place to start is with your insurance agent or financial planner, but you may have to look elsewhere if their companies don’t insure freelancers. That was the case when I started shopping for disability coverage about five years ago. I ended up finding a policy through the Freelancers Union, a New York-based advocacy group. They have since rolled out a National Benefits Platform that lets you search for several types of insurance, including disability.
The premiums you pay will be based on your age, your income, and the elimination period (30 to 90 days) before you start getting benefits after a claim. Benefits aren’t forever – they’re usually capped at a certain number of years based on your age or end when you hit retirement age. Review your coverage every couple of years to see if you need to buy a larger policy to keep up with your (ideally) growing self-employment income.
Liability Coverage for Independent Service Providers
No matter what type of freelance work you do–writing, web design, makeup artistry, or something else–you’ll sleep better if you have a professional liability policy that pays to defend you in case of a client lawsuit. If you want to land contracts with government agencies and enterprise clients, you’ll almost certainly need to show proof of liability insurance in order to bid.
As with disability coverage, start your liability coverage search with your insurance agent, financial advisor, or the Freelancers Union. You can also check with professional organizations in your industry and look for industry-specific insurers.
Other types of insurance you may need
If you handle sensitive or confidential client information, a data breach policy can protect you in case of digital or physical theft. Does your work take you outside the country? You’ll probably want international health and medical evacuation insurance, because most US-based health insurance policies don’t cover out of country expenses.
Remember that your insurance needs may change as your freelance business grows. It’s a good idea to review your coverage once a year to make sure you have the right policies and the proper coverage amounts. Learn more about what you’ll need to start your small business and keep it running.