What advantages does the Affordable Care Act offer to the self-employed?
Three significant advantages under the ACA:
- The potential for an easier shopping experience,
- The possibility of financial subsidies, and
- The ability to easily compare one plan against another.
Comparing Health Insurance Options
Comparing health insurance options from several health insurers will be much different than insurance shopping in the past, says Claire McAndrew, a senior health policy analyst with Families USA. Previously, the self-employed had to go from one insurer to another, making it difficult to compare plans and options within plans, she adds.
What’s more, all health insurance plans offered in the marketplaces must comply with federal standards, meaning each plan must provide comprehensive coverage.
In the past, insurers offered bare-minimum plans, which were often inadequate if a consumer’s health costs were high.
You can find your state’s marketplace at the federal web site or, if your state runs its own marketplace, such as those in California, Kentucky, and New York, start there.
The Commonwealth Fund offers an interactive map of state-based and federally facilitated marketplaces.
Financial Subsidies Available
One of the biggest advantages for the self-employed is the federal tax subsidies for qualified individuals whose income falls at or below 400% of the federal poverty level. If your adjusted gross income qualifies you for a subsidy, you may receive an advanced premium tax credit applied directly to your monthly premiums, McAndrew says.
Or, use this Subsidy Calculator from HealthcareACT.com.
Don’t Worry, Be Covered
Another advantage for the self-employed is the ACA requires insurers to offer coverage to everyone even if you, your spouse, or a child has a pre-existing condition.
Previously, insurers would exclude self-employed applicants for pre-existing conditions because they were not part of a group.
What’s more, health insurers cannot charge more if you or a family member has a medical condition. In fact, when you apply, no one can ask if you have any medical conditions. All you’ll be asked is your age and whether you smoke. Some marketplaces, such as those in Washington, D.C., and California, don’t even ask about smoking, McAndrew says.
Mark Your Calendar: Dates to Remember
You can start shopping now in your state’s marketplace. But you can wait to choose and pay for a plan until Dec. 23 for coverage that begins Jan. 1, McAndrew advises.
You also have the option of waiting until March 31 to enroll and pay for coverage and not face a tax penalty but McAndrew cautions that until then, you will be uninsured. After March 31, anyone who lacks health coverage may be liable for a tax penalty when filing a 2014 tax return, she says.
Some Important Advice
The self-employed are like most consumers in that choosing a health insurance plan often means having access to a certain doctor, hospital, or both.
To ensure that a certain provider is in your network, verify by calling the doctor and hospital, McAndrew advises. Do so after you choose a plan but before you complete the application and pay.
What to Watch for?
Here are two issues to watch in the coming years.
1.) How much will your health insurance costs rise or fall each year, and 2.) how much will the advanced premium tax credit amount change each year?