Health Insurance When You're Self-Employed: Your Real Options in the U.S.

For many people, health insurance is the scariest part of leaving a job. The good news is that self-employed Americans have several solid paths to coverage, and a tax deduction that employees do not get. The bad news is that each path has rules and deadlines that are easy to miss. This guide walks through them in the order most people should consider them.

1. A spouse's or partner's employer plan

If your spouse has access to an employer plan that covers family members, it is often the cheapest and simplest option, because the employer usually pays part of the premium. Compare the extra cost of adding you to the plan against a Marketplace plan in your own name; for some households, especially when the employer contributes little toward dependents, the Marketplace is cheaper.

One important interaction: if you are eligible for a subsidized employer plan through your spouse, you generally cannot take the self-employed health insurance deduction for those months, and you may not qualify for Marketplace premium tax credits if the employer coverage is considered affordable for family members.

2. The ACA Marketplace

The Health Insurance Marketplace (HealthCare.gov, or your state's own exchange) is where most freelancers buy individual coverage. Plans must cover essential health benefits, cannot turn you down or charge more for pre-existing conditions, and are grouped into Bronze, Silver, Gold and Platinum tiers by how costs are shared.

Premium tax credits

Depending on household income and size, you may qualify for a premium tax credit that lowers your monthly premium. The credit is based on your estimated income for the coming year, which is tricky when your income varies. A few practical points:

• For the self-employed, the income that counts is based on net profit, not gross revenue. Business expenses, half of self-employment tax and retirement contributions all lower it.
• The credit is reconciled on your tax return using Form 8962. Underestimate your income and you may have to pay some of the credit back; overestimate and you get the difference as a refund.
• Update your Marketplace application during the year if your income changes significantly. It is the easiest way to avoid a big repayment.
• How generous the credit is depends on the rules in force for the year. The expanded credits Congress enacted in 2021 were scheduled to end after 2025, so check the current rules on HealthCare.gov when you shop.

When you can enroll

Open enrollment for HealthCare.gov typically runs from November 1 to January 15, with state exchanges setting their own dates. Outside that window you need a qualifying life event, such as losing job-based coverage, moving, marriage or having a baby, which usually gives you 60 days to enroll. Leaving a job counts: if you are about to go freelance, mark your coverage end date and apply within that window.

3. COBRA continuation

COBRA lets you keep your former employer's plan, typically for up to 18 months. You keep your doctors and deductible progress, which matters mid-treatment or late in the plan year. The cost is the full premium the employer used to share, plus up to a 2% admin fee, so it is usually expensive. You generally have 60 days to elect COBRA, and coverage is retroactive once you pay. Losing job-based coverage also opens a Marketplace special enrollment period, so compare both before deciding; choosing COBRA and later dropping it voluntarily does not open a new window.

4. High-deductible plans with an HSA

If you are healthy and have some savings, a high-deductible health plan (HDHP) paired with a Health Savings Account can be one of the best tax deals available. Contributions are deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free too. Unlike an FSA, the money stays yours forever, and after 65 it can be used like a traditional IRA for non-medical spending.

Under tax legislation passed in 2025, Bronze and catastrophic plans bought through the Marketplace are treated as HSA-compatible starting in 2026, which widens the choice for freelancers. Confirm a specific plan's HSA eligibility with the insurer before you open an account.

5. Other options to approach carefully

• Short-term health plans are cheaper but can exclude pre-existing conditions, cap benefits, and are limited in duration by federal and state rules. Treat them as a brief bridge, not a plan.
• Health care sharing ministries are not insurance. They are not required to pay claims and are not regulated like insurers.
• Professional associations and freelancer groups sometimes offer group options. Read the plan documents to see whether they are ACA-compliant insurance or something else.
• Direct primary care memberships cover routine visits for a monthly fee. They pair well with a high-deductible plan but do not replace insurance for hospital care.

The self-employed health insurance deduction

If you have a net profit from self-employment, you can generally deduct premiums you pay for medical, dental and qualified long-term care insurance for yourself, your spouse, your dependents, and children under 27. The deduction is "above the line," meaning you do not have to itemize. The main rules:

• The deduction cannot exceed your net profit from the business under which the plan is established.
• It is not allowed for any month you were eligible for a subsidized employer plan (yours or your spouse's).
• If you received a premium tax credit, you deduct only the part of the premium you actually paid. Calculating the two together can be circular; the IRS provides a worksheet in Publication 974.
• The deduction reduces income tax, not self-employment tax.
• Medicare premiums can qualify if you are self-employed and otherwise meet the rules.

The deduction is calculated on Form 7206 and flows to Schedule 1 of Form 1040.

A simple decision path

1. Can you join a spouse's employer plan at a reasonable cost? Compare it with step 2.
2. Get a Marketplace quote using a realistic estimate of net profit, and see what credit you qualify for.
3. If you are mid-treatment or near your old plan's out-of-pocket maximum, price COBRA for the remaining months.
4. If you are healthy with an emergency fund, look at HSA-eligible plans and fund the HSA.
5. At tax time, claim the self-employed health insurance deduction for the premiums you paid.

Official sources: HealthCare.gov (self-employed coverage and income estimates), IRS Publication 974 (Premium Tax Credit), Form 7206 instructions, IRS Publication 969 (HSAs) and the U.S. Department of Labor's COBRA guidance.