Is Health Insurance Necessary for Self-employed?

Is Health Insurance Necessary for Self-employed?

Wondering if health insurance is necessary for self-employed? Self-employment offers a wide range of benefits ranging from creative freedom, flexibility, better work-life balance, and control over finances. It also entails taking the responsibility of handling all aspects of your business, including health insurance.

Here is a closer look at why health insurance is required for self-employed.

Defining self-employment

Self-employed people are those who work for themselves and are skilled at a particular trade, profession, or occupation. Being self-employed can mean anything from working as a freelancer, taking up contracts, or owning a business. If you have a revenue-generating business that has no other employees, you are considered to be self-employed.

According to Pew Research Center’s analysis, about fourteen million Americans are self-employed as of 2021. Independent workers and freelancers such as lawyers, salespeople, writers, and insurance agents contribute $1.3 trillion to the country’s economy.

How to know if you need self-employed health coverage in Massachusetts

You will need to buy health insurance if you

  • Do not work for an employer or a business
  • Own a business that does not employ anyone else
  • Earn taxable income
  • Work as a freelancer, consultant, independent contractor, or advisor.

You are also not categorized as an employer if you hire other independent contractors for certain work. To be considered as an employer, you need to have workers or employees whose income is reported each year on the W-2 form.

Many Americans get health insurance coverage through their employers. This is known as group health insurance or employer-sponsored insurance. As a self-employed individual, you will not qualify for group health insurance and will need to purchase a suitable health insurance plan from private providers.

Is health insurance mandatory for self-employed in Massachusetts?

Under the “individual mandate” law, health insurance is mandatory for self-employed in Massachusetts. While residents of Massachusetts aged 18 or older are required to have health insurance, the plan must meet these standards specified in the ‘minimum creditable coverage.’

  • Covers comprehensive services, including hospital admissions, doctor visits, emergency services, daycare, mental health, and prescription drugs.
  • Cover prescription drugs with a maximum deductible of $250 per individual.
  • Cover regular check-ups and doctor visits before any deductible.
  • Have an annual deductible limit of $2,000.
  • Limit out-of-pocket expenses to $5,000 per year.
  • No cap on benefits for a specific illness in a year.
  • No cap on daily expenses at a hospital.

Penalties for not having health insurance

Individuals who can afford to buy health insurance but have not done may have to face penalties. These penalties vary based on the income level. For instance, if your income is 150.1 to 200 percent of the Federal Poverty Level FPL), you will need to pay a penalty of $264 per year. If you earn between 200.1 to 250 percent of FPL, the penalty is $504 per year, while for an income range of 250.1 to 300 percent FPL, the penalty is $756/year. If you earn above this range, the annual penalty you need to pay is $1,524.

Benefits of having health insurance for the self-employed

The penalty you may have to pay is not the only reason to buy health insurance as a self-employed individual. Buying a suitable health insurance plan is vital to protect yourself against medical risks. Here are the top reasons why health insurance is necessary for the self-employed:

Avoid huge out-of-pocket expenses on medical treatments  

As a self-employed individual, you are responsible for ensuring your business’s financial stability. Unexpected illnesses or injuries can mean huge out-of-pocket medical expenses when you do not have health insurance, which impacts your savings and financial stability.

Encourages you to get preventive health checks

Apart from shielding you from the high costs of medical emergencies, the right health insurance policy encourages you to get regular preventive health checks. By covering the expenses of doctor visits and health checks, the health insurance plan helps prevent severe illnesses that can bring your business to a standstill.

Some health insurance plans focus on preventive healthcare with a system of reminders, record-keeping, and virtual care that make it easy to catch an illness at an early stage.

Covers pre-existing conditions

Whether it is a lifestyle disease such as diabetes or another chronic ailment, the medical expenses for managing chronic conditions can create a huge dent in your pocket. In Massachusetts, insurance providers cannot deny health insurance for an individual with a pre-existing condition. You can find a suitable health insurance plan by comparing different plans and quotes that offer coverage for chronic or critical illnesses.

Health Insurance Necessary for Self-employed

What does health insurance cost for the self-employed?

Health insurance premiums are calculated based on many factors, including:

  • Whether you need health insurance for yourself or for your entire family.
  • Your location or zip code in Massachusetts.
  • Your age.
  • Whether you use tobacco.
  • The type of health insurance plan you need.
  • Your health status.

The average monthly premium was below $500 for all types of health insurance plans in the US, while family monthly premiums averaged $1,152. Massachusetts has one of the lowest health insurance costs compared to most other states. You can find health insurance plans with a monthly premium of $300, although this depends on the type of insurance plan and the ‘metal tier’ you choose. Health insurance plans for the self-employed and families are categorized under Bronze, Silver, Gold, and Platinum metal tiers. The Bronze plan covers 60 percent of your medical expenses while you pay the rest out of your pocket. The Gold and Platinum plans cover 80 and 90 percent of your medical expenses.

You may also qualify for subsidies on your monthly health insurance premium in Massachusetts based on your income. If you are eligible, your average monthly premium can be as low as $228.

Find the best health insurance for self-employed by comparing quotes

While health insurance is vital for the self-employed, finding the right insurance plan that meets your coverage and budget needs can be challenging. If the prospect of visiting each provider’s website and sifting through their plans and quotes seems daunting, just visit, a one-stop destination for finding the best health insurance plans in Massachusetts. Our advanced, user-friendly online tool makes the process of comparing health insurance rates seamless and quick.

Start comparing self-employed health insurance plans in Massachusetts by entering a few details and your zip code here.