Search
Close this search box.
Blog » Money Tips » Managing Health Care Costs When Self-Employed

Managing Health Care Costs When Self-Employed

Health care spending is a major expense for many households. However, when you work for “the man,” your health care costs are often subsidized by your employer. The situation is different when you’re a business owner or self-employed. Managing health care costs when self-employed takes a little more planning.

Are You Eligible for a Subsidy Under the ACA?

The first thing to consider is whether or not you are eligible for a subsidy under the ACA. If you meet certain income requirements and can purchase health insurance coverage via one of the health care exchanges, you can get a bit of a discount on your health premiums. It’s important to make sure you are accurate, though. If you end up claiming a larger subsidy than you are entitled to, it will come back to haunt you at tax time.

Can You Make Do With a Less Expensive Plan?

You might not need the most expensive health plan. Review your needs to determine if you might be able to get by with less coverage. Because my son is on my ex’s health insurance plan, I only have to worry about my own plan. I have few health care needs, so a “bronze” level plan on the health exchange is adequate. This is a less expensive plan. It doesn’t cover some health care services, but they are services I don’t use. Double-check your needs and get the least expensive plan that will meet them.

Is a High-Deductible Plan Right for You?

One of the best ways to manage health care costs when self-employed is to choose a high-deductible plan. This means that you will have to pay more out of pocket for your care. On the other hand, you can see a quite substantial decrease in your monthly premium payments. If you have an emergency fund built up that can handle the up front costs you will have with a high-deductible plan, it can be worth it to get the high-deductible plan to improve your cash flow.

Combine Your High-Deductible Plan with an HSA

The Health Savings Account is a great way to maximize your health care dollars as a business owner. If you have a high-deductible health insurance plan and you meet other requirements, you can open a Health Savings Account. The HSA is a valuable tool for managing health costs when self-employed. Your contributions to the HSA are tax-deductible and the earnings in your account grow tax-free as long as you withdraw them for qualified health care expenses. Even though I could use mine now, I actually plan to let mine build up and use it as an account for health care expenses in retirement.

Don’t Forget Your Tax Deduction

When you’re self-employed you can claim a tax deduction for the premiums you pay for health insurance in most cases. Check with a tax professional to find out how much you can claim, and how to make the claim. This is one of the ways you can manage your health care costs when self-employed. It’s a simple item, but one that can reduce the sting of paying for health insurance.

About Due’s Editorial Process

We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

TAGS
Credit Expert
I’m Miranda and I’m a freelance financial journalist and money expert. My specialties are investing, small business/entrepreneurship and personal finance. The journey to business success and financial freedom is best undertaken with fellow travelers.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Categories

Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More