Self-Employed Health Insurance Options in California | HFC (2023)

Posted: August 19, 2021

Self-Employed Health Insurance Options in California | HFC (1)

If you’re self-employed, a considerable financial concern will be finding affordableCalifornia self-employed health insurance coverage. Though the cost of healthinsurance for self-employed workers always seems to be rising, you may be able to deduct 100% of health insurance premiums you pay for yourself, your dependents and your spouse, up to set limits.

Use this guide to help you navigate your options forCalifornia health insurance as a self-employed worker or small business owner. We can help you find the affordable health insurance you need to protect your health and the health of your loved ones.

Self-Employed vs. Small Business

Before you can find the best health insurance plan for you, you need to determine whether you need self-employed health insurance coverage or small business health insurance coverage.

Self-Employed Health Insurance Options in California | HFC (2)

Self-Employed Health Insurance

If you are a self-employed worker, you can enroll in high-quality, flexible individual health insurance coverage. You are considered a self-employed individual if you have a business that makes money but does not have employees. Self-employed individuals are often considered independent contractors, consultants or freelancers.

As a self-employed California resident, you can fill out an application for a health plan, which will help you determine whether you are eligible for:

  • Low-cost or free coverage: Completing an application will help you determine whether you are eligible for low-cost or free coverage through Covered California or Medicaid, which will also depend on your household’s size and your income.
  • A premium tax credit: Filling out an application can help youdetermine whether you qualify for savings like a premium tax credit. What you qualify for will vary based on your household size and income.

While filling out the application, you will need to estimate your net income. Your savings depend on your estimated net self-employment income for the year you are obtaining coverage rather than your income from the previous year.

You can then select from different health care coverage categories. Those include health plans with low premiums that are most useful in worst-case scenarios to health plans with higher premiums and lower out-of-pocket costs if you receive health care services.

Small Business Health Insurance

On the other hand, if your business has an employee other than yourself, you may needsmall business health insurance. Employees are typically workers whose income is reported on W-2 forms.

When shopping for small business health insurance, you will want to find a plan that fits your budget and your employees’ budgets. You choose what level of coverage is offered and how much you will contribute to their health insurance premiums. You will also select from preferred provider organization (PPO) and health maintenance organization (HMO) plans from various providers.

When you choose small business health insurance, you can offer your employees financial protection and peace of mind in the event of illness or a major accident. You can also control costs by selecting the health plan that best fits your budget and employees’ needs.

Best Health Insurance Options for the Self-Employed

Side hustles and self-employment are on the rise. If you are one of the millions of Americans who are self-employed, you may be concerned about whether you can find affordable, quality health insurance.

Generally, you can sign up for a health plan during open enrollment. This open enrollment period begins Nov. 1 every year and typically ends in December. A qualifying life event may also allow you to enroll in a health insurance plan. Qualifying life events include:

  • Losing previous health insurance
  • Having a child
  • Getting married

Below, we break down how to find the best health insurance for self-employed California workers.

Self-Employed Health Insurance Options in California | HFC (3)

The Cost of Health Insurance for Self-Employed Workers

A few factors can influence the cost of a self-employed health insurance plan that is compliant with the Affordable Care Act, including:

  • Location
  • Age
  • Deductible
  • Tobacco use
  • Income level
  • Plan category
  • Individual versus family plans

Some states have set rules that determine how much each of these factors can affect your monthly premiums. Premiums for tobacco users and older workers can be significantly higher. If you live in an urban area, you may pay more for health insurance than someone who lives in a rural area. But insurance companies cannot charge you more for health insurance based on your medical history, current health status or gender.

A health plan that has a lower premium may be called a high-deductible or catastrophic plan. With this type of plan, you will pay a lower monthly premium. But if you do need health care services, you will pay out-of-pocket for some costs before your insurance begins covering costs. If you are young and in good health, this may be a good option for you.

Other health plans have a higher premium but lower deductibles. If you are older or have a pre-existing condition and know you will need ongoing prescriptions or care from specialists, you may want to consider this type of plan. More coverage may mean you pay less over time.

Coverage Options for Self-Employed Workers

Whether you are working a temporary side gig or own a business can influence what type of health insurance is the right option for you. When you’re your own boss and in charge of everything, this involves various considerations. To help you determine what self-employed health insurance plans may be right for you, understand a few of your options.

For example, if you are laid off from your full-time job, you may decide to do some freelance work while you apply for full-time employment opportunities. In this case, you may need a short-term health insurance solution to protect you in the time between full-time employment. Examples of that and other options include:

  • Short-term insurance: If you want to save on your premium, you may consider short-term health insurance. You can usually have this insurance for a few months, and you can sign up for a plan outside of the open enrollment period. Your premium will be low, but your out-of-pocket costs will be high and your plan may not cover any pre-existing conditions you have.
  • COBRA: Another option for temporary health insurance is COBRA from the Consolidated Omnibus Budget Reconciliation Act. This option allows you to remain on your employer-based plan from your old job for a period. Since you no longer have an employer who is paying some of your premium, you will be paying more for your insurance.
  • Industry-specific insurance: Depending on your industry, you may be able to find discounted health insurance through a freelancers union. Industry-specific plans are available for multiple types of professionals. If you find a plan for you, read the fine print to avoid paying more for less coverage than you would get from another plan.

On the other hand, you may decide you want to be self-employed long term. In this case, you may look at alternative coverage options. The right health plan for you depends on who needs coverage and how much money you are making, but you may consider:

  • Private health insurance: Some insurance carriers offer plans aimed at self-employed people who need good health care coverage at an affordable premium. For a plan that provides a range of benefits, such as access to in-network hospitals and providers for preventative care and annual checkups, speak with an insurance agent. They can help you find the best health plan at the most affordable rate.
  • Health insurance marketplace: The health insurance marketplace can help you determine whether you qualify for a lower health insurance premium, tax credits or Medicaid. If you are a low-income earner, you may qualify for Medicaid, which is health insurance sponsored by the government. You may also be eligible for the Children’s Health Insurance Program, which is for children and similar to Medicaid.
  • Partner’s health insurance: If you are married or have a domestic partner, you may want to consider joining their employer-based health insurance plan. If you think you may be eligible for your partner’s employer-based plan, your partner can speak with their insurance company or human resources department to ask about adding you to their plan. Thisoption can be affordable and convenient, as an employer typically helps cover the cost of the plan.
  • Health care sharing ministry: You may also be able to cover your health care costs through a health care sharing ministry. Note that health care sharing ministries are technically not health insurance. Rather, these are groups of people who are part of an organization like a ministry. You all pool your money into a fund to cover the major health care costs for the group’s members. There may be limits on what a ministry may be willing to pay for, and they may not cover pre-existing conditions.

Your specific circumstances may also influence what health insurance options are available to you, like if:

  • You are a young adult: If you are a young adult, you may be able to stay on your parent’s health insurance until you turn 26.
  • You are a student: If you are also a student, you may be able to get a plan specifically for students.
  • You have a disability: If you have a disability, you may qualify for Medicare.
  • You are in the military: If you are a retired or active military member, you may be eligible for TRICARE.

Weigh the pros and cons of each of the options available to you when deciding what self-employed health insurance plan is right for your situation.

Tax Considerations

If you are self-employed or a small business owner, the prospect of paying your health insurance premiums may seem daunting. Fortunately,you may qualify for a tax write-off for health insurance in California.

Self-Employed Health Insurance Options in California | HFC (4)

Self-Employed Health Insurance as a Deductible Business Expense

When you file your yearly tax return, you may be able to deduct your health insurance premium, which is the amount you pay every month for the health insurance plan. As a result, you can subtract your total yearly expense from your adjusted gross income. This expense can either increase your refund or decrease your bill.

Since this is considered an above-the-line deduction, you can implement it regardless of whether you decide to take the standard deduction or to itemize your deductions. The caveat is that you cannot deduct something higher than your yearly net profit. This restriction means if your small business lost money, you wouldn’t benefit from the tax deduction.

Amount of Premium Tax Credit

Your premium tax credit amount depends on the estimated income you include on your application. You can opt to apply part or all of your tax credit to your monthly premium. Your tax credit will be sent directly to your health insurance provider so you will pay less every month. This option is known as taking an advance payment on your premium tax credit.

If your income changes, it is likely that your premium tax credit will also change. When you experience a change in your income, you should report it as soon as possible, whether:

  • Your income decreases: If your income decreases, you may be eligible for a larger premium tax credit. In this case, you may want to consider increasing the amount you take in advance on your tax credit. This choice will give you a lower premium bill every month.
  • Your income increases: If your income increases, you may be given a lower premium tax credit. As a result, you may want to choose to reduce how much of your tax credit you take in advance every month so you do not end up taking more tax credits than you actually qualify for.

At the end of the year, if you have taken more advance payments than you are eligible for on your premium tax credit, you may need to pay back the money after you file your income tax return. This payment is referred to as reconciling the premium tax credit you are eligible for and the advance payments if your premium tax credit is based on your final yearly income.

Request a Free Quote for Self-Employed Health Insurance

Are you a self-employed California resident? If you are seekinghealth insurance for the self-employed in California, look no further than Health for California. Our application process is accurate and an easy, fast and free wayto apply for self-employed health insurance in California.

Our agents are available at any time to help you and answer all of your insurance-related questions. If you are uninsured in California or you want to switch health insurance plans,get a free quoteforself-employed health insurance from us at Health for California.


Does California allow deduction for self-employed health insurance? ›

If you are self-employed, you may be eligible to deduct premiums that you pay for medical, dental and qualifying long-term care insurance coverage for yourself, your spouse and your dependents.

Can I write off health insurance premiums if I am self-employed? ›

Are health insurance premiums tax deductible? Yes, they are deductible if you have qualifying insurance and if you're an eligible self-employed individual. Qualifying health insurance includes medical insurance, qualifying long-term care coverage and all Medicare premiums (Parts A, B, C and D).

How many employees do you have to have to offer health insurance in California? ›

In California, all employers with 50 or more full-time employees are required to offer some form of health insurance benefit. Once you have 50 employees, you are considered a large employer. This means that you may face penalties if you do not offer health insurance.

What type of insurance should a self-employed person have? ›

If you're self-employed, you can use the individual Health Insurance Marketplace ® to enroll in flexible, high-quality health coverage that works well for people who run their own businesses. You're considered self-employed if you have a business that takes in income but doesn't have any employees.

Is self-employed cheaper insurance? ›

Although there'll be no difference between the policies available for self-employed and employed people, there are a few extra things for freelancers to look out for with their cover.

Can I write off health insurance as a business expense? ›

Health insurance premiums are deductible as an ordinary expense for self-employed individuals. Whether you purchase the policy in your name or have your business obtain it, you can deduct health insurance premiums paid for yourself, your spouse, a dependent child or a nondependent child under age 27.

What percentage of self-employed health insurance is deductible? ›

A self-employment health insurance deduction is extremely beneficial to those who are self-employed and do not qualify for any other type of health insurance. When you purchase your own health insurance as a self-employed professional, you can deduct 100% of your health insurance premiums when filing taxes.

Does not having health insurance affect tax return in California? ›

The penalty for not having coverage the entire year will be at least $850 per adult and $425 per dependent child under 18 in the household when you file your 2022 state income tax return in 2023.

What can I write off on my taxes self-employed? ›

A Guide to Tax Deductions for the Self-Employed
  • Qualified business income.
  • Mileage or vehicle expenses.
  • Retirement savings.
  • Insurance premiums.
  • Office supplies.
  • Home office expenses.
  • Credit card and loan interest.
  • Phone and internet costs.

Are health insurance premiums tax deductible in California? ›

You can include health insurance premiums in your medical expense calculations. However, certain premiums are not eligible for medical expense deductions. You cannot include the following premiums in your tax deductions: Life insurance policies.

Are copays tax deductible for self-employed? ›

Medical expenses that can qualify for tax deductions—as long as they're not reimbursed—include copays, deductibles and coinsurance.

How many hours do you have to work to get health insurance in California? ›

Permanent-intermittent employees are eligible for health benefits after being credited with a minimum of 480 paid hours at the end of a six-month control period. The State pays a portion of your premium, referred to as the employer contribution.

Is it illegal to not have health insurance in California? ›

The individual mandate means that Californians must either have qualifying health insurance, or pay a penalty when filing their state tax return unless they qualify for an exemption. How much? For tax year 2022, the penalty will cost at least $850 per adult and $425 per dependent child under 18 in your household.

What is the waiting period for health insurance in California? ›

Waiting Periods

California law prohibits health plans from imposing any waiting or affiliation period on group health coverage, other than that imposed by the employer sponsoring the group health plan. Waiting periods for pre-existing conditions are prohibited.

Can I get self-employed insurance? ›

Insurance for self-employed people protects you against some of the risks that sole traders might face in their business. For instance, you can get business insurance that protects the self-employed against the cost of lawsuits from clients, or claims from members of the public.

What are the 4 types of insurance that everyone should have? ›

There are, however, four types of insurance that most financial experts recommend we all have: life, health, auto, and long-term disability."

How to get health insurance without a job? ›

If you're unemployed you may be able to get an affordable health insurance plan through the Marketplace, with savings based on your income and household size. You may also qualify for free or low-cost coverage through Medicaid or the Children's Health Insurance Program (CHIP).

What are the disadvantages of self-insurance? ›

Disadvantages of self-insurance

The primary disadvantage of self-insurance is the assumption of greater risk. A year that brings large unexpected medical claims requires that the company has the financial resources to meet its obligations. This unpredictability puts greater demands on budgeting and cash flow.

Is it worth going self-employed? ›

Should I go self-employed? There are plenty of reasons to go self-employed. You get to 'be your own boss' and work more flexibly. And depending on your industry, you may be able to command a much higher rate than the salary you'd be able to achieve as an employee.

What is the major reasons for self-employed to take insurance? ›

5 Reasons You Need Term Insurance as a Self-Employed Person
  • Lack of Employer Benefits. ...
  • Business Ownership Transfer Costs. ...
  • Tax Benefits. ...
  • Life Cover with a Single Premium. ...
  • Financial Support in case of Disability & Terminal Illnesses.

Can I deduct medical expense from LLC? ›

According to LegalZoom: For non-member employees – An LLC can deduct the cost of medical insurance for all employees who are not members of the LLC. This deduction can also include the amount the LLC pays for employees to have qualified long-term health coverage.

Can I claim for private health insurance through my business? ›

Can You Pay for Health Insurance Through Your Company? Yes, it's possible to buy your own personal Health Insurance via your limited company. One way to do this would be to set up Business Health Insurance for yourself and your staff.

Can an S Corp owner deduct health insurance? ›

Health and accident insurance premiums paid on behalf of a greater than 2-percent S corporation shareholder-employee are deductible by the S corporation and reportable as wages on the shareholder-employee's Form W-2, subject to income tax withholding.

How much health insurance can you write off on taxes? ›

You may deduct only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. You figure the amount you're allowed to deduct on Schedule A (Form 1040).

Does health insurance affect tax return? ›

A self-employed health insurance deduction is available for the costs of medical insurance, dental insurance, and long-term care policies. You can deduct these costs up to the total of your self-employment gross income.

Where does self-employed health insurance go on w 2? ›

The health insurance premiums paid by the S corporation are reported on Form W-2, Box 14 S. This is the amount the shareholder deducts on page 1 of Form 1040, line 29 (Self- employed health insurance deduction)

How to avoid California health insurance penalty? ›

If you want to avoid the California penalty for no health insurance, you must enroll in a qualified health plan or qualify for an exemption.
  1. Enroll in a Qualified Health Plan. Qualified health plans meet specific standards and minimum essential coverage requirements. ...
  2. Have a Valid Exemption.
Mar 6, 2023

How much is health insurance in California per month? ›

California residents can expect to pay an average of $487 per person* for a major medical individual health insurance plan. Prices will vary and premiums can be lower if you are in good health.
How much does health insurance cost in California?
Metal LevelAverage Monthly Premium*
1 more row

Will the IRS penalize for no health insurance? ›

If you had no health coverage

If you didn't have coverage during 2022, the fee no longer applies. This means you don't need an exemption in order to avoid the penalty.

How do I get the biggest tax refund when self-employed? ›

How to Get the Biggest Tax Refund in 2023
  1. Select the right filing status.
  2. Don't overlook dependent care expenses.
  3. Itemize deductions when possible.
  4. Contribute to a traditional IRA.
  5. Max out contributions to a health savings account.
  6. Claim a credit for energy-efficient home improvements.
  7. Consult with a new accountant.
Jan 24, 2023

How do I avoid paying tax when self-employed? ›

Self-employment tax paid by business owners is calculated based on the net income of your business for the year. The only guaranteed way to lower your self-employment tax is to increase your business-related expenses. This will reduce your net business income and correspondingly reduce your self-employment tax.

What if my expenses exceed my income self-employed? ›

If your expenses are less than your income, the difference is net profit and becomes part of your income on page 1 of Form 1040 or 1040-SR. If your expenses are more than your income, the difference is a net loss. You usually can deduct your loss from gross income on page 1 of Form 1040 or 1040-SR.

How will Covered California affect my tax return? ›

If you receive a tax credit through Covered California, you must file taxes for that benefit year. You will receive a 1095-A form, which shows how much Covered California paid to your insurance company to help with the cost of your health coverage. You will use the information on your 1095-A to fill out IRS Form 8962.

How does Covered California verify income? ›

This is called “income verification.” Covered California does this by electronically asking the Internal Revenue Service (IRS) database and other databases if what you reported is the same as what they have on file. The IRS will not share your personal tax data with Covered California.

What happens if my income increases while on Covered California? ›

If your income is more than what you told us on your application, you may have to repay some or all of the advanced premium tax credits that you got. There are limits to the amount you may need to repay, depending on your income and if you file taxes as “Single” or another filing status.

What deductions can I claim without receipts? ›

What does the IRS allow you to deduct (or “write off”) without receipts?
  • Self-employment taxes. ...
  • Home office expenses. ...
  • Self-employed health insurance premiums. ...
  • Self-employed retirement plan contributions. ...
  • Vehicle expenses. ...
  • Cell phone expenses.
Nov 9, 2022

Are eyeglasses tax deductible? ›

The bottom line. You can deduct the costs for prescription eyeglasses and eye exams on your tax return. But they must be a part of your itemized medical deductions, which need to exceed 7.5% of your adjusted gross income.

Is working 32 hours considered full-time in California? ›

The standard definition of full-time hours in California is between 32 and 40 hours per week. However, it's important to note that after the implementation of the ACA, workers are considered part-time if they work less than 30 hours per week, and full-time if they work 30 hours a week or more.

Is it better to get health insurance through work or private? ›

Obtaining health insurance through an employer is often cheaper than purchasing health insurance independently from your job - this is because your employer will help cover some of your health coverage and medical expenses.

Is health insurance mandatory in California 2023? ›

California residents, and their dependents, are required to have health insurance or face a penalty. Enrolling in student health insurance is one way to meet that requirement. However, low-cost coverage may also be available through Medi-Cal or through Covered California.

What insurance is mandatory in California? ›

California's Low Cost Automobile Insurance Program (CLCA)

The law says that you must have auto liability insurance. However, if you have a low income, it can be hard to pay the premium. California has a program to help you. This program helps income-eligible good drivers get insurance.

What type of insurance is mandatory in California? ›

All drivers in California must carry some kind of liability coverage, which pays for injuries or damage you cause in an accident where you are at fault. Bodily injury liability insurance: This type of coverage pays for the other party's medical expenses if the accident is deemed your fault.

Can I buy health insurance and use it immediately? ›

In general, there is no waiting period in health insurance for immediate hospitalization resulting from an unfortunate accident. Neither the initial waiting period in health insurance applies in such situations. One can raise claims for accidental hospitalization even during the waiting period in health insurance.

Is there a waiting period for Blue Shield of California? ›

4. There is a three-month waiting period for these services unless you had prior coverage. Contact Member Services at (888) 271-4880 for more information about obtaining a waiver. 5.

How long does it take for California to approve insurance license? ›

The Department typically requires 4 weeks to process and approve your insurance license, once they have received the required documentation. Upon approval, you will receive an email that includes a link to the Department's website that will allow you to view and print your insurance license.

How much is health insurance in California per month on average? ›

California residents can expect to pay an average of $487 per person* for a major medical individual health insurance plan. Prices will vary and premiums can be lower if you are in good health.
How much does health insurance cost in California?
Metal LevelAverage Monthly Premium*
1 more row

What insurance is needed for a small business in California? ›

While each small business is unique, insurance carriers have recommended that small businesses in California carry at least $500,000–$1,000,000 in commercial liability insurance to cover bodily injury, personal injury, advertising injury, and legal defense and judgments.

Does California offer self employment assistance? ›

For instance, the only state program geared toward self-employed workers in California is the EDD's Disability Insurance Elective Coverage program. Under this program, people who do not pay into State Disability Insurance through wages can still receive Disability Insurance and Paid Family Leave benefits.

Does California have low income health insurance? ›

Medi-Cal is California's Medicaid program. This is a public health insurance program that provides free or low cost medical services for children and adults with limited income and resources.

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