Freelancers, consultants, contractors, gig workers, and small business owners all run into the same question sooner or later: where does my health insurance come from now? Without an employer plan, you're choosing coverage yourself — and the rules that decide what you pay work a little differently when your income comes from invoices instead of a paycheck. This guide walks through the realistic options and the decisions that matter most. For a broader look at protecting yourself as a business owner, including income protection, see our self-employed coverage page.
Your realistic options when you're self-employed
- An ACA Marketplace plan. For most self-employed people under 65, this is the core option. Marketplace plans can't turn you down or charge more for pre-existing conditions, and you may qualify for a premium tax credit based on your household income.
- A spouse's or partner's employer plan. If one is available, compare it carefully. It may be the simplest route, but it also affects your eligibility for Marketplace subsidies and the self-employed premium deduction.
- An ICHRA, once you have employees. An Individual Coverage HRA lets a business reimburse employees tax-free for individual health insurance. It's a strong fit for a growing small business, but it generally isn't a way for a solo owner to cover themselves (more on that below).
- Medicaid. In a lean year, or in the early months of a new business, household income may fall within your state's Medicaid limit.
How ACA subsidies work when your income isn't steady
The premium tax credit is based on your expected household income for the year. For a W-2 employee, that's usually an easy number. For the self-employed, it's generally your projected net self-employment income, meaning what's left after business expenses, plus any other household income.
That creates both an opportunity and a risk. Because the credit uses net income, legitimate business expenses can lower the figure that counts. But because the credit is reconciled on your tax return, estimating too low can mean paying some of it back, and estimating too high can mean paying more each month than you needed to.
- Base your estimate on your realistic expectations, not your best month or your worst one.
- Update your Marketplace application during the year if your income shifts significantly. You don't have to wait until tax time.
- Keep records you can rely on. Clean bookkeeping makes both the estimate and the year-end reconciliation much easier.
Can an ICHRA cover a self-employed owner?
This is one of the most common points of confusion. ICHRAs reimburse employees, and under the tax rules, sole proprietors, partners in a partnership, and owners of more than 2% of an S-corporation generally aren't treated as employees for this purpose. So if you're a one-person business, an ICHRA usually isn't the tool for your own coverage.
Things change once you hire. If you have W-2 employees, an ICHRA can let you offer a real health benefit with a predictable budget, and your employees choose their own individual plans. Some business structures, such as certain C-corporations where the owner is also an employee, may be treated differently. This is exactly the kind of detail to confirm with a tax advisor before you set anything up. Our plain-English ICHRA guide covers how the arrangement works from the employer's side.
Want your options laid out side by side?
We'll compare Marketplace plans using your realistic income estimate, check whether a spouse's plan or an ICHRA changes the picture, and explain the trade-offs. There's no cost to you.
Get my free comparisonThe self-employed health insurance deduction
Many self-employed people can deduct the premiums they pay for health coverage for themselves, a spouse, and dependents, subject to IRS rules. A few points are worth knowing:
- You generally can't take the deduction for any month you were eligible for a subsidized employer plan, including one offered through a spouse's job.
- The deduction interacts with the premium tax credit, so the math can get circular. This is a good place to involve a tax professional.
- It's a deduction, not a credit. It reduces taxable income rather than your tax bill dollar for dollar.
What about short-term or "alternative" plans?
You'll see ads for low-cost short-term medical plans, sharing ministries, and similar products marketed to freelancers. Some have a place, but they often don't cover pre-existing conditions, may leave out prescriptions or preventive care, and aren't the same as ACA-compliant coverage. Before you trade real coverage for a lower monthly price, make sure you know exactly what you'd be giving up.
A simple checklist before you enroll
- Estimate your net self-employment income for the coverage year, plus other household income.
- Find out whether you have access to a spouse's employer plan and what it would cost.
- List your doctors, specialists, and prescriptions so you can check networks and formularies.
- Decide how much deductible risk your cash flow can realistically absorb. Our Bronze vs. Silver vs. Gold guide can help.
- If you have or plan to hire employees, ask whether an ICHRA or a group plan fits better.
How Honorbrook helps
We're an independent agency, so we're not tied to a single carrier. We can show you Marketplace options priced against your realistic income, explain where an ICHRA does and doesn't fit, and flag the questions to take to your tax preparer. There's no cost to you. Carriers pay us directly, and your premium is the same whether you enroll with an agent's help or on your own.
Availability and rules vary by state
Health plans, premiums, enrollment rules and state programs differ by state and sometimes by county, and a given plan may not be available in every state. Honorbrook is licensed in the 11 states below; what we can offer you depends on what carriers sell where you live. Each state’s insurance regulator can verify an agent’s license and answer consumer questions.
- Virginia: Virginia Bureau of Insurance
- Maryland: Maryland Insurance Administration
- North Carolina: North Carolina Department of Insurance
- South Carolina: South Carolina Department of Insurance
- Georgia: Georgia Office of Insurance and Safety Fire Commissioner
- Alabama: Alabama Department of Insurance
- Louisiana: Louisiana Department of Insurance
- Texas: Texas Department of Insurance
- Michigan: Michigan Department of Insurance and Financial Services
- Indiana: Indiana Department of Insurance
- West Virginia: West Virginia Offices of the Insurance Commissioner