How to Navigate Health Insurance When You're Self-Employed

If you live in one of the 32 states that uses the federal exchange, your plans live at HealthCare.gov. If you live in California, New York, Washington, Colorado, or any of the 18 state-based exchanges, you shop on your state's own marketplace site. The plans, the prices, and the subsidies are the same. The interface is different.

Self-employed people can shop the marketplace year-round if you've had a qualifying life event in the last 60 days. Losing employer coverage counts. Moving counts. Getting married, having a baby, gaining a dependent all count. If you have not had a qualifying event and it's not open enrollment, you have two options. Wait until November 1. Or look at off-marketplace plans, including short-term medical, until then.

Your subsidy is calculated against the income you say you will earn for the calendar year you're enrolling for. Project too low and you owe the IRS the subsidy back at tax time. Project too high and you pay more in premiums than you needed to.

What our brokers do with 1099 clients is run three numbers. Best case (you land that big contract). Worst case (you lose your largest client). Likely case (your last 12 months of revenue smoothed out). We base the projection on the likely case and review again mid-year if income has drifted more than 15 percent.

This is the one freelancers leave on the table most. The self-employed health insurance deduction lets you deduct premiums for yourself, your spouse, and dependents directly from your gross income on Schedule 1, line 17.

It's an above-the-line deduction, which means you get it even if you take the standard deduction. The catch is your business has to show net income for the year. If you operate at a loss, the deduction is suspended for that year. Talk to your CPA. Plansure brokers can't give tax advice, but we will tell you which premium amount to send them.

If you see a doctor once a year for a physical and that's it, a bronze plan with an HSA is probably the right shape. Low premium, high deductible, but you bank pre-tax dollars for the occasional visit.

If you have a chronic condition or take regular prescriptions, a silver plan usually wins on total annual cost. Higher monthly premium, lower out-of-pocket exposure when you use care.

If you travel a lot or split time between two states, look for a PPO with a national network. HMOs are cheaper but they're built around a single in-state network of providers.

When you file your taxes, you reconcile the subsidy you took during the year against what your actual income turned out to be. If you underestimated income, you'll owe some subsidy back, capped based on income tier. If you overestimated, you get a refund.

The number to put on Form 8962 comes from Form 1095-A, which the marketplace sends you in January. Save it. Send it to your CPA along with your other tax docs.

Self-employed health insurance is more flexible than most people think. The marketplace was redesigned for non-W-2 workers in 2014 and the deductions stack with your business expenses. The two things that go wrong most often are income projections that don't match reality, and people who don't reconcile at tax time.

A good independent broker does both of those for you, every year, at no cost to you. The carriers pay our commission. You pay the same premium whether you use a broker or shop alone.