Self Employed Health Insurance Options

I received the following question about self employed health insurance, and because I know many of you are business owners, or blog full time, I hoped you could provide some real world help for a fellow reader looking for health insurance.

Robert writes in with the following question:

I was wondering if you knew any ways self employed individuals could buy health insurance?  I have been taking your advice on building a “side hustle,” and luckily enough it is now bringing in more than my full time job.  I am eager to quit my regular job and take this side hustle full time, but worry about affordable health insurance for me, my wife and my young son.  Any ideas?

Robert, first of all, congratulations on building a second income substantial enough to replace your full-time job.  You may remember from my New Year’s goals post, that is something I hope to one day achieve as well. Also like you, I have questions about how to provide health insurance for my family, outside of the traditional group policy where I work. I have a few ideas to get you started, but will rely on readers to fill in the gaps by sharing their expertise on the subject.

1. Continue current coverage under COBRA.  According to the Department of Labor website, you, your spouse, and your son may continue health insurance coverage based on your “voluntary or involuntary termination of employment for reasons other than gross misconduct.”  COBRA is expensive because you’ll have to pay both sides of the insurance premium (your employer probably used to pay the majority of the costs), and you may only be eligible for up to 18 months, so it is not a long-term solution.

2. Apply for a health insurance policy at is one of the leading sites for providing quotes on personal and family health insurance coverage, coverage for small businesses, and short-term policies. I highly recommend you get a free instant quote there first.

3. One spouse continues to work and receive benefits.  Something my wife and I have discussed is the idea that she could return to work to receive family health insurance coverage if I ever branch out on my own.  This might be a tough sell, particularly if there are child care issues to consider.

4. Work part time for an employer that offers benefits.  They are few and far between, but there are a few employers out there that offer health coverage to part-time employees.  Starbucks and UPS come to mind.  It might be possible to do your “side hustle” during the day, sling a few boxes at night, let mom stay at home and still get benefits. This one may be a long shot.

5. Consider membership in trade associations, unions, etc.  When investigating this option for myself a few months ago someone recommended joining various freelance associations (such as the “Freelancers Union,” and various groups for writers), which offers group health care options for its members.  I also noticed places like Sam’s Club offer group policies to their members through providers such as Blue Cross Blue shield, etc.  You will probably pay more than you did as an employee, but less than you would for COBRA.

6. Consider a high-deductible plan along with a Health Savings Account (HSA).  If you and your family are relatively healthy, you might investigate an HSA with a high-deductible, or catastrophic, health insurance plan.  Basically, a catastrophic plan has low premiums because it only pays for things over several thousand dollars (think heart attacks, accidents, etc.).  The health savings account is established to help pay anything and everything up to that high deductible.  This option requires a good chunk of cash to fully fund the HSA up front.  It’s also a risky plan, but a lot cheaper alternative to traditional health insurance, and a lot safer than having no insurance at all.

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