As a freelancer/Independant Contractor and given the changes with the recent Obamacare (Affordable Care Act and Patient Care and Coverage Act) changes (I prefer not to discuss political opinions please), what do freelancers have to do under this new law?

Is it just that one must register with the healthcare exchange and are required to have health insurance or suffer the tax penalty?

1 Answer 1


Entreprenuer magazine recently published an article regarding this.

Self employed individuals have several options:

Option 1: Do nothing and forgo health insurance. You face paying the penalty:

The landmark law requires that most Americans have coverage starting next year or face a fine. Fees for those who opt not to buy individual coverage for 2014 is the higher of 1 percent of annual income or $95 per person, increasing yearly to the higher of 2.5 percent of income or $695 per person.


Option 2: If you have a previous plan you can keep it. We've heard that many times on the news. So what that means that if you have an existing health insurance plan you can keep it regardless even if it doesn't meet the current government standards of coverage. It'll be grandfathered in because of the ACA (Affordable Care Act):

Under the ACA, if you have a plan that was in place prior to March 23, 2010, it might be grandfathered in. However, these plans might not have the same protections created by the health reforms.


Option 3: Find a plan through a health care exchange. States after October 1st, 2013, are required to establish an exchange or insurance marketplace where individuals can purchase health insurance:

Depending on family size and income, solo entrepreneurs and other individuals may qualify for federal subsidies if they purchase plans through their state-based marketplaces...


Option 4: Find a plan outside the exchanges. This option would mean that you would forgo goverment subsidees and risk potential health insurance that don't meet goverment standards for health insurance plans: e.g. free preventive care, etc.

People also will be able to buy insurance outside the marketplaces, through insurance agents or private-sector online brokerages. Independent agents know the market well and can usually offer you options that will fit your needs. Be aware though that federal subsidies are available only through the government-overseen exchanges so you might not benefit from price breaks on premiums and out-of-pocket costs such as copayments and deductibles.


Option 5: Become a legal entity and hire an employee Businesses who have an employee and pay their employees through W-2 are required to provide health care plans and businesses are then allowed access to a business marketplace known as Small Business Health Options Program (SHOP) Marketplace:

Once you have an employee, you are no longer a sole proprietor. As a micro-business, you are not obligated to purchase health insurance for your employees. The status makes you eligible to purchase insurance from your state's small business exchange, also called a Small Business Health Options Program (SHOP) Marketplace. Outside the exchange, some agents will also sell group premiums for 2 or more employees. If you decide being a sole proprietor no longer works for your business, make sure that you hire a full-time employee, the type whose income you report at the end of the year with a W-2. Hiring independent contractors will not make you eligible for the SHOP exchanges.


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