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Why is My Health Insurance So Expensive as a Self-Employed Individual?

If you quit your job to be a 1099 contractor or start a business, you will likely have some sticker shock when you apply for health insurance. For example, a 40-year old who may have had excellent benefits at their previous job may have only paid $100 per month for his/her health insurance. Now, purchasing it on their own, they may pay $350+ per month for a reasonable health plan. That’s 3.5x more! Not only that, but the copays in the plan may even be double what they were in the previous employer’s plan.

What gives?

The main thing to keep in mind is that many employers (especially large ones) are incentivized under the ACA to help pay your premiums. A generous employer may even pay most or all of the monthly premiums for you. This makes your financial responsibility much less.

However, when you decide to strike out on your own, every premium dollar is coming from YOUR pocket. No, the price didn’t jump on you – that’s just what it costs.

Now, let me take a break and give a quick disclaimer: this blog isn’t meant to be political or to advocate for this program or that program – I’m just merely trying to educate on how the landscape looks today.

Some people may have difficulty affording health insurance if they have to be responsible for the entire premium. The ACA has created state-specific marketplaces that help those people get subsidies (or discounts) on their health insurance. In California, the marketplace is called Covered California and at least 590,000 consumers get subsidies due to their household size and income.

Because affordability is a top concern for Californians, the state government has widened the range of people eligible for these subsidies. For example, a family of 4 earning a household income of less than $157,200 may qualify for a subsidy in 2021.

If your income is above the threshold for subsidies in your state’s marketplace, you may be able to purchase your health insurance directly from the insurer. In many cases, people with higher incomes pay less by doing it that way.

But the main takeaway is this – don’t forego health insurance due to price. Access to care is more important than ever. And if you need help with the cost, that’s why the marketplace exists. If you need help figuring out what is best for you and your family, find an agent or broker that you can trust. Just make sure you are covered! After all, health is wealth.

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