Thinking about making the jump to self-employment? If you’re like most people, losing benefits from your employer may be a big reason you stayed in a traditional 9 to 5. What many people don’t know, though, is that getting quality health insurance and retirement is still possible when you’re a freelancer.
Freelancers and Health Insurance
Being independent often means quality health insurance is more expensive, both because an employer isn’t covering the costs and because you are no longer part of a group that lowers costs. However, there are a few things to keep in mind that can help you get the most out of what you’re paying for and lower your overall costs.
First, know that if you’re purchasing Affordable Care Act (ACA) compliant plans, there are ten Essential Health Benefits that are included in the costs you pay, including preventive care. That means purchasing a marketplace plan gives you access to a variety of screenings, vaccinations, and annual exams to keep you healthy.
Additionally, plans purchased through the Federal or State Marketplaces (healthcare.gov or the equivalent in your state) are eligible for tax credits that can lower the costs of your premiums and other obligations. Last year, more than 80% of people qualified for tax credits that made it more affordable to get quality care while self-employed.
Finally, there is a perk to paying for health insurance premiums when you’re a freelancer! You are most likely eligible for tax deductions on those payments, whether your coverage is for you alone or you and your family. The basic requirements are:
You have no other health insurance coverage. If you are eligible to participate in an employer plan, you aren’t eligible for tax deductions on self-employed health coverage.
You have business income. You can deduct only as much as the net income you earn from your business. If your business doesn’t earn money (or loses it), you’re aren’t eligible to deduct health insurance premiums. If you earn from multiple business, you’re only allowed to deduct from one income.
If you’re looking to find health insurance plans that offer preventive care and qualify for these tax credits and deductions, you can search and enroll in a plan using Catch.
Freelancers and Retirement
More than a third of Americans don’t have a retirement account. If you’re self-employed or a freelancer, it can be even more difficult to know where to start because an employer isn’t opening the account for you. Still, investing for your future is an important part of building your safety net. None of us wants to work forever.
An IRA is a simple way to invest for retirement, and you can use a Personal Payroll tool like Catch to automatically put money into it each time you’re paid, for free. Catch offers Traditional and Roth IRAs so you can choose to invest pre-tax income (Traditional) or lower your penalties in the event you need to make an early withdrawal (Roth).
There are a lot of benefits to having benefits, and fortunately, it’s no longer true that you have to have a traditional job in order to get them. Freelancers and self-employed people are quickly learning that Personal Payroll, like the free app from Catch, offers an easy way to do the work you love while keeping the benefits you need.
* Note that this is not tax or investment advice. Consult with a professional (like an accountant or advisor) if you need specific guidance for your personal situation.