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Think Now About Later - Health Insurance Plans For Retirement as Freelancer

There are a lot of great benefits to being a freelancer. We set our own schedules, we don’t have to worry about a boss breathing down our necks every day, and we can wear whatever we want to “work.” That being said, there are a few drawbacks. One of the biggest challenges is that we’re on our own when it comes to insurance.

There is no fancy benefits package for freelancers. We have to figure all of that out on our own, and if we don’t there’s nothing to keep us from a financial catastrophe if we get sick. While willing members of the “gig economy” of freelancers are reportedly happier, they still need to manage their own health care in a way people with a traditional employer don’t have to worry about.

What happens when we need medical insurance? What about our retirement? How do we prepare for our health needs both now and in the future? This all starts with some research and a safety net. You can’t rely on anyone else to present you a magic portfolio of benefits. Luckily, you don’t need to. Here’s how you do it yourself.

Finding Coverage

The first (and most complicated) step is to find a health care coverage plan that works for you. The good news is you have some flexibility. When you work for an employer, you’re likely umbrellaed under their healthcare coverage options. You don’t get to shop around for a company, policy, and plan that works for you.

One of the most affordable and well-known options for the self-employed is to get coverage under the Affordable Care Act. Unless you have a special circumstance (like having a baby), you’ll need to sign up during the enrollment period which begins in November of each year.

If the Affordable Care Act isn’t for you, you can still search for the right fit in a healthcare marketplace. Healthcare.gov is the most official listing of all the health exchanges, so you can find one local to your area. You have three main options with your insurance plan:

  1. PPO: This is a plan that won’t limit you to in-network providers, but it does come with higher out-of-pocket costs for these providers that are considered out-of-network.
  2. HMO: Unlike a PPO, an HMO limits you to in-network providers which are contracted to the provider.
  3. HSA: This is a health savings account. You’ll pay for your appointments and prescriptions until you meet a deductible, and then you can keep costs down with tax deductions.

In general, it’s safe to choose a high deductible plan if you lead a healthy lifestyle, don’t have existing conditions, and you don’t plan to get pregnant in the near future. These cost less overall, but they’ll likely be enough coverage to protect you against catastrophic events and regular visits to the doctor.

Prepare for Tomorrow

While the first step is to figure out a coverage plan that works for you today, the work doesn’t start there. Many people, even those traditionally employed, fail to prepare for their health in retirement. While federal programs like Medicare Parts A, B, C, and D will help lower the cost of health coverage in your golden years, it does not cover everything. There are limits, and without a safety net, you can quickly squander your retirement funds. There are limits, and without a safety net, you can quickly squander your retirement funds, and while personal loans are always a possibility, debt in retirement is never a fiscally sound option.

As a freelancer, you have a few options to plan for the future. You can open an IRA, Roth IRA, or a SEP IRA. A SEP IRA is designed specifically for those who are self-employed, and you can put away as much as a fourth of your income each year below a certain cap.

However, a smart option for protecting your health, in particular, is establishing a Health Savings Account. You can contribute up to $3,460 per person yearly (or $6,900 for a family) and it’s tax-deductible. This money grows under your investment, and you can use it for things like medical expenses and other expenses as you age. Set up this fund for yourself and have a percentage of your monthly income be put aside automatically. Even though you don’t have an employer 401(k), you can still be prepared.

Ready for Anything

As a freelancer, you have to go above and beyond to make sure your health is protected. We wouldn’t trade our independence for anything, and with that freedom comes more responsibility. It’s not as complicated as it seems to choose a health insurance plan that works for your needs, and you can even create a system for saving for the future. Are you ready for the next step to protect your health?