Quick answer: most self-employed people without employees buy coverage through the ACA Marketplace (HealthCare.gov or a state exchange), where premium tax credits can lower the cost based on household income. Other options include joining a spouse’s or domestic partner’s employer plan, staying on COBRA after leaving a job, Medicaid if income is low, or a parent’s plan until age 26. If you have a net profit and are not eligible for an employer-subsidized plan, the IRS generally lets you deduct health insurance premiums for yourself, your spouse and dependents as an adjustment to income.
Leaving a traditional job to freelance, consult or run a small business brings freedom, but it also means finding your own health insurance. Without an employer handling the details, many self-employed people are unsure where to start, what it will cost and how taxes fit in.
This guide walks through every major option, explains how Marketplace subsidies and the self-employed health insurance deduction work, covers health savings accounts, highlights products to be cautious about and ends with a step-by-step plan. For a broader overview of how health insurance works, see our complete health insurance guide.
This is general information, not tax or legal advice. Sources: HealthCare.gov pages for the self-employed, Open Enrollment and premium tax credits; IRS guidance on the self-employed health insurance deduction (Form 7206) and health savings accounts (Publication 969); Medicaid.gov; U.S. Department of Labor on COBRA. Rules and dollar limits change yearly. Checked October 2026. Questions about this article: hello@proinsuranceinfo.com.
Health Insurance for Self-Employed People: Your Main Options
| Option | Who it fits | Key points |
|---|---|---|
| ACA Marketplace plan | Most self-employed people without employees | Covers pre-existing conditions; subsidies based on income |
| Spouse or partner’s employer plan | Those with a spouse who has job-based coverage | Often the lowest cost; check family premium |
| COBRA | Those recently leaving a job | Same plan, but usually expensive; limited duration |
| Medicaid | Lower-income households | Low or no cost; rules vary by state |
| Parent’s plan | Under age 26 | Can stay on a parent’s plan regardless of self-employment |
| Medicare | Age 65 and older, or certain disabilities | Separate enrollment rules |
ACA Marketplace Plans
Who uses the Marketplace
According to HealthCare.gov, self-employed people with no employees can use the individual Marketplace to buy coverage. The Small Business Health Options Program (SHOP) is designed for employers with employees.
What Marketplace plans cover
All Marketplace plans cover essential health benefits, such as doctor visits, hospital care, prescription drugs, maternity care and mental health services. Plans cannot deny coverage or charge more because of pre-existing conditions.
Every ACA Marketplace plan must cover the 10 essential health benefits:
- Outpatient (ambulatory) care
- Emergency services
- Hospitalization
- Pregnancy, maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including dental and vision care for children
Marketplace plans also cannot deny coverage or charge more because of pre-existing conditions. The insurance companies offering Marketplace coverage vary by state and even by county, so compare all plans available where you live.
Metal tiers
Plans are grouped as Bronze, Silver, Gold and Platinum, which differ in how costs are split between you and the plan. Bronze plans have lower premiums and higher out-of-pocket costs; Platinum plans have the reverse. Our explainer on Marketplace metal tiers covers the details.
When you can enroll
Open Enrollment on HealthCare.gov typically runs from November 1 to January 15. State exchanges may set different dates. Outside Open Enrollment, you need a qualifying life event, such as losing other coverage, getting married, having a baby or moving, to get a Special Enrollment Period. Our guide to open enrollment and special enrollment periods explains the rules.
Premium Tax Credits for Self-Employed People
Premium tax credits lower your monthly premium based on your expected household income and family size. For self-employed people, income generally means your net self-employment income after business expenses, not your gross revenue, plus other household income.
Estimating income
Estimating income is tricky when earnings vary. Tips:
- Use last year’s net profit as a starting point, then adjust for known changes.
- Keep bookkeeping up to date so you can update your estimate during the year.
- Report income changes to the Marketplace promptly.
Eligibility for premium tax credits and Medicaid is based on your household income as a percentage of the federal poverty level (FPL). In states that expanded Medicaid, adults with income up to 138 percent of FPL generally qualify for Medicaid. The upper income limits for premium tax credits have changed in recent years, so check HealthCare.gov or your state marketplace for the current year’s rules.
Reconciling at tax time
Premium tax credits are based on your estimate. At tax time, you reconcile using IRS Form 8962. If your actual income was higher than estimated, you may have to repay some of the credit; if lower, you may get more back. Repayment rules have changed over time, so check current IRS guidance.
Subsidy rules have also changed in recent years. Preview current prices and savings on HealthCare.gov or your state exchange before deciding.
Joining a Spouse's or Partner's Plan
If your spouse has employer coverage, adding yourself is often the simplest and cheapest option. Compare the extra premium for spouse or family coverage with Marketplace prices. Note that if your spouse’s employer offers you affordable coverage, you may not qualify for Marketplace premium tax credits. HealthCare.gov explains how affordability is determined for family members.
Some employers add a surcharge for covering a spouse who could get coverage elsewhere, so check the plan details.
COBRA After Leaving a Job
If you recently left a job to go out on your own, you may be eligible for COBRA, which lets you keep your former employer’s plan, generally for up to 18 months. According to the Department of Labor, you can be charged up to 102 percent of the full premium. COBRA can make sense if you are mid-treatment or have met your deductible, but it is often expensive compared with subsidized Marketplace coverage.
Medicaid
If your income is low, especially in the early months of a new business, you may qualify for Medicaid. Eligibility depends on your state and is based on current monthly income. You can apply any time of year. A Marketplace application also screens for Medicaid eligibility.
Health Savings Accounts
A health savings account (HSA) lets you set aside pre-tax money for medical expenses if you are covered by an HSA-eligible high-deductible health plan. HSAs offer three tax advantages: contributions are deductible, growth is tax-free and withdrawals for qualified medical expenses are tax-free.
For 2026, the IRS set HSA contribution limits of $4,400 for self-only coverage and $8,750 for family coverage, with an extra $1,000 catch-up contribution for people 55 and older. Legislation enacted in 2025 also made Marketplace bronze and catastrophic plans HSA-compatible starting in 2026, according to IRS guidance. Check IRS Publication 969 for current rules.
For self-employed people, an HSA can double as a long-term savings tool, since unused money rolls over year to year.
The Self-Employed Health Insurance Deduction
The IRS allows many self-employed people to deduct health insurance premiums. Key points:
- Who qualifies: generally, self-employed people with a net profit, including sole proprietors, partners and more-than-2-percent S corporation shareholders, under specific rules.
- What it covers: premiums for medical, dental and qualified long-term care insurance for yourself, your spouse, your dependents and children under 27 at year-end.
- Key limit: the deduction cannot exceed your net profit from the business under which the plan is established.
- Employer plan eligibility: you cannot take the deduction for any month you were eligible to participate in a subsidized health plan through your employer or your spouse’s employer.
- How to claim: the deduction is figured on Form 7206 and reported as an adjustment to income on Schedule 1 of Form 1040, so you can take it even if you do not itemize.
If you receive premium tax credits, the interaction between the credit and the deduction is complex. IRS instructions explain how to calculate both, and tax software or a tax professional can help.
Products to Be Cautious About
Short-term health plans
Short-term plans are not required to follow ACA rules. They can deny coverage for pre-existing conditions and exclude services like maternity care or mental health treatment. Federal rules on how long these plans can last have changed several times. Read the plan’s exclusions carefully.
Short-term medical plans do not have to cover the essential health benefits and can exclude pre-existing conditions or set coverage limits. Rules on how long they can last differ by federal and state law, and some states ban or restrict them. For most self-employed people, a short-term plan is a gap filler at best, not a replacement for Marketplace coverage.
Health care sharing ministries
These are arrangements where members share medical costs. They are not insurance and are not required to pay claims. Coverage limits and exclusions vary widely.
Discount plans
Medical discount plans offer reduced prices at certain providers but are not insurance.
Other Insurance to Consider
Health coverage is only one part of protecting yourself as a business owner.
- Disability insurance replaces income if illness or injury keeps you from working, which matters when you have no employer sick pay.
- Dental and vision coverage may need to be purchased separately for adults.
- Business liability insurance protects your business from claims.
Our guide to business insurance basics for the self-employed covers liability and other policies, and founders can see health insurance for startup founders.
Example Scenarios
These hypothetical examples show how the options compare in practice. Actual prices vary by location, age and plan.
A single freelance designer
Alex, 32, earns a modest net profit from design work and has no employer coverage available. Alex previews Marketplace plans and finds that premium tax credits bring a Silver plan within budget. Because Alex’s income qualifies for cost-sharing reductions, the Silver plan’s deductible is lower than its standard version. Alex enrolls during Open Enrollment, tracks premiums for the self-employed health insurance deduction and updates the income estimate mid-year after landing a bigger client.
A consultant with a working spouse
Sam left a corporate job to consult. Sam’s spouse has employer coverage, and adding Sam costs less per month than any Marketplace plan without subsidies. Since Sam is eligible for a subsidized employer plan through the spouse, Sam would not qualify for Marketplace premium tax credits and could not claim the self-employed deduction for those months. Joining the spouse’s plan is the clear choice.
A new business owner with uneven income
Jordan just launched a business and expects little profit in the first year. Jordan applies through the Marketplace, and the application shows Jordan qualifies for Medicaid in their state based on current monthly income. When income rises later, Jordan reports the change and moves to a subsidized Marketplace plan through a Special Enrollment Period.
A healthy contractor who wants to save
Riley, 45, rarely sees a doctor and wants to build savings. Riley chooses an HSA-eligible plan, contributes regularly to an HSA and invests the balance for future medical costs, while keeping enough cash on hand to cover the deductible if needed.
Budgeting for Health Costs
Self-employed people should budget for both premiums and out-of-pocket costs. A simple approach is to set aside money each month in a separate savings account equal to your expected deductible divided by 12. That way, an unexpected medical bill does not disrupt your business cash flow. Revisit the amount each year when you renew coverage.
Step-by-Step Plan for Choosing Self-Employed Health Insurance
- Estimate your net self-employment income for the year.
- Check other options first: a spouse’s plan, a parent’s plan if under 26 or Medicaid.
- Preview Marketplace plans to see prices after subsidies.
- Compare total costs: premiums plus deductibles, copays and coinsurance.
- Check networks and drug lists for your doctors and prescriptions.
- Consider an HSA-eligible plan if you are healthy and want to save.
- Enroll during Open Enrollment or within a Special Enrollment Period.
- Track premiums for the self-employed health insurance deduction.
- Update income estimates with the Marketplace as your business changes.
Common Self-Employed Health Insurance Mistakes
- Using gross revenue instead of net income when estimating Marketplace income
- Missing Open Enrollment and going uninsured for months
- Forgetting to report income changes, leading to a surprise repayment at tax time
- Choosing a plan on premium alone without checking out-of-pocket costs
- Buying non-ACA coverage without understanding the exclusions
Frequently Asked Questions
Where do self-employed people get health insurance?
Most use the ACA Marketplace through HealthCare.gov or a state exchange. Other options include a spouse’s plan, COBRA, Medicaid or a parent’s plan if under 26.
Can I deduct health insurance as self-employed?
Often, yes. If you have a net profit and are not eligible for a subsidized employer plan, you can generally deduct premiums for yourself, your spouse and dependents using Form 7206.
How do I estimate income for Marketplace subsidies?
Use your expected net self-employment income after business expenses, plus other household income. Update it during the year if it changes.
Can I use the SHOP Marketplace with no employees?
HealthCare.gov directs self-employed people with no employees to the individual Marketplace. SHOP is for small employers with employees.
Is an HSA worth it for the self-employed?
For many people, yes. If you have an HSA-eligible plan, contributions are tax-deductible and can be used tax-free for medical expenses now or later.
What are the essential health benefits?
They are 10 categories every ACA Marketplace plan must cover, including emergency services, hospitalization, maternity care, mental health, prescription drugs, preventive care and pediatric dental and vision.
Are short-term medical plans a good option for the self-employed?
Usually not as primary coverage. Short-term plans skip many essential health benefits and can exclude pre-existing conditions. They may work as a brief bridge, but compare Marketplace options first.
Sources
- HealthCare.gov: Coverage for the self-employed; Open Enrollment; Premium tax credits.
- IRS: Form 7206 instructions; Publication 969; Form 8962.
- U.S. Department of Labor: COBRA.
- Medicaid.gov: Eligibility.
