Health Insurance for the Self-Employed and Freelancers

If you work for yourself, you do not have an HR department to hand you a benefits guide. You shop for coverage on your own, and your income changes from month to month, which makes the Marketplace estimate harder. But self-employment also gives you tax tools that employees do not have: you can deduct your premiums, and you have control over how much taxable income you show. This guide explains how to use both.

Where to get coverage

• The Marketplace (HealthCare.gov or your state exchange): the main choice, with premium tax credits and cost-sharing reductions if your income qualifies.
• A spouse’s employer plan: compare the cost of adding you with an individual plan.
• Directly from an insurer or through a broker: the same ACA plans, but you can get a subsidy only through the Marketplace.
• Medicaid or CHIP: if your income is low. In many states, it is open to adults with income up to 138% of poverty.
• An ICHRA or QSEHRA: if you also have employees, you could reimburse their individual premiums.

Estimating your income for the Marketplace

The Marketplace asks for your expected modified adjusted gross income for the year. For a self-employed person, that means net profit (revenue minus business expenses), minus the adjustments you expect, such as one-half of self-employment tax, retirement contributions and the health insurance deduction itself. It is not your gross revenue. If your income varies, make your best estimate of the year in total, and update it during the year if it changes. See the subsidy calculator for the credit at different income levels. Underestimating can lead to a repayment on your tax return, because the cap on repayment no longer applies, so be realistic and a little conservative.

The self-employed health insurance deduction

If you are self-employed (including partners, and sole proprietors, and certain S corporation shareholders), you may be able to deduct the premiums you pay for medical, dental and qualifying long-term care insurance for yourself, your spouse and your dependents, and your children under age 27 at the end of the year. This is an above-the-line deduction claimed on Schedule 1 using Form 7206, so it lowers your adjusted gross income whether or not you itemize. The main rules are:

• The deduction cannot exceed the net profit from the business that establishes the plan.
• You cannot deduct premiums for any month in which you were eligible to participate in an employer-subsidized health plan, either through your own job or your spouse’s.
• If you take the premium tax credit, the amount you deduct is the net premium after the credit. Because the deduction affects your income, which affects the credit, the calculation is circular; IRS Publication 974 shows the method.
• The deduction does not reduce your self-employment tax.

Because the deduction reduces your AGI, it also lowers your MAGI for the subsidy, which increases the credit.

Other moves that lower income

• Half of self-employment tax: deductible automatically on Schedule 1.
• SEP-IRA or solo 401(k): a solo 401(k) has an employee deferral limit of $24,500 for 2026, plus an employer contribution, with a combined limit of $72,000 (before catch-up). A SEP-IRA allows employer contributions up to 25% of compensation (about 20% of net self-employment earnings after adjustments) within the same dollar limit.
• HSA contributions: $4,400 self-only or $8,750 family for 2026 and $4,500 or $9,000 for 2027, if you are on an HSA-eligible plan. Since 2026, Marketplace bronze and catastrophic plans are HSA-eligible. See the HSA guide.
• Qualified business income deduction and business expense timing, which affect your taxable income but not always your MAGI for the Marketplace, so ask a tax professional.

Using the 400% line

Because you control some of your income, the cliff is worth planning around. For 2027, the cutoff is $63,840 for one person and $86,560 for a couple. If you are close, a combination of retirement contributions, an HSA and the self-employed health insurance deduction could keep you under. But do not distort your business only to chase a subsidy: a tax saving of a few thousand dollars is not worth turning down real income. Read our subsidy cliff guide.

Choosing a plan as a freelancer

Look at plans in terms of total cost in a good year and a bad year. Freelancers often have irregular income, so a plan with a manageable out-of-pocket maximum is critical. If you are healthy and have an emergency fund, a bronze plan with an HSA can have the lowest total cost. If your income is below 250% of poverty, check for CSR silver plans first (see the CSR guide). Use the comparison calculator to compare plans.

Timing and paperwork

You need open enrollment or a qualifying event, such as loss of other coverage. Becoming self-employed does not itself create a special enrollment period, but leaving a job with employer coverage does. Keep your premium receipts and Form 1095-A. Pay estimated taxes each quarter, and include any expected repayment of the premium tax credit.

S corporation owners

If you own more than 2% of an S corporation, the premiums must generally be paid or reimbursed by the company and included in your W-2 wages, and you then deduct them on your personal return. The rules are technical, so use a tax professional.

A simple yearly plan for freelancers

In October, project your net income for the next year and run the subsidy calculator to see where you land in relation to the 400% line. In November, enroll and set up an automatic payment for the first premium. In January, open an HSA if you picked an eligible plan and set up a regular transfer. Each quarter, when you pay estimated taxes, re-estimate your income and update the Marketplace if it is much higher or lower than before. In April, file your taxes with Form 8962 and Form 7206 and compare the results with your estimates. Keep a separate savings account for the deductible, since a low-premium plan is only a good deal if you can cover it.