How to build a benefits package if you’re self-employed

If you’re self-employed, you’ve probably figured out how to get health insurance, thanks to the Affordable Care Act — but what about the rest of your benefits? Freelancers, gig economy workers, and solopreneurs don’t often think about putting together the kind of benefits package traditionally available to a W-2 employee.

But if you’re not asking yourself whether you should also purchase dental, disability or life insurance, you might be missing out on opportunities to save money while taking care of yourself and your family. Grab the right vision insurance, for example, and your insurer might cover new glasses or contacts for everyone, every year up to a certain amount.

A good benefits package also prevents you from taking on risk that you can’t afford. Skipping dental insurance might not seem too risky, but going without regular teeth cleanings could cost you in the long run. You should also consider disability insurance and life insurance, both of which are designed to help protect you and your loved ones from worst-case scenarios.

When you work for yourself, you need to think of your career from both the employee and the employer’s perspective — and that means making sure you have the right benefits to do your work effectively. Here’s what you need to know about finding health insurance, paying for dental and vision insurance, and adding additional insurance plans to your self-employed benefits package.

Using a health care startup vs. the ACA marketplace

When open enrollment begins this fall, your first stop might be Healthcare.gov or the Affordable Care Act marketplace website in your state. However, you might not realize that there are a number of benefits startups — like Stride Health, Oscar, Gravie and Trupo — designed to help freelancers, small business owners, and gig economy workers make smarter choices about their insurance packages.

I reached out to Sara Horowitz, Trupo’s co-founder, to learn more about what these startups can offer and what freelancers need to know about navigating open enrollment and their various insurance options. The biggest benefit — pun intended — you’ll get from working with a health insurance startup is an informed perspective on which insurance package might be best for you. “The [marketplace] user experience leaves something to be desired and the choices can be overwhelming,” Horowitz explains. “That’s why Trupo will soon be releasing its top health insurance picks for New York and New Jersey freelancers.”

Horowitz noted that freelancers may still need to work directly with the ACA marketplace — especially if they’re hoping to get a health insurance subsidy. “The important thing to know when shopping for health insurance is “do I qualify for subsidies and how do I get them?” The ACA marketplace is the ultimate decision-maker regarding subsidies and if your income is complicated (like so many freelancers’), sometimes it’s best to talk directly to the exchange.”

That said, this isn’t an either/or situation. Freelancers can use a benefits startup to put together their entire benefits package, or they might get their health insurance (and their subsidy) through Healthcare.gov, and then use a service like Stride Health or Trupo to secure additional insurance coverage, such as vision, dental, or disability insurance.

Easy + Simple + Inexpensive

“The easiest, simplest process for receiving term life insurance. And the premiums were the lowest quote.” —Michael

Learn more
Average rating as of March 2018: 9.4/10
Read more at TrustPilot

Buying dental or vision insurance vs. paying out-of-pocket

I’ve been a freelancer for nearly a decade, and although I’ve always had a health insurance plan, I’ve never purchased vision or dental insurance. Instead, I’ve paid for my annual eye exam and my biannual teeth cleanings out-of-pocket. In general, these appointments cost about $200 each, and I can pay for them out of my health savings account (HSA).

However, just because that system works for me doesn’t mean it’ll work for everybody. I max out my HSA every year and have a substantial emergency fund, but other freelancers may prefer the security of insurance — especially if they wouldn’t be able to pay off an unexpected dental bill. “It really comes down to what you can afford to save for on your own,” Horowitz says. “While it’s great to have an emergency fund or an HSA to tap into to, larger incidents can knock you off your feet. I’ve spoken with too many freelancers who have racked up credit card debt, cashed out retirement funds, or moved in with family because of something unforeseen.”

In my case, dental insurance for a single woman in her late 30s would cost around $20 a month in premiums with an $1,000 annual maximum benefit — which means it’s something I should definitely consider for next year. Be aware that the annual maximum benefit is essentially the opposite of the out-of-pocket maximum that comes with an ACA health insurance plan. The out-of-pocket maximum means “after you pay this much, insurance will cover the rest.” The annual maximum benefit means “after insurance covers this much, you pay the rest.” Keep that in mind when you do the math on whether to purchase dental insurance, whether you’re buying it for yourself or for your children.

Purchasing additional insurance coverage

Health, vision, and dental insurance aren’t the only types of insurance that self-employed workers should look into. You might also consider purchasing accident insurance or disability insurance, both of which are regularly offered to traditional employees as part of their benefits package.

“When you are working on your own, it’s very easy to feel overwhelmed by your insurance options because you don’t have an HR manager handing you a suite of benefits. And since your work may be episodic and variable, you have even more short-term risks than that traditional employee,” Horowitz explains. “That’s why I founded Trupo — to bring to freelancers the same kinds of benefit packages as the full-timers get.”

For those in the market for long-term disability insurance, Breeze offers individual plans starting at $9 per month.

Remember, a self-employed person should treat themselves the way an employer would treat a valued employee: by giving themselves the opportunity to remain financially stable following an accident or injury. “Most freelancers can relate to the phrase ‘you don’t work, you don’t eat,’ where the risk is very real that you could have an injury or an illness interrupt your ability to earn a living,” Horowitz says. “Benefits like accident insurance can make a real difference since the benefits are paid to you directly — and you can use them to pay bills, buy groceries, it’s up to you.”

Freelancers should also consider purchasing life insurance, especially if they have a family that depends on their income. Adding affordable accident, disability and life insurance to your self-employed benefits package can protect your partner and your family from unexpected financial hardships — and you can get a free quote to learn just how affordable term life insurance can be.

I’ll give Sara Horowitz the final word: “The great thing about insurance is that it takes the risk that you, individually, may have an emergency and it shares that risk with thousands of other people like you. Since the risk is shared, so are the resources — meaning you don’t have to personally save enough to handle that whole emergency on your own.”

So start asking yourself what kind of benefits you deserve, and where you need to go to find them.

Life insurance needs aren't one-size-fits-all.

Start your life insurance checkup

Nicole Dieker is a full-time freelance writer. Her work regularly appears on Bankrate, Lifehacker, The Write Life and numerous other sites. She is the author of Frugal and the Beast: And Other Financial Fairy Tales.

 This article is sponsored by Haven Life Insurance Agency. Haven Life does not endorse the products, services or strategies discussed here. Opinions are those of the individuals interviewed.

Haven Life Insurance Agency offers this as educational information only. Haven Life does not provide tax, legal or investment advice. This material is not intended to provide, and should not be relied on for, tax, legal, or investment advice. You should consult your own tax, legal, and investment advisors before engaging in any transaction.

Real Rate is based on your application and third party data obtained during underwriting.

Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

Get the latest news

Apply now