An eligible individual who would like to obtain group health insurance without providing

Q: What is a group insurance plan?

A Group Health Plan” (GHP) is health insurance offered by an employer, union or association to its members while they are still working. GHP coverage is based on current employment.

Generally, if you run your own business and have no employees, or are self-employed, your business won’t qualify for group coverage. You can purchase qualified health coverage through the Marketplace for individuals and families.

Inhaltsverzeichnis Show

The Individual Marketplace
Qualifying for Marketplace savings
What Is Being Self-Employed?
Self-Employed Profile
Buying Group Health Insurance With No Employees
Buying Group Health Insurance With Employees
Buying Health Insurance for Self-Employed Workers Through the Public Exchange
Choosing a Health Insurance Plan When Self-Employed
Self-Employed Health Insurance Deduction
Using HealthMarkets to Buy Health Insurance When Self-Employed
Working With HealthMarkets May Help With Employee Satisfaction
More Choices for Group Health Insurance for Self-Employed Workers
What is a group insurance plan?
What is the term for the period before an individual is eligible for coverage under the group plan?
What percentage of eligible employees must participate?
How many employees do you need for a group policy?

With an Individual Marketplace plan, you can:

Find coverage for yourself and your family
Access premium tax credits and other savings, if you qualify

The Individual Marketplace

The Individual Marketplace offers flexible, quality coverage for people who:

Run their own businesses
Are self-employed with no employees
Work as freelancers or consultants

All plans in the Marketplace cover the same categories of essential health benefits and are prohibited from excluding treatment based on pre-existing conditions. You can also choose between plans with lower premiums and higher cost-sharing when you need care, or higher monthly payments and lower cost-sharing when you need care.

You can only enroll in Marketplace coverage during the annual Open Enrollment Period, unless you have a qualifying life event during the year.

Looking for help with coverage? Find an agent or broker in your area. Agents and brokers are experts in health insurance and can help you find the coverage you need if they have completed registration with the Marketplace, generally at no extra cost to you.

Qualifying for Marketplace savings

To get a premium tax credit or reduction of your out-of-pocket costs, you’ll need to provide an estimate of your household income to the Marketplace for the year you’re getting coverage. This can be challenging for business owners whose income may vary. You should provide your best estimate. Talk to your tax professional for advice on how to estimate your household income.

If you qualify for a premium tax credit and/or reduction of your out-of-pocket costs and your expected household income changes during the year, you should return to the Marketplace and update your estimated income as soon as possible. At the end of the year, if you make more than what you reported to the Marketplace, you may have to pay back some or all of the premium tax credits that you received in advance. If you make less, you could get additional premium tax credits when you file your taxes.

Learn more about reporting income to the Marketplace.

Note: You may be able to get more savings and lower costs on Marketplace health insurance coverage due to the American Rescue Plan Act of 2021. Find out if you qualify for Marketplace savings.

Back to glossary

Your status once you have had 18 months of continuous creditable health coverage. To be HIPAA (Health Insurance Portability and Accountability Act) eligible, at least the last day of your creditable coverage must have been under a group health plan; you also must have used up any COBRA or state continuation coverage; you must not be eligible for Medicare or Medicaid; you must not have other health insurance; and you must apply for individual health insurance within 63 days of losing your prior creditable coverage. When you're buying individual health insurance, HIPAA eligibility gives you greater protections than you would otherwise have under state law.

When you see the cost of individual health insurance, you might immediately wonder if there’s a way you can get group health insurance, which is typically far more affordable.

Consider this: You may be eligible for a group health plan through a professional, trade or membership organization. The members of such groups share the cost of medical insurance in much the same way the employees of a small business do.

Here are a few organizations you may want to look into:

AARP Health
National Association of Female Executives
Small Business Service Bureau
Writers Guild of America
Freelancers Union

If you’re a startup with a very small number of partners or employees and you’re not yet ready to add them to a group plan, you may want to see which of the organizations above can provide coverage for everyone on your team.

March 24, 2021

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6 minute read

Stepping out to work for yourself: ✔

Starting your own business: ✔

Getting group health insurance when you’re self-employed: in progress.

Learn the best way to take this last task from “in progress” to “complete,” whether you want to buy group health insurance for yourself or to cover your employees.

What Is Being Self-Employed?

According to the IRS, you’re self-employed if you run a trade or business as an independent contractor, a sole proprietor, or as a member of a partnership, or if you’re in business for yourself, including having a part-time business.1 The U.S. Small Business Administration (SBA) considers a sole proprietor as an “unincorporated business owned and run by one individual with no distinction between the business and you, the owner.”2 Both sole proprietors and partnerships can hire employees, but the owners are still legally recognized as self-employed.3,4

Self-Employed Profile

In a 2020 small business profile report, the Small Business Administration Office of Advocacy stated that there were about 31.7 million small businesses in the U.S. and that approximately 25.7 million of those business were nonemployers—which are defined as businesses with no paid employees that are subject to federal income tax.5,6

Buying Group Health Insurance With No Employees

If you work for yourself and have no employees, you are considered a small group of one. You can only buy group health insurance when you are self-employed through an insurance company or agent in certain states. Check with your state insurance department to verify if group health insurance policies are sold to small groups of one. In most cases, however, a self-employed person with no employees would have to buy an individual health insurance policy.7

Buying Group Health Insurance With Employees

If you have at least one employee (someone who is not an independent contractor, your spouse, or a business partner or part-owner of the company), you can buy group health insurance through an agent, directly from an insurance company, or through the public exchange. Basically, you have more options for how you can buy a group health policy when you’re a self-employed business owner with employees.

Anther option is a stand-alone health reimbursement account (HRA). This is an employer-funded account from which you can be reimbursed tax-free for qualified medical expenses. There are several types of HRS, including the Individual Coverage HRA (ICHRA) available to businesses of any size, and the Qualified Small Employer HRA (QSEHRA), available to business with up to 49 employees.8,9 These two types of HRAs are considered an alternative to job-based health coverage, and require enrollment in a health plan for the money to be used.10

For a QSEHRA, the business owner sets an allowance for the QSEHRA, then employees maintain minimum essential health coverage and submit their medical expenses for tax-free reimbursement. Employees can be reimbursed up to $5,300 per year for individuals and up to $10,700 per year for families.11

It should also be noted that most employers must meet group health plans standards under federal law, which is known as the Employee Retirement Income Security Act (ERISA).12 ERISA requirements include providing key plan information to participants, providing fiduciary responsibilities, establishing an appeals process, and providing plan participants with the right to sue for benefits and fiduciary breaches.13 HealthMarkets can assist with ERISA compliance.

Buying Health Insurance for Self-Employed Workers Through the Public Exchange

The public exchange for employers, known as the Small Business Health Options (SHOP) Marketplace, categorizes business owners with no employees (hiring independent contractors doesn’t count as having employees) as self-employed and those with employees as small employers. To buy group health coverage through the SHOP, you must have at least one eligible full-time equivalent employee. An eligible employee cannot be a spouse, business partner, or part owner in your company. You usually need to have no more than 50 employees (some states allow up to 100) to buy a SHOP plan. If you want to enroll yourself in the plan, at least one of your employees must first be enrolled.14

Your small business may qualify for a tax credit of up to 50% if you have fewer than 25 employees, but this comes with certain requirements:15

You have to buy a SHOP plan for at least two years.
Your employees can’t earn more than $50,000 in average annual wages.
You offer a qualified health plan through SHOP.
You must pay for at least 50 percent of employees’ premium costs.

Choosing a Health Insurance Plan When Self-Employed

The type of group health plan you choose may depend on whether or not you have employees. If you have no employees, then how you go about choosing group health insurance for your self-employed business may be the same as if you were buying individual health coverage or family health insurance. If you have employees, then you have to consider things like how much you can afford to contribute toward employee premiums (most insurance companies require at least 50% of premium cost),16 the network of providers employees would have access to, and the amount employees would have to pay for a plan that has a deductible. Of course, the goal is to pick a plan that makes financial sense for your business while also being what’s best for your employees.

The chart below shows features of different types of group health insurance plans.

Plan Type	Access to In-Network and Out-of-Network Providers	Premium Cost Level	Deductible Cost Level	Best Type of Plan if:
Health Maintenance Organization (HMO)17	In-network only, except for emergencies*	Usually lower than most other plans. Lower employee premiums means lower employer premium contributions.	Usually has no deductible. If there is a deductible, typically lower than most other plans.	You want care organized through a central provider (must have a primary care physician [PCP] and get referrals in most cases*) and lower out-of-pocket costs
Preferred Provider Organization (PPO)17	Both, but there’s a lower percentage of coverage out-of-network	Usually has one of the highest premiums compared to other plan types	Not the highest, but typically more than an HMO plan	You want more flexibility to visit providers without going through a PCP or getting a referral.
Point of Service (POS)17	Both, but typically need a referral from PCP to go out-of-network	Typically higher than an HMO, but lower than a PPO	Typically higher than both an HMO and a PPO plan	You want to have a mixture of guided healthcare from a PCP with the ability to get coverage out-of-network.
High Deductible Health Plans (HDHP)18	Depends—can work like an HMO, PPO, or POS	Usually the lowest	Typically the highest	You want lower premiums and the ability to use your health insurance with a health savings account (HSA).
Fee-for-Service (FFS)19	Both	Often the most expensive	Can be lower than other plans, but the overall out-of-pocket costs are high because members typically pay for care up front and then file a reimbursement claim.	You want the most flexibility to visit any provider you choose.

*A referral from a PCP is not needed for emergencies and routine care from an in-network obstetrician or gynecologist.20

Self-Employed Health Insurance Deduction

If you work for yourself, you could be eligible for a self-employed health insurance deduction. If so, you may be able to adjust your gross income when filing your tax return by deducting 100% of your health insurance premiums—including dental and long-term care—for your household (you and your dependents). To find out if you’re eligible, you should consult with a tax professional. If you are allowed to take the self-employed health insurance deduction, this will not prevent you from taking advantage of the Affordable Care Act’s premium tax credits, if you are eligible for those as well.21

Using HealthMarkets to Buy Health Insurance When Self-Employed

With HealthMarkets, you get access to a wide variety of health insurance plans. Having lots of health insurance rates to compare when you are self-employed can make it easy to find health insurance for yourself or your small group.

Another reason why you would want to work with HealthMarkets is to maximize your time. As a self-employed business owner, you may wear many hats—acting as the human resources, accounting, and creative team all in one. Juggling so many roles may not allow you the luxury to fully analyze all the different group health plans out there. You may also need to find out what health benefits employees are looking for. Again, time may not afford you the opportunity to meet with each employee.

Working With HealthMarkets May Help With Employee Satisfaction

Employees with thumbs up

Because HealthMarkets can provide employees with a greater level of service by assessing their health coverage needs, explaining different plan options, and even identifying where supplemental insurance can help, this may create better employee satisfaction and retention.

A 2020 Workplace Wellness study conducted by EBRI revealed that 54% of employees are very or extremely satisfied with their health insurance plan.22

A satisfied employee may also be more likely to recommend your company to job seekers. Offering group health insurance that meets your employees’ needs can also help with recruiting future employees.

More Choices for Group Health Insurance for Self-Employed Workers

HealthMarkets works with recognized insurance companies across the country to give small businesses access to their choice of health insurance plans. When shopping for a small business health plan, it’s important to reach out to an agent who specializes in this area. If you are interested in finding a plan for you small business, call a licensed insurance agent at today.

Going the solo plan route? HealthMarkets can also help you review your individual health plan options. Start comparing health plans online now.

What is a group insurance plan?

A “Group Health Plan” (GHP) is health insurance offered by an employer, union or association to its members while they are still working. GHP coverage is based on current employment.

What is the term for the period before an individual is eligible for coverage under the group plan?

Waiting Period The period that must pass before an employee or dependent is eligible to enroll (becomes covered) under the terms of the group health plan.

What percentage of eligible employees must participate?

Most insurers impose a requirement that a certain percentage of eligible employees (often 75 percent) actually participate in the healthcare plan.

How many employees do you need for a group policy?

To be eligible for small group health insurance, a company must have between two and 50 FTEs. One of the employees on the group health plan can be the employer or owner. However, at least one other FTE who isn't the small business owner must enroll in the group health plan.