So, you’re thinking of leaving your job and taking a chance in the wild world of self-employment. It’s true that being your own boss carries many benefits: You can keep your own work schedule, choose your own clients, and work from pretty much anywhere.
But being self-employed means letting go of a certain degree of security. You’ll want to have enough savings to make ends meet if your business hits a lull — and you’ll need to cover your own health insurance.
Think of this guide as your roadmap to getting started in the world of self-employment.
Self-employed? If you no longer have access to employer-based health insurance, another option could be a short-term plan. Explore short-term insurance options now.
Depending on what state you live in, you may have 3 main choices: COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act; Affordable Care Act (ACA) health insurance; and short-term insurance. Here’s a closer look at each type:
If you don’t have it set up already, it’s important to get life insurance. There are 2 main kinds of life insurance to choose from: term life insurance and permanent life insurance.
A supplemental life insurance policy could be a great add-on to your traditional health plan. Learn more about life insurance policies today.
Liability insurance is a type of insurance that you purchase to protect against claims resulting from injuries and damage to people and/or property. Do you need it if you’re self-employed? The simple answer is yes.
“Anyone who is self-employed should have business liability insurance,” stresses Beloff. “If someone comes to visit you at your home office for business and they slip and fall, it may not be covered under your standard homeowner’s [insurance] policy.”
While a business structure such as a limited liability company (LLC) provides some protection from personal liability, the protection is not absolute for members, and your business can still be sued, Beloff notes. If you’re a professional, such as an accountant, financial adviser or attorney, Beloff also recommends that you explore professional liability insurance. This protects you against financial loss if a client sues you for malpractice, errors or negligence.
If you manufacture and distribute products, you may also need product liability insurance, and if you have a significant amount of property and physical assets, you may need commercial property insurance.
Did you know that in some states you can include eligible children on your short-term insurance policy? Enter your zip code to learn more or call a licensed insurance agent at 1-844-211-7730.
This article contains information that is compiled by UnitedHealthcare or its subsidiaries. UnitedHealthcare does not represent all the information provided are statements of fact.
Sources:
Georgetown University Center on Health Insurance Reforms. “I’m losing my job-based coverage and have been given the option to sign up for COBRA. What are the pros and cons of doing that?” Retrieved from https://navigatorguide.georgetown.edu/faq/im-leaving-employment-and-have-been-given-the-option-to-sign-up-for-cobra-what-are-the-pros-and-cons-of-doing-that Accessed April 11, 2024
HealthCare.gov. “Formulary.” Retrieved from https://www.healthcare.gov/glossary/formulary/ Accessed April 11, 2024
HealthCare.gov. “Special Enrollment Periods.” Retrieved from https://www.healthcare.gov/coverage-outside-open-enrollment/special-enrollment-period/ Accessed April 11, 2024
HealthCare.gov. “What Marketplace health insurance plans cover.” Retrieved from https://www.healthcare.gov/coverage/what-marketplace-plans-cover/ Accessed April 11, 2024
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Internal Revenue Service. “SIMPLE IRA tips for the sole proprietor.” August 29, 2023. Retrieved from https://www.irs.gov/retirement-plans/simple-ira-tips-for-the-sole-proprietor
Internal Revenue Service. “Simplified Employee Pension plan (SEP).” December 1, 2023. Retrieved from https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep
Internal Revenue Service. “Topic no. 510, business use of car.” January 30, 2024. Retrieved from https://www.irs.gov/taxtopics/tc510
Internal Revenue Service. “Topic no. 509, business use of home.” January 30, 2024. Retrieved from https://www.irs.gov/taxtopics/tc509
Social Security Administration. “If you are self-employed.” January 2024. https://www.ssa.gov/pubs/EN-05-10022.pdf
U.S. Department of Labor. “A New Year’s resolution: prepare for retirement!” January 26, 2023. Retrieved from https://blog.dol.gov/2023/01/26/a-new-years-resolution-prepare-for-retirement
U.S. Department of Labor. “FAQs on COBRA continuation health coverage for workers.” Retrieved from https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-health-coverage-consumer.pdf Accessed April 11, 2024
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