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Health Insurance

Health Insurance for the Self-Employed and Freelancers

Coverage options for freelancers and sole proprietors in 2026 and 2027: Marketplace plans on variable income, a spouse's plan, HSAs and the self-employed deduction.

By All Blog Article Editorial Team · Published · 9 min read

If you work for yourself and have no employees, your main choices are an individual plan from HealthCare.gov or your state's Marketplace, a spouse's job-based plan, or Medicaid if your income is low enough in your state. Which one costs least depends on your expected profit for the year, whether a spouse's employer offers family coverage, and two tax rules that apply only to self-employed people.

Open enrollment for 2027 coverage on HealthCare.gov runs from November 1, 2026 to January 15, 2027. The hard part for freelancers is the income estimate: the advance credit is checked against your actual profit at tax time, and from tax year 2026 any overpayment is repaid in full.

Key takeaways

  • Self-employed people with no employees shop on the individual Marketplace. The Marketplace bases savings on the profit you expect for the coverage year, not on last year's profit.
  • For tax years after 2025 there is no cap on repaying advance credit you were not owed, so update your estimate as soon as your income changes.
  • An affordable family offer through a spouse's job usually rules out the credit. Being eligible for any subsidized employer plan in a month rules out the self-employed deduction for that month.
  • From 2026, every bronze and catastrophic plan available as individual coverage through a Marketplace works with a health savings account (HSA). The 2027 contribution limits are $4,500 for self-only coverage and $9,000 for family coverage.
  • The self-employed health insurance deduction cuts income tax but not self-employment tax, and it cannot exceed the business's net earnings.
  • If you claim both the credit and the deduction for the same premiums, together they cannot exceed what the premiums cost.

Your main coverage options

For Marketplace purposes, a business that earns money and has no employees makes you self-employed. Hiring independent contractors does not change that. You buy coverage on the individual Marketplace, the same place people without a job-based offer shop. If the business has at least one employee other than you, your spouse, a family member or an owner, you may be able to use the small-business Marketplace, called SHOP, instead.

  • A Marketplace plan. You can get a premium tax credit if your household income is between 100% and 400% of the federal poverty line and no affordable job-based coverage is available to you. For 2027 coverage, 400% is $63,840 for one person. Our guide to how premium tax credits work in 2026 and 2027 covers the calculation.
  • A spouse's or partner's job-based plan. Often the simplest route, but it affects both the credit and the tax deduction, as explained below.
  • Medicaid or CHIP. You can apply any time of year, and eligibility rules differ from state to state. Eligibility is checked against this year's income, so a slow year can change the answer.
  • COBRA, if you just left a job to freelance. It keeps your old plan at up to 102% of its full cost. See COBRA vs a Marketplace plan before you decide.

Estimating income when it changes month to month

On the Marketplace application you report your net self-employment income, sometimes called profit: what the business takes in minus its tax-deductible expenses. It is the figure that ends up on Schedule C of your federal return. If expenses are larger than income, you report a net loss. Add any other household income, such as a spouse's wages.

HealthCare.gov lets you subtract only a few other items, including student loan interest, IRA contributions if you have no retirement account through a job, and HSA deposits in limited situations. Personal expenses such as medical bills, mortgage interest and child care do not count.

The estimate is for the year you want coverage. HealthCare.gov asks for your best estimate, drawing on what you earned before, what you realistically expect, and what is normal in your line of work. It may ask you to prove the figure with a self-employment ledger, which can be any accurate, detailed record of income and expenses, such as a spreadsheet. Keeping one as you go makes that request easy to answer.

Three rules make the estimate matter more than it used to:

  • No repayment cap. For tax years after 2025, if your profit turns out higher than estimated, you repay the full excess of the advance credit on your return.
  • The 400% cliff. Above 400% of the poverty line the credit is zero for 2026 and 2027, so a strong year near the line can turn a credit into a repayment of everything you received.
  • A safety net at the bottom. If income ends below 100% of the poverty line, the 2025 Form 8962 instructions let you keep the credit if the Marketplace estimated at least 100% when you enrolled, advance payments were made, and you did not knowingly or recklessly give wrong information.

The trade-off is the same for everyone who takes the credit in advance. Taking all of it gives the lowest monthly bill but the largest possible repayment; taking less costs more each month but shrinks any bill at tax time, which matters most when income is hard to predict or near 400%. HealthCare.gov asks you to update your application as soon as it looks like your yearly profit will differ from your estimate, for example when a contract ends or a large one starts.

Using a spouse's or partner's plan

When a spouse's job offers coverage to spouses and dependents, HealthCare.gov says you usually will not qualify for Marketplace savings. What decides it is affordability. For a family member offered coverage through someone else's job, the offer counts as affordable if the employee's premium to cover the household is no more than 9.96% of household income for plan years starting in 2026, or 10.22% for 2027, and the plan meets the minimum value standard.

The same offer also affects your tax deduction. Under the IRS instructions for Form 7206, you cannot take the self-employed health insurance deduction for any month you were eligible to take part in a subsidized health plan through your own employer or your spouse's, or through the employer of a dependent or of a child under 27. That holds even if you did not enroll.

So compare the full yearly cost of each route. If the spouse's plan would add you for a modest extra premium, it often wins. If the family premium is high but still counts as affordable, you lose both the credit and the deduction for those months, and the comparison needs real numbers. Our guide to comparing plans by total yearly cost shows a method.

HSA-compatible plans for freelancers

A health savings account holds money you have not paid income tax on, to be spent on medical bills, and the balance stays yours. Under the 2025 tax law (Public Law 119-21), from January 1, 2026 any bronze or catastrophic plan available as individual coverage through a Marketplace counts as an HSA-qualified high-deductible plan, even if its deductible or out-of-pocket limit falls outside the usual HSA rules. IRS Notice 2026-5 adds that the same plan bought off the Marketplace also qualifies if it is offered on one. Bronze plans sold to small employers through SHOP generally do not.

HSA contribution limit20262027
Self-only coverage$4,400$4,500
Family coverage$8,750$9,000
Extra if 55 or older by year-end$1,000$1,000

For a self-employed person the deduction is the main draw. You can deduct HSA contributions you make yourself even if you do not itemize, which lowers adjusted gross income and therefore the income used for the premium tax credit. Contributions for a year can be made up to the following year's tax-filing deadline; for 2025 contributions, the IRS deadline was April 15, 2026. Catastrophic plans are open only to people under 30 or with a hardship or affordability exemption, and the premium tax credit cannot be used on them. See HSA rules for 2026 and 2027 for eligibility details.

Example: A single freelance designer in one of the 48 contiguous states expects 2027 MAGI of $56,000 after business expenses. The benchmark silver plan costs $700 a month ($8,400 a year). These personal figures are illustrative. $56,000 is 351% of the $15,960 guideline, so her expected contribution is 10.22% × $56,000 = $5,723.20 and her credit is $8,400 − $5,723.20 = $2,676.80 for the year. She takes it all in advance on an HSA-compatible bronze plan that covers her for all of 2027.

Then a big contract lifts her MAGI to $66,000, which is 414% of the guideline. Her credit falls to zero, and she would owe back all $2,676.80. If she contributes the 2027 self-only maximum of $4,500 to her HSA, her MAGI drops to $61,500, or 385%. Her credit becomes $8,400 − (10.22% × $61,500) = $8,400 − $6,285.30 = $2,114.70, and she repays $562.10 instead. The self-employed health insurance deduction would lower her MAGI further; that interaction is covered next.

The self-employed health insurance deduction

This deduction lets you subtract health insurance premiums from income on Schedule 1 of Form 1040, whether or not you itemize. Under the 2025 instructions for Form 7206, the latest published, it is open to:

  • people with a net profit on Schedule C or Schedule F;
  • partners with net earnings from self-employment;
  • people who used an optional method to figure self-employment earnings on Schedule SE;
  • shareholders owning more than 2% of an S corporation who received wages from it.

The plan must be established under your business, but if you file Schedule C or Schedule F the policy can be in the business's name or your own. Premiums for medical, dental and vision insurance count, and so do qualified long-term care premiums up to age-based dollar limits that change each year. They can cover you, your spouse, your dependents and a child under 27 at the end of the year. Medicare premiums you pay voluntarily for coverage in your name can count too.

The limits are where people trip up:

  • The deduction cannot be more than the net earnings from the business the plan is set up under. A business with a loss gives no deduction.
  • It lowers income tax but not self-employment tax: you cannot subtract it when figuring net earnings for Schedule SE.
  • It is not allowed for months you were eligible for a subsidized employer plan, as described above.
  • Premiums you deduct here cannot also be claimed as itemized medical expenses on Schedule A.

How the deduction and the premium tax credit interact

Each one changes the other. A larger deduction means lower adjusted gross income, which can mean a larger credit. A larger credit covers more of the premium, which leaves less premium to deduct.

The limit itself is short: add the deduction you claim for the premiums to the credit worked out after taking that deduction into account, and the sum may not be more than the premiums. IRS Publication 974 sets out two ways to get there, an iterative method and a shorter simplified method that in some cases gives a less favorable result. It also accepts any other method that meets both sets of rules. Tax software usually does this calculation; it will need your Form 1095-A.

Frequently asked questions

Can you deduct Marketplace premiums and also get the premium tax credit?

Yes, but only the part you paid yourself. Together, the deduction and the credit cannot exceed the premiums, and IRS Publication 974 shows how to divide them.

Is the deduction allowed for a side business alongside a salaried job with health benefits?

Not for any month you were eligible for your employer's subsidized plan, even if you declined it. The same applies if a spouse's employer offered you a subsidized plan.

Does the deduction reduce self-employment tax?

No. The IRS instructions say you cannot subtract it when figuring net earnings for self-employment tax. It reduces income tax only.

What if the business loses money this year?

You report the net loss on your Marketplace application, and you get no self-employed health insurance deduction because it cannot exceed net earnings. A low year may also make you eligible for Medicaid, depending on your state, and you can apply any time.

Sources

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