How Do I Know if I’m Self-Employed or a Small Employer? A Guide to ACA Health Plans

How Do I Know if I’m Self-Employed or a Small Employer?

A Guide to ACA Health Plans

If you work for yourself or run a small business, figuring out whether you’re considered self-employed or a small employer is key when choosing the right health insurance plan. Under the Affordable Care Act (ACA), the options available to you depend on your status. Are you a sole proprietor or do you employ others? This distinction will determine whether you should shop for individual ACA health plans or offer coverage to your employees through a small group plan.

In this blog, we’ll break down the difference between being self-employed and a small employer, and how each affects your health insurance options under the ACA.

What Does It Mean to Be Self-Employed?

Self-employed individuals typically work for themselves and don’t have any employees. Common examples include freelancers, independent contractors, consultants, and small business owners who don’t hire additional workers.

If you’re self-employed, you’re eligible for individual ACA health plans available through the federal or state health insurance Marketplace. These plans provide comprehensive coverage, including the 10 essential health benefits, and you may also qualify for financial assistance like premium tax credits to help reduce the cost of coverage.

Key Characteristics of Being Self-Employed:

- You don’t have any employees

- You work for yourself and run your business on your own

- You can purchase health insurance through the individual Marketplace

- You may qualify for tax credits or subsidies based on your income

What Health Insurance Options Are Available to the Self-Employed?

If you’re self-employed and need health insurance, the ACA Marketplace is your go-to place for finding affordable coverage. Here are the ACA health plan tiers available to you:

1. Bronze Plans: Lowest monthly premiums with the highest out-of-pocket costs.

2. Silver Plans: Moderate premiums and out-of-pocket costs, and the only tier eligible for cost-sharing reductions if you qualify.

3. Gold Plans: Higher premiums with lower out-of-pocket expenses, ideal for those who expect to use more healthcare services.

4. Platinum Plans: The highest premiums but the lowest out-of-pocket costs, offering the most comprehensive coverage.

You can apply for health coverage during the Open Enrollment Period or during a Special Enrollment Period if you’ve experienced a qualifying life event (like moving to a new state or losing previous coverage).

Financial Assistance for the Self-Employed

As a self-employed individual, you may qualify for premium tax credits based on your income. These credits help lower your monthly insurance premiums, making health coverage more affordable. The ACA also provides cost-sharing reductions if your income is between 100% and 250% of the Federal Poverty Level (FPL) and you select a Silver plan.

What is a Small Employer?

A small employer is defined as a business owner with one or more employees, up to a maximum of 50 full-time employees. If you have employees and want to provide them with health insurance, you’ll need to look into Small Business Health Options Program (SHOP) plans, which are designed specifically for small businesses under the ACA.

Key Characteristics of Being a Small Employer:

- You have at least one full-time employee other than yourself or a spouse

- You can offer health insurance to your employees through the SHOP Marketplace

- You may qualify for the Small Business Health Care Tax Credit if you meet certain criteria

What Health Insurance Options Are Available for Small Employers?

If you’re a small employer, you have access to SHOP plans that allow you to offer health insurance to your employees. These plans provide the same comprehensive coverage as individual ACA plans but are designed for small businesses. You can offer coverage to full-time employees and even contribute toward their premiums to make health insurance more affordable.

Benefits of SHOP Plans:

- You can choose from a variety of ACA-compliant health plans to offer to your employees

- You may qualify for the Small Business Health Care Tax Credit if you meet eligibility requirements (you must have fewer than 25 full-time employees and pay average wages below $50,000)

- Offering health coverage can help attract and retain talented employees

How Do You Determine Your Status?

To figure out whether you’re self-employed or a small employer, consider the following questions:

1. Do you have employees?

- If you don’t employ anyone (besides yourself and possibly your spouse), you’re likely self-employed and should look at individual ACA health plans.

- If you have one or more employees, you’re considered a small employer and can explore small group health plans through the SHOP Marketplace.

2. What type of business structure do you have?

- Sole proprietors, independent contractors, and freelancers are generally classified as self-employed.

- Small businesses with employees (even if you’re the sole owner) fall under the small employer category.

3. Do you want to provide coverage for your employees?

- If you plan to offer health insurance to your employees, you’ll need to use SHOP Marketplace plans.

- If it’s just you, individual Marketplace plans are your best option.

ACA Health Plans: Options for Both Self-Employed Individuals and Small Employers

Both self-employed individuals and small employers have access to a variety of health insurance options under the ACA. Whether you’re looking for an individual plan for yourself or a small group plan for your employees, the ACA ensures you’ll receive essential health benefits and protection against high medical costs.

For the self-employed, individual ACA plans offer flexibility, financial assistance, and comprehensive coverage. For small employers, SHOP plans make it easy to provide health benefits to employees, with potential tax credits to offset the costs.

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Get Help Finding the Right Health Insurance Plan with Aura Insure

Whether you’re self-employed or a small employer, Aura Insure can help you find the right ACA health plan for your needs. Our team of experts will guide you through the process, ensuring you get the coverage and savings you’re eligible for.

Contact us today to explore your health insurance options and get started with the best plan for 2024!