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Health Insurance for Self-Employed FAQs

Self-employed in California? Learn how to get affordable health insurance through Covered California, maximize your subsidies, and deduct your premiums on taxes.

Am I Eligible for Covered California?

Yes! Self-employed individuals, freelancers, independent contractors, and gig workers are all eligible for Covered California.

Who Qualifies:

  • Sole proprietors and LLC owners
  • Freelancers and consultants
  • Independent contractors (1099 workers)
  • Gig economy workers (Uber, Lyft, DoorDash, etc.)
  • Small business owners without group coverage
Good News: Self-employed individuals often qualify for substantial subsidies because of how income is calculated.

How Do I Report Variable Income?

Covered California uses Modified Adjusted Gross Income (MAGI) to determine subsidies. For self-employed individuals, this is your net income after deductions.

Income Calculation:

MAGI = Gross Revenue - Business Expenses - Self-Employment Tax Deduction - Health Insurance Deduction

Tips for Variable Income:

  • Estimate conservatively: Use your expected average monthly income
  • Update when income changes: Report significant changes to Covered California
  • Keep good records: Track income and expenses throughout the year
  • Consider prior year: Last year's tax return can guide estimates
Pro Tip: Your actual income is reconciled at tax time. Over or underestimating affects your tax refund/payment, not your coverage.

How to Maximize Your Subsidies

Self-employed individuals have unique opportunities to optimize their income for maximum subsidies.

Legal Strategies:

  1. Maximize business deductions: Legitimate expenses reduce MAGI
  2. Contribute to retirement accounts: SEP-IRA or Solo 401(k) contributions lower MAGI
  3. Time income strategically: Defer invoicing or accelerate expenses when beneficial
  4. Use HSA contributions: If on a Bronze HDHP plan, HSA contributions reduce MAGI

Example Scenario:

Freelancer earning $70,000 gross:

  • Gross Income: $70,000
  • Business Expenses: -$15,000
  • SEP-IRA Contribution: -$10,000
  • MAGI for Subsidies: $45,000

Self-Employed Health Insurance Deduction

Self-employed individuals can deduct 100% of health insurance premiums as an "above the line" deduction.

What You Can Deduct:

  • Your monthly health insurance premiums
  • Premiums for your spouse and dependents
  • Dental and vision insurance premiums
  • Long-term care insurance (with limits)

Important Rules:

  • Cannot deduct more than your net self-employment income
  • Cannot deduct if eligible for employer-sponsored coverage
  • Deduction is only for months you were self-employed
Note: You can only deduct the portion of premiums you actually pay, not the subsidy amount.

Best Plans for Self-Employed

The best plan depends on your income, expected healthcare usage, and tax situation.

Bronze HDHP

Best for: Healthy individuals wanting lowest premiums + HSA

  • Lowest monthly cost
  • HSA-eligible for tax savings
  • Higher deductible
Silver (with CSR)

Best for: Those with income under 250% FPL

  • Enhanced Silver benefits
  • Lower deductibles and copays
  • Best value if you qualify

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Our agents specialize in helping self-employed Californians find the right coverage.

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