Medical costs hit self-employed people harder than employees. Learn the high-deductible health plan strategy, HSA optimization, and every available tax deduction for freelancer medical expenses.
Without employer insurance, freelancers pay more for health coverage and face higher out-of-pocket exposure. Understanding your options reduces both the cost and the financial shock of medical events.
For healthy freelancers in the US: A High Deductible Health Plan (HDHP) combined with a Health Savings Account (HSA) is often the optimal approach.
HDHP: Lower monthly premium than traditional plans. Higher deductible ($1,600+ individual in 2024).
HSA: Pre-tax contributions (up to $4,150 individual in 2024). Invest the HSA balance in index funds. Use HSA funds tax-free for medical expenses.
Net effect: Lower monthly premium, tax-advantaged savings for medical expenses, and a growing invested balance for future medical costs.
Beyond your regular emergency fund, maintain a separate medical emergency fund equal to your annual out-of-pocket maximum ($8,050 for individual HDHP plans in 2024).
This ensures a major medical event does not blow up your general emergency fund.
Self-employed health insurance premiums: 100% deductible off adjusted gross income (US).
HSA contributions: Fully deductible (US).
Medical expense deduction: Medical expenses exceeding 7.5% of AGI are deductible as an itemized deduction. For most, this threshold is too high to reach. But worth calculating in a high-expense medical year.
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