Self-employed? Don’t forget to consider these factors while taking a health insurance plan (2024)

Freelancers, gig workers and small-business owners have innumerable ways to leverage their skills and carve out a career path. But such self-employed people have to carefully plan various aspects of their work and life. One of these is choosing a suitable health insurance plan.

Yogesh Agarwal, Founder and CEO of employee healthcare platform Onsurity, says, “As of 2023, there are an estimated 73.3 million freelancers in the United States. According to an Everly Survey, 42% freelancers in the US don’t have any form of health insurance due to high costs. Now, if we talk about India, it has over 15 million freelancers. However, there is no data on the public domain as to what percentage of freelancers in India have health insurance coverage. Of the 10,00,000 individuals served by Onsurity through its employee healthcare plans, 43% are gig and contractual workers.”

But why should self-employed individuals invest in health insurance? This coverage is needed to meet financial responsibilities and unexpected expenses related to the health of the individual and family. As freelancers do not have a guaranteed steady income or corporate healthcare coverage, health insurance is especially necessary for them.

Agarwal says the cashless claim feature in health insurance policies can be invaluable for the self-employed.

Pankaj Goenka, Assistant Vice-President & Head-B2B Business, InsuranceDekho, says that investing in a comprehensive health insurance plan isn’t just a smart financial move, but also a proactive step towards safeguarding ourselves from the unexpected burden of medical costs. The other benefits include financial security, peace of mind, quality healthcare, preventive care and tax deductions.

“Health insurance serves as a safety net, mitigating the risk of substantial out-of-pocket expenses that can arise from medical treatments, hospital stays, surgeries and medications. By having a solid health insurance plan, you ensure that you won't be left with hefty bills that can potentially jeopardise your financial stability and the future of your business,” he says.

But there are some things that self-employed people should be aware of while looking for health insurance plans.

According to Agarwal, such individuals should opt for plans with affordable premiums and low or no deductibles. It should also have all the key benefits. In addition, the insurance provider should cover the doctors and hospitals the individual prefers. Agarwal says take note of the out-of-pocket limits or coverage caps — like room rent limit or any illness-specific cap — to avoid any last-minute confusion and expenses.

Goenka says make sure your health insurance provides the necessary coverage when you need it the most. It is of the utmost importance to thoroughly understand the plan’s aspects such as coverage, terms and exclusions.

He highlights the need to check the waiting period before signing up for any coverage plan. Many health insurance policies have waiting periods before they will cover ailments related to certain pre-existing conditions or specific treatments. Waiting periods can impact your ability to claim benefits during the initial stages of your policy.

Furthermore, other common parameters to assess the suitability of a plan/insurance provider are co-pays, cashless treatment, availability of modern treatment procedures and claim settlement ratio.

How can individuals extend the insurance benefits to their families?

Agarwal says that an ideal way to plan for health insurance for your family is to choose a family floater plan. Such a plan offers coverage for self-employed individuals and their family under one scheme. The coverage is shared by the family members, making the premium more economical for self-employed individuals.

Additionally, he says that if the family feels the need to increase the sum insured, they can apply for a super top-up plan; take this in case the medical expenses are likely to exceed the sum insured in your base policy.

Goenka also says that to create a comprehensive yet budget-friendly health insurance coverage, it’s best to implement a two-fold approach: a base policy supplemented by a top-up plan. The base policy delivers essential coverage, while the top-up plan extends protection for higher expenses, thereby striking a balance between coverage and cost.

He advises individuals to consider several key factors — such as appropriate sum insurance, member-addition flexibilities, waiting periods and lifelong renewability — while choosing a plan that can adequately serve the person as well as the family members.