Open Enrollment and Freelancers: Health Insurance Decisions for Next Year

For an employee, open enrollment is a form from HR. For a freelancer, it is a set of decisions with real tax consequences: which marketplace plan to pick, whether a spouse's employer plan is the better deal and, above all, what to tell the marketplace you will earn next year. This guide covers those decisions in the order you will make them, with what changed for 2027.

Decision one: marketplace or a spouse's plan

If your spouse's employer offers family coverage you could join, compare it with the marketplace before anything else. Two tax rules usually tip the answer.

When a spouse's plan is available, the pre-tax payroll deduction usually beats the marketplace for the household, because it saves the 7.65% payroll tax as well as income tax. The marketplace tends to win only when the employer plan is expensive for family coverage, has a narrow network or is not available to you at all.

Decision two: the income estimate

The marketplace asks for your expected household income for 2027, specifically modified adjusted gross income. For a sole proprietor, that is roughly net profit minus half of self-employment tax, minus deductions such as retirement contributions and the health premium deduction, plus any other income. It is not your gross revenue.

Your credit is paid to the insurer each month based on that estimate, then settled against your real income on Form 8962 when you file in 2028. For 2026 and later years there is no longer a cap on how much of an overpayment you repay. Two situations show why the estimate deserves care.

If your income changes during 2027, report it on the marketplace within 30 days. The credit adjusts for the remaining months, which is how you keep a surprise from building up.

Estimating when your clients vary

Freelance income rarely comes in a straight line, so build the estimate from pieces you can defend. Start with contracts or retainers you already have for 2027. Add the average of your last two years of project work, not your best year. Subtract expected business expenses, half of self-employment tax and any retirement or HSA contributions you plan to make. Write the calculation down and keep it with your tax records; if you have to explain the estimate later, a reasoned method helps.

If the number lands close to 400% of the poverty line, the decision has larger stakes than usual. Under the cliff, you get a credit; just over it, you get none and repay what was advanced. Plan your contributions with that line in mind, or consider taking a smaller advance credit and claiming the rest when you file.

Decision three: which metal tier

Bronze plans have the lowest premiums and the highest deductibles. Silver plans sit in the middle and are the only tier that gets cost-sharing reductions, which lower deductibles and copays for people with income up to 250% of the poverty line. Gold plans cost more each month and less when you use care.

Two changes shift the comparison for 2027. Starting in 2026, bronze and catastrophic plans count as HSA-eligible, so a bronze enrollee can make deductible HSA contributions. And for 2026 coverage, CMS opened catastrophic plans to people of any age who lose credit eligibility because their income is below 100% or above 400% of the poverty line. Check whether that hardship option is still offered when you apply.

Catastrophic plans have always been open to people under 30. They cover three primary care visits and preventive care before a very high deductible, and premium credits cannot be used on them. They are worth pricing if you are young, healthy and mainly want protection against a large bill.

Her figures are illustrative. Plan prices vary by county, age and insurer, and her income is above 250% of the poverty line, so she gets no cost-sharing reduction on silver. Someone at $35,000 would see a much stronger silver plan and should compare again.

If you miss the window, or your income is low

Outside open enrollment, you can only buy a marketplace plan after a qualifying life event, such as losing other coverage, moving, marrying or having a child. Leaving a W-2 job with benefits to freelance counts as losing coverage, and you generally have 60 days to enroll. Simply deciding you want insurance in March does not.

If your 2027 income will be low, check Medicaid before choosing a plan. In states that expanded Medicaid, adults with income up to 138% of the poverty line usually qualify, and the marketplace application screens for it automatically. Medicaid has no premium credit to repay, but a freelancer whose income rises during the year should report it promptly.

The open enrollment checklist

1. Find out whether you or your spouse can join an employer plan in 2027.
2. Estimate 2027 income from your current clients and contracts, minus half of self-employment tax and planned retirement and HSA contributions.
3. Compare at least one bronze, silver and gold plan on total annual cost in a light year and a heavy year, rather than on premium alone.
4. Check that your doctors and prescriptions are covered.
5. Enroll by Dec. 15 for a Jan. 1 start. Some state marketplaces use different dates, so confirm yours.
6. Set a reminder to update your income on the marketplace if a client starts or ends.

Once you have coverage, the premiums are usually deductible. Our guide to the self-employed health insurance deduction covers who qualifies and how to claim it, and the freelancer's benefits checklist covers the other gaps an employer used to fill. First-year freelancers can start with the first-year freelancer page.

This article is for educational purposes only and is not tax, legal or insurance advice.