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Being self-employed often means being without the cushion of employer-sponsored health benefits. However, like all self-employed individuals, day traders have several avenues for obtaining health insurance in the US. The most significant number of traders are day traders. This article delves into these options, providing a roadmap for securing comprehensive health coverage.
How Do Day Traders Get Health Insurance in the US?
Day traders can get health insurance as self-employed persons. Day traders can buy from $12 up to $200 monthly premium at ACA Marketplace Plans, Private Health Insurance, HSA with HDHP, Trade Association Plans, Short-Term Health Insurance, Healthcare Sharing Programs, COBRA, Medicaid, and Direct Primary Care.
Day traders, much like other self-employed individuals, face the challenge of securing their health insurance without the cushion of employer benefits. Fortunately, they have various options tailored to their needs, including ACA Marketplace Plans and direct purchases from private health insurance companies.
Additionally, strategies such as enrolling in High Deductible Health Plans paired with Health Savings Accounts or joining trade association plans can provide coverage tailored to their financial situations. Short-Term Health Insurance, Healthcare Sharing Programs, COBRA, Medicaid, and Direct Primary Care also offer potential solutions, ensuring day traders can find a plan that fits their unique requirements.
The Affordable Care Act (ACA) Marketplace
- What is the ACA Marketplace? The ACA, commonly known as Obamacare, introduced a platform where individuals can compare and purchase health insurance plans. These plans are organized by tiers, from Bronze to Platinum, based on coverage and cost.
- Benefits for the Self-Employed:
- Subsidies: Based on your income, you may qualify for subsidies that reduce your monthly premium. If your income fluctuates, as it often does for day traders, it’s essential to estimate your annual income accurately to avoid paying back subsidies during tax time.
- Coverage Guarantee: Insurers cannot deny coverage based on pre-existing conditions.
- Essential Benefits: All plans must cover essential health benefits, including preventive services, emergency services, and prescription drugs.
- How to Apply: Visit HealthCare.gov to explore options, check subsidy eligibility, and enroll.
As self-employed individuals, day traders must navigate health insurance costs based on their income. This showcases the current structure’s direct relationship between a trader’s income and health insurance costs.
For instance, under a Bronze plan, if a day trader’s annual earnings amount to $25,000, they would pay an approximate monthly premium of $12. However, if their annual income rises to $35,000, the monthly premium for the same Bronze plan increases to about $110.
The Bronze plan is one of the health insurance tiers available to self-employed individuals and others through the Affordable Care Act (ACA) Marketplace. Here’s a breakdown of the Bronze plan:
- Coverage Level: Bronze plans are designed to cover about 60% of the total average care costs. This means that, on average, you would be responsible for 40% of the costs, while the insurance would cover the remaining 60%.
- Premiums: Typically, Bronze plans have the lowest monthly premiums of all the ACA plans. However, these lower premiums come with higher deductibles and out-of-pocket costs than Silver, Gold, or Platinum plans.
- Deductibles: Bronze plans generally have higher deductibles. A deductible is the amount you pay for covered healthcare services before your insurance starts to pay. Once you’ve met your deductible, you will only need to pay your share of the costs (like coinsurance or copayments).
- Best Suited For: This plan might suit individuals who want insurance for worst-case scenarios but expect not to need frequent medical care. It’s especially considered by younger, healthier individuals or those who are financially savvy and have set aside funds to cover potential out-of-pocket expenses.
- Essential Benefits: Regardless of the higher deductibles and out-of-pocket costs, Bronze plans, like all ACA-compliant plans, cover essential health benefits. These benefits include emergency services, hospitalizations, prescription drugs, maternity and newborn care, and preventive services.
For self-employed individuals, the cost of a Bronze plan can vary based on their income, location, age, and whether they use tobacco. Subsidies or tax credits may also be available based on one’s income, which can reduce the monthly premium cost.
Medicare health insurance for Day traders
Medicare is a federal health insurance program primarily designed for individuals 65 and older or those with certain disabilities or conditions. It is not specific to any occupation or employment status, so it’s relevant for day traders as it would be for anyone else once they reach the qualifying age or conditions.
If you’re a part-time worker or a self-employed day trader, the standard monthly premium for Medicare Part B is typically $164.90. Additional coverage options, such as Medicare Advantage, Medicare Part D, or Medicare Supplement, come with separate costs beyond the standard Part B premium.
Here’s how Medicare applies to day traders considering it as a self-employed health insurance option:
- Eligibility: Day traders become eligible for Medicare once they turn 65 or earlier if they have specific disabilities or conditions like End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS).
- Parts of Medicare:
- Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care, and some home health care.
- Part B (Medical Insurance): Covers certain doctor services, outpatient care, medical supplies, and preventive services.
- Part C (Medicare Advantage): An alternative to Original Medicare (Parts A & B) offered by private companies. It often includes A and B services and may offer additional coverage, like vision or dental.
- Part D (Prescription Drug Coverage): Offered by private companies, it helps cover the cost of prescription medications.
- Costs: Even though Medicare provides coverage, it’s not free. Part A might be premium-free for many individuals, but Part B usually requires a monthly premium. The costs for Parts C and D vary by plan. Day traders, being self-employed, need to be aware of these costs, especially if Medicare becomes their primary health insurance.
- Supplemental Coverage (Medigap): Since Medicare doesn’t cover all healthcare expenses, many beneficiaries opt for Medigap policies, sold by private companies, to help pay some out-of-pocket costs.
- Self-Employment Tax and Medicare: Day traders, like other self-employed individuals, pay a self-employment tax, which contributes to Social Security and Medicare. Thus, even as self-employed individuals, they have been funding their future Medicare benefits.
- Enrollment: Day traders and others must enroll in Medicare during the initial enrollment period when they first become eligible. Delaying enrollment can lead to higher premiums.
Health Savings Account (HSA) and High Deductible Health Plans (HDHP)
- What are HSAs and HDHPs? An HSA is a tax-advantaged savings account meant for medical expenses. To open an HSA, you must first be enrolled in an HDHP.
- Benefits for the Self-Employed:
- Tax Advantages: Contributions to an HSA are tax-deductible, the interest or other earnings on the assets are tax-free, and distributions may be tax-free if used for qualified medical expenses.
- Flexibility: Funds roll over year to year and can be invested. If used for non-medical expenses after age 65, it will be taxed as income without penalty.
COBRA for Day traders
COBRA, or the Consolidated Omnibus Budget Reconciliation Act, allows workers and their families to continue their employer-sponsored health insurance coverage for a limited period after employment ends or they experience another qualifying event. Here’s how COBRA can relate to day traders and self-employed individuals:
- Transition Phase: If a day trader recently transitioned from traditional employment to full-time day trading or another form of self-employment, COBRA can serve as a bridge. It allows the individual to retain the coverage they had with their former employer.
- Duration: COBRA typically allows individuals to continue their insurance for up to 18 months. In some situations, like disability, this period can extend to 29 or 36 months.
- Cost: While COBRA provides continuity in health coverage, it can be costly. The individual is generally responsible for the entire premium, including the portion their employer used to pay, plus a 2% administrative fee. Therefore, while the coverage is the same, the costs can be substantially higher than when they were employed.
- Qualifying Events: Eligibility for COBRA usually arises from specific events such as job loss (voluntary or involuntary), reduction in working hours, transition between jobs, death, or divorce.
- Relevance to Day Traders: Day traders, like any other individuals transitioning from standard employment to self-employment, can opt for COBRA as a temporary measure to ensure no gaps in their health coverage. This can be particularly useful for those with ongoing health needs or who want to retain specific coverage not immediately available in their new self-employed status.
- Alternative to Marketplace Plans: Some day, traders might use COBRA as a short-term solution while researching or waiting for open enrollment to obtain a health insurance plan through the ACA Marketplace or other avenues.
If you’ve recently left traditional employment, the Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals to continue their employer-sponsored health insurance for a limited time.
- Drawbacks: COBRA can be expensive, as you’ll likely pay the entire premium without any employer contribution.
Join a Professional or Trade Association
Many professional or trade associations offer group health insurance plans to their members.
- Benefits for the Self-Employed:
- Group Rates: Leveraging collective bargaining power, associations can sometimes obtain lower premium rates for their members.
- Networking: Joining an association can also provide networking and professional development opportunities.
Short-Term Health Insurance
These policies provide temporary health coverage for people between major medical plans. They might be suitable for day traders in transition or those seeking a temporary solution.
- Drawbacks: They typically do not cover pre-existing conditions, preventive care, or maternity. Moreover, they are not compliant with ACA, meaning they don’t offer the same protections and benefits.
Healthcare Sharing Programs
These are alternatives to traditional health insurance, where members share medical expenses. They are based on voluntary participation, and each member contributes a monthly share amount.
- Considerations: They are not insurance and thus are not regulated similarly. It’s essential to understand the terms, as these programs might not guarantee payment of claims.
Conclusion
While day traders and self-employed individuals face unique challenges in securing health insurance, numerous options are tailored to their needs. It’s crucial to research, compare, and choose a plan or combination that offers the best balance of coverage, cost, and flexibility. Always consult a health insurance advisor or broker to ensure you’re making the best decision for your situation.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
