Health insurance and retirement as a US creator

What changes when nobody employs you

With a job, three things happened without you: health coverage, a retirement contribution and tax withholding. Self-employed, all three are yours — and the third one is covered in taxes for creators in the US.

The other two are this article, and they share one problem: both were designed around a steady salary, and creator income is not steady.

Health coverage without an employer

The usual route is the ACA marketplace — healthcare.gov or your state's own exchange. Two things decide what you pay:

The plan tier. Bronze, Silver, Gold. Lower premiums mean higher costs when you actually use it, and vice versa. For someone young and healthy the instinct is Bronze; the thing to check before deciding is the deductible, because that is the number that matters on a bad day.

Your estimated annual income. The subsidy is calculated from what you expect to earn this year. That is where creators get into trouble.

The estimate problem

You enrol in November and estimate from what the last few months looked like. Then the year goes differently — better or worse — and the subsidy was calculated on the wrong number. It gets reconciled on your tax return: earn more than estimated, and you pay some of it back.

Two habits fix this:

• Update the estimate during the year. The marketplace lets you report a change in income whenever it happens. Most people never do it, and that is the whole cause of the surprise.
• Estimate slightly high rather than low. Being owed money back is a better tax return than owing it.

Enrolment timing

Open enrolment is a window, not a permanent option. Outside it you need a qualifying life event to enrol. In practice: put the window in your calendar, because missing it means a year without the marketplace route.

Retirement on income that moves

The reason to think about this at all is not discipline, it is tax: contributions reduce taxable income, so a strong year costs less in tax if some of it went into a retirement account.

Two accounts fit self-employment with no staff:

Both let you contribute after you know how the year went, which is the property that matters here. Neither requires you to commit to a monthly amount you might not have in February.

A third option, a plain Roth IRA, sits alongside either one and has its own income limits. Which combination is right depends on numbers a guide cannot see — this is a one-hour conversation with a CPA, and the same CPA you want for the quarterly estimates anyway.

The sequence that works

1. Marketplace coverage first. It is the one with a deadline.
2. Set aside tax money per payout, before anything else — see the tax guide.
3. Retirement from what is left in strong months. Not a fixed monthly amount.
4. Revisit the income estimate whenever the picture changes, not once a year.

If you work with an agency

An agency does not employ you and cannot insure you — anyone claiming otherwise is describing something that is not an agency relationship. What a decent one does do is pay reliably and on a schedule, which is what makes any of the above plannable. That, and telling you plainly that you are self-employed.

More on the money side in how US creators get paid and what to check in a US agency contract.

In short

• Marketplace coverage, with the subsidy based on your own income estimate.
• Update that estimate during the year; that is the whole trick.
• SEP-IRA or solo 401(k) — contribute after a good year, not monthly.
• Tax money first, retirement from what is left.

Sources

• HealthCare.gov: coverage for the self-employed
• Social Security Administration: If You Are Self-Employed
• IRS: Retirement Plans for Self-Employed People
• IRS: deducting health insurance premiums