What You Need to Know About Owner-Operator Health Insurance

Last Updated September 23, 2024

As an owner-operator, there are many trucking business expenses to consider before you go through with launching your company. Purchasing fuel, buying a truck, and maintenance costs might come to mind first, but one expense that can’t be overlooked is trucking business insurance, including owner-operator health insurance.

It might be irritating that you have to fork over thousands of dollars annually on something that doesn’t help drive sales, but doing so could legitimately save your company if disaster strikes. And you don’t want to play around with insurance given healthcare costs can be absorbent.

In this article, we’ll take a closer look at what you should know about owner-operator health insurance including how much it costs, why it’s necessary, and where you can obtain it in order to protect your health and finances.

An Overview of Owner-Operator Insurance Coverage

Owner-operators are responsible for several different types of insurance. Those operating under their own authority must obtain:

• Workers’ compensation
• Commercial general liability insurance
• Commercial auto liability insurance
• Cargo insurance
• Physical damage insurance

Owner-operators who lease-on with a carrier will often still be responsible for non-trucking liability insurance and bobtail insurance.

However, when it comes to covering medical expenses, both types of owner-operators will be responsible for obtaining their own health insurance. As an owner-operator, you are considered a business owner or independent contractor. This means you don’t have access to employer-sponsored health insurance and are therefore responsible for obtaining your own coverage.

Health insurance for owner-operator truck drivers is essential for covering both routine and emergency medical expenses. These plans reduce how much you pay out of pocket for medical care, helping you take care of your overall health.

Related: Owner-Operator Insurance Requirements

Why Owner-Operator Health Insurance Is Necessary

First and foremost, healthcare in the United States is expensive. That’s why 95% of small business owners have chosen to invest in health insurance.

Whether you need help managing a chronic condition or you get in a vehicle accident and require emergency care, healthcare costs can quickly become overwhelming if you don’t have insurance to help out. While monthly premiums are a noteworthy expense, they are ultimately there to keep medical care more affordable.

It’s also worth noting that many trucking companies prefer to lease-on owner-operators who have health insurance. In some cases, they won’t work with drivers who don’t have owner-operator health insurance. Obtaining a health insurance policy—even a relatively basic plan—can help you get more work.

Owner-Operator Health Insurance: Potential Expenses

Owner-operator health insurance costs are generally tied to the following elements of insurance. The cost for each of these elements will vary based on the “level” of plan you purchase. Plans that offer a higher level of coverage will typically have lower deductibles, copayments, and coinsurance but higher monthly premiums. On the other hand, plans with lower premiums may require you to pay more out of pocket for covered medical care.

Premiums

Your premium is the amount of money you pay each month to have your health insurance plan. For plans that are purchased through the Health Insurance Marketplace, a tax credit is available based on your income and family size to help lower your monthly premium costs.

Deductibles

A deductible is the amount you are required to pay for certain health services before your insurance plan will pay for them. Some care activities, like annual wellness checkups or urgent care visits, are not subject to the deductible. Generally speaking, plans with a lower deductible will have a higher monthly premium.

Copayments

After you reach your deductible, you will typically only be required to pay a copayment for medical care. This is a set fee that you may pay for services such as a specialist visit or a prescription. The copay is a flat rate that remains the same for each visit.

Coinsurance

Coinsurance is another payment option after you meet your deductible. With coinsurance, you pay a percentage of your healthcare costs (such as 20% or 40%), and your insurance plan covers the rest. The exact amount will vary depending on the total cost of the healthcare service.

Max Out-of-Pocket Expenses

This is a limit on the total amount you have to pay out of pocket for healthcare with your deductible, copays, or coinsurance. Once you reach this amount during a plan year, your health insurance provider will cover 100% of all subsequent healthcare expenses.

Owner-Operator Health Insurance Plan Options

When it comes to selecting CDL owner-operator health insurance, there are generally three types of plans to consider. The best health insurance for owner-operators will depend on your specific needs and situation.

Short-Term Health Insurance

Short-term health insurance plans provide temporary health coverage, such as when you are transitioning between jobs that offer employer-sponsored health insurance. However, short-term health insurance plans are not always required to cover preventative care or preexisting conditions. They are a temporary solution until you can find a more permanent health coverage option. You’ll also typically need to be in good health to qualify for a short-term health insurance plan.

Federal or State Individual or Family Plans

Federal or state individual or family plans are available through the government’s Health Insurance Marketplace. The Marketplace allows you to compare plans based on factors like level of coverage, premium and deductible amounts, and which healthcare providers accept the plan.

The plans that are available to you depend on your state and ZIP code. It’s also worth noting that unless you experience a qualifying life change, you can only enroll in a new plan between November 1 and December 15, and coverage will begin on January 1 of the next year.
Health Insurance Marketplace plans have limited geographical coverage—any healthcare you obtain out of your home state will likely be considered “out of network,” though most still cover emergency care outside of your network.

Organizational Plans

Finally, there are organizational plans specifically designed to address the needs of owner-operators. These plans are available to members of trucking associations to help you obtain coverage at a lower premium that is better tailored to your needs as an owner-operator.

The Truckers Service Association (TSA), Owner-Operator Independent Drivers Association (OOIDA), and the National Independent Truckers Insurance Company (NITIC) all provide health insurance for owner-operators with a variety of discounts and rebates. Coverage details and other plan specifics may vary based on your location, driving record, and other factors.

How Much Does Owner-Operator Health Insurance Typically Cost?

The cost of owner-operator health insurance varies based on several factors. When obtaining insurance coverage through the Health Insurance Marketplace, your premium costs will depend on the type of plan you purchase, your reported income level, and the size of your family. Plan expenses and options will also vary from state to state. Depending on these factors, you may qualify for a subsidy that covers all or part of your monthly insurance premiums.

For organizational plans, your premium and deductible will primarily be based on your location (and that of your trucking business), as well as your driving record.

According to research from eHealth, the average monthly premium for self-employed individuals is $484, while the average family premium is $1,230. However, the same study notes that millions of Americans may qualify for bronze-level plans through the Health Insurance Marketplace with a $0 premium thanks to government subsidies.

It’s wise to research multiple insurance options to find what best fits your budget and healthcare preferences.

In-Summary: Owner-Operator Health Insurance

Obtaining owner-operator health insurance should never be overlooked when starting your own trucking company. Health insurance covers both routine medical care and emergency expenses in case you are involved in an accident on the road, providing much-needed financial coverage so a medical incident doesn’t wreck your finances.

As an independent contractor or business owner, you are fully responsible for selecting and managing your healthcare plan. This requires careful evaluation of the different types of plans available to you through the Health Insurance Marketplace or organizations that serve the insurance needs of the trucking industry.

You should evaluate plans based on factors like monthly premiums, deductibles, copayments, and coinsurance, as well as the level of coverage each plan provides. Carefully evaluating your various options will ensure you find healthcare coverage that fits your budget and your individual needs as an owner-operator. With the right type of coverage, you won’t have to worry about managing your healthcare expenses on the road.

Owner-Operator Health Insurance FAQs

Do owner-operators need health insurance coverage?

Yes! Owner-operators are independent contractors, which means they don’t qualify for employer-sponsored health insurance coverage. Obtaining health insurance coverage will help cover medical costs such as emergency room visits, prescription medications, and routine doctor’s appointments. In addition, many trucking companies won’t work with owner-operators who don’t have health coverage.

Can owner-operators write off health insurance?

Yes. As an independent contractor, you can write off your health insurance premiums, as long as you have a qualifying insurance plan. These write offs are typically available whether or not you itemize your tax return.

Do owner-operators need multi-state health insurance?

If you want in-network health insurance in multiple states, you will likely need to contact a private insurer to determine what options are available. Health Insurance Marketplace plans are generally only “in network” for a single state. Medical services obtained out of state would be considered out of network, but most plans still offer some level of out of network help for emergency medical expenses. Multi-state health insurance isn’t necessarily essential, but it can be good to have if you spend a lot of time outside your home state.