Do self-employed Aussies and sole traders need health insurance? 

If you’re self-employed, either as a small business owner or one of the 1.5 million sole traders or freelancers in Australia, you probably keep a very close eye on the flow of money coming in and out. Health insurance can be a big expense, which means you might be wondering if you can do without it. So do freelancers, sole traders and small business owners really need Private Health Insurance? The answer depends on your income and health needs.  

Here’s what to consider. 

Staying healthy as a sole trader 

If you’re self-employed, you don’t have the option of sick leave from an employer – and that’s tough on your pocket. For that reason, staying as healthy as possible, and giving yourself the best chance of recovery if you need hospitalisation, could be a worthy investment. Taking out Hospital Cover means that if you need surgery or a procedure in hospital, you can skip waiting lists, choose your own doctor and potentially get your own room. Your health insurance might mean you’ll get back on your feet – and back to work – much faster.  

Extras Cover could pay off, too, especially if you have a very physical job like a trade, or you have an active lifestyle. Having Extras Cover could help support you with costs such as physiotherapy and remedial massage – not to mention reading glasses, which you may need if you’re working at a computer screen all day. 

Choosing health insurance when you’re self-employed 

As a freelancer or sole trader, your income might fluctuate, so it can be tricky to predict your annual earnings. The Medicare Levy Surcharge (MLS) means 1%, 1.25% or 1.5% of your income will be deducted from your income at tax time if you didn’t have Hospital Cover during the financial year, and you earned more than $97,000 as a single person or more than $194,000 as a couple, single parent or family. If you do earn over that limit and weren’t expecting to, it’s too late to take out Hospital Cover at the end of the financial year – you need to have held cover all year to be totally exempt from the MLS. So if you think your income is likely to exceed that limit this financial year, it might be worth getting a Hospital Cover policy now to reduce your MLS (as you’ll only have to pay it for the days you didn’t have cover). Talk to your accountant or financial advisor for personalised advice.  

Do I have to pay the Medicare Levy Surcharge? 

How do I find the best health insurance policy as a self-employed person?

If your main reason for taking out Hospital Cover is to avoid the MLS, you’ll probably look for the cheapest policy available. But don’t forget to make sure your chosen policy offers you value for money, too. No matter how cheap it is, a policy that doesn’t work for you is not worth the money. 

Has your self-employed income dropped? 

Here’s a handy tip to help you save money. If your self-employed income has dropped significantly and you have health insurance, check to see whether your eligibility for the Private Health Insurance Rebate has changed. This Rebate offers you a reduction of between 8.202% and 32.812% of your health insurance premiums if your income falls within certain thresholds. So if you’re now eligible for a higher percentage of this Rebate due to an income decrease, let your health insurer know right away, and watch your premiums reduce. You also have the option of continuing to pay the higher premiums then getting a refund at tax time, but you might prefer to get the savings right away.  

What’s the best health insurance for self-employed people? 

The best health insurance policy for you as a freelancer, small business owner or sole trader is one that fits your budget and your healthcare needs. There are tonnes on the market to choose from, but not all of them are available on other health insurance comparison websites, so use the healthslips.com.au Calculator to make sure you’re seeing every option available to you. We compare every policy from every insurer in Australia, and we’re not selling insurance so we don’t give preference to any insurer or policy. Best of all, our Calculator is free to use and you don’t need to enter your contact details. 

Calculate your best policy here. 

Other types of insurance for self-employed Australians 

As well as health insurance for yourself, you’ll need insurance for your business if you’re self-employed. Here are some of the most common types: 

• Public liability insurance – insurance to cover damages if your business causes harm, death or injury to people. This is compulsory in some industries. 

• Professional indemnity insurance – if you or your business makes an error or gives professional advice that results in legal action, this insurance will cover you. 

• Business interruption insurance – cover if your business is shut down due to certain factors such as natural disasters. 

• Workers’ compensation insurance – if you have employees, this is a compulsory form of insurance to cover your business if one of your staff experiences an accident or injury at work. 

• Key person insurance – this covers your business financially if you, or another important person, is suddenly unable to work. 

This advice is general in nature and does not take into consideration your circumstances. If you need advice, please seek out an insurance or financial expert. 

Trudie McConnochie

Writer and Researcher

Knowledge is power – that’s the guiding principle behind everything Trudie writes, and it’s a philosophy she brings to her work at healthslips.com.au. By breaking down complex information into easy-to-understand blogs and stories, she aims to empower Australians to make the best choices and an informed decision around private health insurance.

Trudie understands firsthand some of the complexity of private health insurance having moved to Australia from New Zealand and having to navigate a vastly different public healthcare system and health insurance structure.

Trudie holds a Bachelor of Communication Studies (journalism major) from the Auckland University of Technology.

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