5 Components to a Self-Employed Benefits Package

How to Create Your Own Self-Employed Benefits Program

When you’re self-employed, you enjoy many perks traditional employees don’t get: flexible hours, unlimited vacation and sick days, tax deductions, and the freedom to work from anywhere. These benefits make the entrepreneur lifestyle appealing, whether you’re running a full-time business or working a part-time side gig.

However, with all this freedom comes a significant drawback: the absence of an employer-sponsored benefits package. Without built-in health insurance, paid leave, or retirement plans, it becomes your responsibility to create your own system of benefits.

Below are simple and effective ways to build your own self-employed benefits program.

1. Individual Health Insurance

After leaving a traditional job, the biggest benefit people miss is health insurance. Group plans through an employer are usually cheaper because companies share the cost. As a self-employed individual, you’ll need to explore your own options.

If your spouse or partner has a group plan, you can join as a dependent. This is often the easiest and most affordable route.

If not, you’ll need to shop for an individual plan. Based on your income and family size, you may qualify for:

Subsidies that lower your monthly premium

Medicaid or CHIP if your income is low

To reduce costs further, consider choosing a high-deductible health plan (HDHP). These plans pair with a Health Savings Account (HSA), allowing you to save money tax-free for medical expenses.

2. Health Savings Account (HSA)

A Health Savings Account is a powerful tool when you have a high-deductible health plan.
Raising your deductible usually means lower premiums, but you’ll pay more out-of-pocket before insurance kicks in. An HSA helps you manage those costs.

Benefits of an HSA include:

Tax-deductible contributions

Tax-free growth on your savings

Tax-free withdrawals for qualified medical expenses

You can use HSA funds for doctor visits, prescriptions, eyeglasses, dental care, and more. HSAs are available whether you buy insurance individually or through a group plan.

3. Term Life Insurance Policy

Life insurance is often more affordable than most people think—especially if you’re in good health.

You should consider life insurance if anyone depends on your income, such as:

Children

A spouse or partner

Aging parents

There are two main types:

Term Life Insurance

Provides coverage for a set period (10–20 years). It’s affordable and offers the highest coverage for the lowest price.

Permanent Life Insurance

Includes whole life, universal life, and variable life. These provide lifetime coverage and include a cash value component but cost more.

Example:
Someone in their 30s with good health may get a 20-year, $500,000 term policy for around $200 a year.

You can compare quotes at companies like Haven Life, Liberty Mutual, and USAA.

4. Disability Insurance

Many people don’t realize that a disability is more likely to occur before age 65 than premature death. A long-term disability can keep you from working for years.

While health insurance pays medical bills, it doesn’t cover your living expenses. Disability insurance replaces a portion of your income—often 60–70%—if you can’t work due to illness, injury, or a long-term condition.

Self-employed individuals may also have the option to pay into state disability programs, which can be cheaper than private policies. Compare both options through companies like MetLife and State Farm.

5. Contribute to a Tax-Advantaged Retirement Account

Without an employer-sponsored 401(k), retirement planning becomes your responsibility. Thankfully, there are several great options for self-employed workers:

Traditional IRA

Roth IRA

SEP-IRA

Solo 401(k)

These accounts help you save for the future while gaining valuable tax benefits. Whether you’re a freelancer, small business owner, or independent contractor, you can choose the plan that best fits your income and goals.

Thinking About Starting Your Own Business?

Becoming your own boss is exciting, but it requires planning—especially when it comes to funding. New business owners often need capital for:

Equipment

Office or workspace

Marketing

Advertising

Staff and operations

Many entrepreneurs qualify for Business Loans or No-Doc Loans, which make it easier to launch or grow a business.