The Marketplace, IRS and tax-return vocabulary behind buying your own health plan, defined in plain English for freelancers and 1099 workers.

This guide is general information, not insurance, tax or legal advice. Rules, limits and deadlines change each year, so check HealthCare.gov, Medicare.gov or your insurer for your situation.

Buying health coverage without an employer means learning a second vocabulary. Some of it comes from the Marketplace, some from the IRS and your tax return. This glossary defines the terms freelancers and 1099 workers run into most often. For the cost-sharing words every plan uses, see our guide to health insurance terms; for the shopping process itself, see how to buy coverage on the ACA Marketplace.

Marketplace Terms

Individual Marketplace. The website where people without employer coverage browse and compare health plans. It is also called the Exchange.

State-based Marketplace. A Marketplace run by an individual state under its own name. California’s, for example, is called Covered California.

Open enrollment period. The annual window when anyone can buy a Marketplace plan. In most states, the window for 2026 coverage runs from November 1 to December 15, though some state-run Marketplaces stay open through the end of December.

Special enrollment period. A chance to sign up outside the annual window, triggered by a qualifying life event rather than the calendar.

Off-exchange plan. A plan bought directly from an insurer rather than through the Marketplace. Open enrollment applies to both routes, but premium tax credits are available only on-exchange.

Essential health benefits. The 10 categories of services an ACA plan must cover, including doctors’ services, inpatient and outpatient hospital care, prescription drugs, pregnancy and childbirth, and mental health services. Some plans cover more.

Premium Tax Credit Terms

Premium tax credit (PTC). A refundable tax credit that helps eligible people with low or moderate income afford Marketplace coverage. It runs on a sliding scale: lower income, larger credit.

Advance payments of the premium tax credit (APTC). An estimated share of your credit sent directly to your insurer each month to lower what you pay. You can choose to have all, some or none sent ahead; the rest can be claimed at tax time.

Reconciliation. The yearly settling of accounts on your return. If you received advance payments, you file IRS Form 8962 and compare the amounts paid on your behalf with the credit your actual income supports. Differences change your tax liability for the year of coverage.

Minimum value. The standard an employer plan must meet to block your credit. If you can get affordable employer-sponsored coverage that provides minimum value, the premium tax credit is off the table. Eligibility rules also exclude people eligible for Medicaid, Medicare, CHIP or TRICARE, and (with narrow exceptions) Married Filing Separately filers.

The details have shifted over time. For tax years 2021 and 2022, the American Rescue Plan Act temporarily removed the cap that kept households above 400 percent of the federal poverty line from qualifying. For tax years beginning after Dec. 31, 2025, the IRS also removed earlier limits on repaying excess advance payments, so a careful income estimate matters.

Income Terms on the Application

Expected household income. Marketplace savings are based on what you expect to earn in the year you want coverage, not on last year’s income.

Net self-employment income. What your business brings in after expenses. If expenses exceed income, you report a net loss instead. The application also asks you to describe your work in your own words: house cleaning, jewelry making, construction.

Household income. Income from everyone in your household, including tax dependents who do not need coverage themselves.

Modified adjusted gross income (MAGI). The income figure behind Marketplace savings. Start with your adjusted gross income, the amount on line 11 of IRS Form 1040, then add untaxed foreign income, non-taxable Social Security benefits and tax-exempt interest. Leave out Supplemental Security Income.

Income ledger. Any accurate, detailed record of your self-employment income and expenses. A spreadsheet, accounting software or a handwritten book all qualify.

Counted in your estimate	Not counted
Net business income, after expenses	Proceeds from loans, including student and home equity loans
Interest and dividends, including tax-exempt interest	Supplemental Security Income (SSI)
Net rental and royalty income	Child Tax Credit payments from the IRS
Social Security benefits, entered in full before deductions

Helpful tip: Estimate the year’s income as carefully as you can from past experience and realistic expectations, then update your Marketplace application as soon as it looks like net income will land higher or lower than you guessed. Advance credit payments are calculated from that estimate.

Tax Terms for Your Own Premiums

Self-employed health insurance deduction. A deduction that reduces your adjusted gross income by the health insurance premiums you pay during the year. Self-employed people have been able to deduct 100 percent of premiums since 2003.

Form 7206. The IRS form used to figure the self-employed health insurance deduction. It replaced a worksheet that once sat inside the IRS’s business expense publication.

Health savings account (HSA). A tax-advantaged account that lets self-employed people pay medical expenses with pre-tax dollars. Our guide to HSAs and high-deductible plans explains how the two work together.

Terms When You Hire Help

SHOP. Short for the Small Business Health Options Program, a Marketplace for small employers who want to offer group coverage to staff instead of buying individual policies.

Small Business Health Care Tax Credit. A credit for eligible small employers. To qualify, a business needs fewer than 25 full-time equivalent employees, average salaries of about $65,000 a year or less, payment of at least 50 percent of full-time employees’ premium costs, and SHOP coverage offered to all full-time employees. It works on a sliding scale, so more than 10 full-time equivalent employees or average wages above $25,000 (as adjusted for inflation) shrink it, and it lasts for two consecutive taxable years.

Where to Check the Official Definition

HealthCare.gov’s glossary defines the Marketplace terms, and the IRS publishes guidance on the premium tax credit, Form 8962 and Form 7206. Your state’s Marketplace may add its own vocabulary, and the wording on IRS forms controls what you actually owe. Before your next enrollment decision, open your Marketplace application and match each of these terms against the glossary at HealthCare.gov.

Frequently asked questions

Do I need a formal business to use the Marketplace as a freelancer?
No. HealthCare.gov treats freelancers and consultants with no employees as self-employed buyers who can use the Individual Marketplace like anyone else. You report your net self-employment income on the application.

What happens if my income estimate is wrong?
Advance credit payments are calculated from your estimate, so differences between the estimate and your actual income are settled on Form 8962 when you file your return. Updating your Marketplace application during the year keeps the payments closer to what you actually qualify for.

Can I get the premium tax credit for a plan bought directly from an insurer?
No. Premium tax credits are available only for on-exchange plans. You can buy off-exchange during open enrollment, but you give up the credit by doing so.

Is the self-employed health insurance deduction the same as the premium tax credit?
No. The deduction reduces your adjusted gross income by the premiums you pay, while the credit directly offsets Marketplace premiums. Some self-employed people may qualify for both, and a tax professional can check your specific situation.