As a freelancer, electing whether or not you have healthcare coverage is a big deal. There’s obviously the impact on your own physical wellbeing and the out-of-pocket costs, but there’s also the impact on your taxes. So while open enrollment season is here, it’s worth taking stock of how your health insurance status may affect your freelance taxes.

Not having health insurance no longer means a federal tax fee. 2019 was the first year that the federal tax penalty (The Affordable Care Act’s individual Shared Responsibility Payment, or individual mandate) for not having coverage was eliminated since Obamacare brought it into effect — a fact you’ll see reflected on this year’s return, and those going forward. This fee was collected by the IRS from taxpayers who could afford health insurance but chose not to buy it.

However, you may still have a state penalty. While there isn’t a federal tax penalty for not having health insurance, some states are picking up the slack, so to speak. States including the District of Columbia, Massachusetts, and New Jersey have introduced a new individual health insurance mandate that requires you to have qualifying health coverage — or pay a fee in lieu of it — with your 2019 state taxes. In 2020, California and Vermont will have this mandate. There are several other states also considering this.

No health insurance in 2019? It may increase your taxable income. While not having health insurance won’t add to your tax bill this year or beyond, it will eliminate your ability to reduce your taxable income by deducting the cost of your health insurance premiums. This means that unless you have other deductions, you may need to factor in paying more in tax. Also, you will still be paying the same amount of Medicare and Social Security taxes.

If you have out-of-pocket medical expenses, don’t count on itemizing them. If you don’t carry health insurance, you know that you have to pay medical expenses out of pocket. However, with the increased standard deduction under tax reform (now at $12,000 instead of $6,500) unless you have a significant number of medical expenses, it’s likely not worth itemizing them.

If you did have a high number of significant healthcare bills this year, the medical expense deduction will help, but keep in mind that the floor for using it has risen again. Therefore you can deduct qualified medical expenses only when they are over 10 percent of your adjusted gross income for the year.

If you are hesitant about paying for health insurance because of the cost, it may be tax savvy to research some cheaper options. Experts predict that the Obamacare-era exchanges will still remain and offer reasonably-priced plans for now. In addition, the Trump administration’s proposal to expand the definition of what type of individuals or businesses can purchase ‘group” healthcare may create some less expensive, albeit less comprehensive, health insurance plans.

Consider a health savings account (HSA) if you have a high-deductible health insurance plan. If you decide to enroll in a high-deductible health insurance plan, you can use an HSA  to set aside pre-tax dollars to pay for qualified medical expenses. In addition, there are time limits associated with using the funds in an HSA as well as stipulations on the specific items you can use the money for, so be sure to check with your plan administrator.

Make an informed decision about electing for health care coverage. Forgoing health insurance is a big decision for freelancers. If you feel that you can’t afford health insurance or that your out-of-pocket expenses will be less than what you might pay in premiums, then not having health insurance may save you a few dollars given that you will no longer be subject to a tax penalty for doing so—unless you live in a state that has instituted such a penalty. However, from a tax perspective, if have the misfortune of large medical bills, you are unlikely to see a tax win from a deduction standpoint if you opt out of an affordable health insurance plan and pay your bills yourself.

Whatever you ultimately do, be sure that you weigh all the factors involved in the cost vs. benefit analysis of paying for health insurance. That way you can know that your decision takes into account both your personal health needs and the health of your freelance business.

Jonathan Medows is a New York City based CPA who specializes in taxes and business issues for freelancers and self-employed individuals across the country. He offers a free consultation to members of Freelancer’s Union* and a monthly email newsletter covering tax, accounting and business issues to freelancers on his website, www.cpaforfreelancers.com — which also features a new blog, how-to articles, and a comprehensive freelance tax guide.

*Jonathan is happy to provide an initial consultation to freelancers. To qualify for a free consultation you must be a member of the Freelancers Union and mention this article upon contacting him. Please note that this offer is not available Jan. 1 through April 18 and covers a general conversation about tax responsibilities of a freelancer and potential deductions. These meetings do not include review of self-prepared documents, review of self-prepared tax returns, or the review of the work of other preparers. The free meeting does not include the preparation or review of quantitative calculations of any sort. He is happy to provide such services but would need to charge an hourly rate for his time.