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Do I Qualify for Medicare If I Am Self-Employed?

Medicare Part A – hospital insurance – is free to most Americans when they turn 65. The way the majority of seniors earn this benefit is by working (or having a spouse who worked) at least 40 calendar quarters in any job where FICA taxes were paid in the U.S. While this may seem straightforward, not everyone works for an employer. Those who work for themselves may wonder: do I qualify for Medicare if I am self-employed? And what about sole proprietors? Do sole proprietors qualify for Medicare?

Medicare agents are available to help seniors transition from private healthcare to Medicare. Every kupuna has a unique work history and their own healthcare needs; Medicare agents will sit down with you to answer all your questions and help you find the perfect plan. These services are always free.


In this article, we will answer some of the basic questions that self-employed seniors may have as they plan to transition to Medicare.


Do sole proprietors qualify for Medicare?


Generally, yes. A self-employed person who earns income for at least 40 calendar quarters and files taxes will qualify for premium-free Medicare Part A. A sole proprietor is a person who runs their own business that is not incorporated. Instead, a sole proprietor registers their business with their Social Security number and uses a Hawaii Tax ID number (EIN), if necessary.


Sole proprietors contribute to Medicare just like any other American: through taxation. While most Americans pay Medicare and Social Security taxes through payroll taxes, self-employed persons pay a self-employment tax instead. Social Security taxes are 12.4% of a worker’s earnings up to the annual limit and Medicare taxes are 2.9% of a worker’s earnings. Employees and employers split these taxes and taxes are withheld automatically from an employee’s paycheck. The only practical differences are that if you’re self-employed, you must pay the entire 15.3% on your own and that you must be sure to report your business income on your federal tax filing or you won’t be contributing.


What sole proprietors need to do to before enrolling in Medicare


If you’re self-employed, you will want to pay attention to your work credits to make sure that you have worked at least 40 calendar quarters before you turn 65. Work credits are credits earned by workers throughout their work history. Workers gain up to four work credits for every year they earn wages and pay FICA taxes into the Social Security system.


It is extremely important for self-employed individuals to file their taxes each year for a few reasons. The first being that we are legally obligated to file and pay income taxes. The second reason is that there is no employer to automatically deduct FICA taxes, which means the only way to pay the self-employment tax that contributes to Medicare is by filing. The third reason is that filing each year shows that you earned enough money that year to qualify for any work credits.


One difference between HIPAA-covered health care providers who are sole proprietors versus employees is that they must obtain an NPI for themselves as an Entity Type 1-Individual before they can enroll in Medicare.



Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.


At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.



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