Health insurance for 1099 contractors
If you get a 1099, you pay the whole premium and your income can swing from month to month. You can buy a Marketplace plan, where any savings depend on your estimated net income for the year, or you may qualify for a private plan that asks health questions. Sam Clayland compares both on a free 25-minute call.
What makes your situation different
Your income is a forecast, not a paycheck
The Marketplace asks you to estimate your net self-employment income, and its savings are based on your estimate for the year you are getting coverage, not on last year. If the year runs better than you guessed, you settle up at tax time and may have to repay some or all of the advance credit.
A job offer anywhere in the household changes the math
Once you have an offer of job-based coverage, in most cases you no longer qualify for a premium tax credit. A spouse's plan that covers family members usually has the same effect. It also matters for your taxes: you cannot take the self-employed premium deduction for any month you could have joined a subsidized employer plan, even if you did not.
Leaving a W-2 job can open a window
HealthCare.gov says losing job-based coverage can open a Special Enrollment Period, so you may not have to wait for Open Enrollment. A 1099 contract ending is different, because no job-based coverage is lost. Check the deadline as soon as you know your coverage is ending.
Sam to confirm: this page matches how you work with these clients, and add a real example
What Sam will ask
- What did you net last year, and what do you honestly expect this year?
- Does anyone in your household have access to job-based coverage?
- Which doctors and prescriptions do you need to keep?
- What would a large surprise medical bill do to your business?
Handy, but not required
- Last year's net profit, or your best estimate
- Your current plan and premium, if you have one
- A list of doctors and prescriptions
Common questions
Can a 1099 contractor buy a Marketplace plan?
Yes. HealthCare.gov says a freelancer, consultant, independent contractor, or other self-employed worker with no employees can enroll through the Marketplace.
Which income do I use when my 1099 income changes every year?
The Marketplace asks for your estimated net self-employment income for the year you are getting coverage, not last year's income. Update your estimate if the year changes, because the credit is reconciled on your tax return.
Can I deduct my premiums as a 1099 contractor?
Often, yes, if you had a net profit from self-employment and were not eligible for a subsidized employer plan that month. The IRS covers this in the Form 7206 instructions, and a tax professional can confirm your situation.
Not you? Other kinds of work:
people who work with their hands · restaurant owners and staff · real estate professionals · small business owners