Health Insurance

Will My Job Give Me Health Insurance As A 1099 Employee?

Jacqueline Slobin17 Mar 2021

Quick Digest

  • W-2 employees, or independent contractors, are typically hired by a company for a specific project or for a short period of time.
  • Some employers may offer W-2 contractors benefits, such as health insurance, but your employer is not required to do so.
  • There are many ways to get coverage as a freelancer, such as Mira, which provides access to low-cost urgent care, prescriptions, and lab tests at $25-$45 a month.

1099 vs. W-2 employees 

1099 and W-2 are tax forms that are used for two different types of employees. 1099 workers are independent contractors that are typically hired to help companies with a specific project or for a finite length of time. W-2 employees, on the other hand, receive a salary and benefits from the business owner they work for. 

In general, 1099 employees have greater flexibility in creating schedules, accepting tasks, and the method for completing jobs. However, 1099 employees need to provide their own supplies for jobs and do not qualify for all of the same benefits as W-2 employees. 

W-2 employees include full-time employees and typically have set hours, less independence, and more structure than 1099 employees. They also tend to work for longer periods of time and as a result, receive more benefits from their providers, such as health insurance. 

What benefits can I get as a 1099 employee? 

Since 1099 employees are typically hired for a single project, specific, or short-term work, they are not entitled to as many benefits as W-2 employees. If you are a freelancer working under a 1099 contract, your employer may decide to offer some of the following benefits. 

  • The IRS allows 1099 employees to claim costs for home-work, office, and supplies
  • Some companies may offer 1099 employees health insurance plans, corporate discounts, and educational benefits
  • Companies may also offer support for traveling and profit-sharing

Since the benefits offered vary by company and contractor, it is important to clarify or ask about potential benefits when signing a contract. 

Do 1099 contractors get health insurance from employers? 

Employers are not required to provide health insurance for 1099 contractors; however, some companies may decide to extend benefits anyway. 

In general, if companies meet a few requirements, such as extending benefits equally to employees and having at least one payroll employee, they can be eligible to provide coverage to 1099 contractors.  

How can a 1099 worker ask their employer about health insurance?

John Bartleson is the owner of Health Benefits Connect. Bartleson has been a health insurance broker for 14 years and is licensed in 24 states. He has extensive knowledge of all types of health insurance plans and is dedicated to helping expand consumer's knowledge in health insurance.

Bartleson says "Now is the perfect time for freelance employees to ask their employer for help with their health insurance! Employers can utilize a federal program called the Individual Coverage Health Reimbursement Arrangement (ICHRA), to offer their 1099 employees a monthly tax-free allowance for the employees to purchase an individual health insurance plan. 

Executed in January 2020, the ICHRA program gives employers more options than ever. Employers no longer need to purchase group health insurance plans to provide tax-free benefits to their employees. Also, the ICHRA rules allow employers to determine the reimbursement amount that will be provided to the employees each year. This flexibility gives many employers an opportunity to provide a benefits package to their 1099 employees that weren't available before.

The ICHRA program provides the perfect opportunity for employees to initiate a conversation with their employer about their interest in health insurance. Additionally, there are many other options for 1099 workers for individual plans, including the ICHRA benefits. This is where reaching out and discussing options with a Licensed Health Insurance Broker is helpful.  A Licensed Broker can navigate the regulations and options for both the employer and employee."

More information about the ICHRA program can be found here.

Options if you do not get health insurance through your job 

If you are a freelancer and your employers do not provide you with health insurance, you have several options to get a health plan. 

1. Mira is a health care plan that offers low-cost urgent care visits, prescriptions, and lab testing for freelancers. Mira costs $25 - $45 a month and members do not have to reach a deductible. In addition, you can join anytime, not just during the open enrollment period. Members also are eligible to get free at-home COVID-19 diagnostic and antibody tests.  

2. Private Insurance plans can be purchased from the health insurance marketplace during open enrollment season each year. There are gold, silver, and bronze plans that you can choose between depending on your general health and how much coverage you need. Bronze plans typically have a premium of around $500 - $600 a month and may have a deductible of over $5,000. Silver plans typically have a higher monthly premium of around $700 - $900 but have lower deductibles closer to $1,500. 

3. Catastrophic plans are plans that only cover catastrophic events and may be a good fit for individuals who are under 30 and in good health. Catastrophic plans tend to have much lower monthly premiums than gold, silver, or bronze. Monthly premiums are typically $200 - $300, but the deductible will likely be over $8,000. 

4. Family member’s plans may also be a good option if you are a freelancer. If you are under 26 you can remain on your parents’ health insurance plan and if you are married you may be able to get covered by your spouse’s health insurance. 

5. The Freelancers Union and other group plans can recommend insurance options. Some professional groups may offer group health insurance and function similarly to employer health insurance to provide cost-sharing or discounted rates. 

Need more information about health insurance? We’re here to help! 

Sources: 

https://www.fundera.com/blog/1099-vs-w2-employee

https://www.northwesternmutual.com/life-and-money/the-difference-between-a-1099-and-a-w-2/

https://www.thebalancecareers.com/1099-employee-benefits-for-freelancers-4161248

https://enrollmentspecialists.blog/2019/03/18/group-health-benefits-1099-contractors/

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"My insurance premiums went up 30% this year. My husband and I switched to Mira and never looked back," said Danna - Brooklyn, NYC