PlansFor1099

A 1099 worker with a spouse on an employer plan

When one spouse is on a 1099 and the other has an employer plan: the 10.22% family affordability test, when the 1099 spouse can still get the credit, what it does to the deduction, and how to compare.

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Licensed Agents in 31 States · NPN #22052447

Half of the 1099 households a licensed agent sees have a W-2 spouse with a plan at work. Joining it is not automatically the answer, and since the 2023 affordability rule the marketplace is open to the 1099 spouse more often than people think.

Start with your ZIP and your income, not with a plan name

Premiums are set county by county and the credit is set by income, so no table can give a 1099 worker a final number. Enter your ZIP and a licensed agent prices every plan filed where you live against what you actually expect to earn.

Takes about 30 seconds. No account, and you choose how you are reached.

“I run my own business and my time is valuable. Daniel handled everything — compared the private options, explained what I was actually getting, and had me covered fast. Way better experience than trying to navigate it myself.”
Mark T., client

The affordability test, family version

A 1099 spouse cannot take the premium tax credit if the employer plan offers family coverage that is affordable: the employee’s share of the family premium (not the employee-only premium, since the 2023 fix) is 10.22%% of household income or less in 2027. Above 10.22%%, the family members are free to use the marketplace with a credit; the employee usually is not, because employee-only coverage is tested separately and is normally affordable.

The arithmetic

Household income $120,000: 10.22%% is $12,264 a year, $1,022 a month. If adding the spouse and children to the work plan costs more than that in employee contributions, the 1099 spouse and children can buy marketplace plans with a credit measured on the whole household income, while the employee stays on the work plan. Many employer family tiers cost $800 to $1,500 a month in contributions, so the test is often met.

What it does to the deduction

The self-employed health insurance deduction is not allowed for any month the 1099 spouse was eligible for the employer plan, whether or not they joined it. A 1099 spouse who buys their own marketplace plan while eligible for the work plan pays with after-tax money. The comparison therefore has three columns, not two: the work plan’s family tier, the marketplace with a credit and no deduction, and, over the line, the private market.

How to compare

  1. Get the employee’s monthly contribution for employee-only and for the family tier from HR.
  2. Divide the family-tier contribution by household income; over 10.22%%, the marketplace is open to the 1099 spouse.
  3. Price the marketplace for the 1099 spouse and children at household income; price the work plan’s family tier; check networks and deductibles side by side.
  4. If household income is over the line for the household size, price the private market for the healthy 1099 spouse.

The ZIP box runs steps 3 and 4.