Leaving a W-2 job for 1099 work: the 60-day window after the employer plan ends, COBRA against the marketplace, the start-date rules, estimating income with no history, and the quarterly tax surprise.
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The first 1099 year is the one with the least information and the most deadlines. The employer plan ends on a date, the marketplace window opens from that date, and the income estimate has no history behind it.
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.
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Losing employer coverage is a qualifying event. It opens a 60-day special enrollment window on the marketplace, counted from the day coverage ends (or, if you apply before it ends, your new plan can start the first of the month after the old one stops). Miss the 60 days and the next chance is Open Enrollment in November for a January start.
COBRA keeps the old plan, at the full premium plus 2%%, for up to 18 months. It is the right choice when a treatment is mid-course, a deductible is nearly met late in the year, or a doctor is in no marketplace network. Otherwise the marketplace with a credit is usually far cheaper, and a healthy person over the line should price the private market too. Choosing COBRA and dropping it later is not a qualifying event; the marketplace window runs from the original loss of coverage, not from when COBRA ends early.
Use signed contracts and a conservative close rate, net of the expenses you can already see (tools, software, insurance, the truck). Count the W-2 months already earned this year: the credit is reconciled on the whole calendar year, so a strong January-to-June on payroll pushes the year’s MAGI up even if the 1099 half is lean. Update the estimate at the first quarter’s end.
Premiums paid for months with no employer plan available come off above the line (Form 7206), up to net profit. Whether COBRA premiums qualify is a question for a tax professional; marketplace premiums in your own name do.
Nobody withholds for a 1099 worker. Self-employment tax is 15.3%% of net profit (12.4%% Social Security up to $192,300 in 2027, 2.9%% Medicare), on top of income tax, paid in four estimated instalments. Health premiums are deductible against income tax, not against that 15.3%%. Budget the premium and the quarterlies together from month one.