PlansFor1099

Health insurance for a single-member LLC

An LLC changes liability, not health insurance. What decides the premium's tax treatment is how the LLC is taxed: disregarded (Schedule C), S corporation (payroll and Box 1) or partnership.

Licensed Agents in 31 States · NPN #22052447

Forming an LLC is often the first business step a 1099 worker takes, and the first question a licensed agent gets afterwards is whether the LLC should buy the plan. It does not matter; the tax election does.

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

Disregarded entity (the default)

A single-member LLC that has made no election is taxed as a sole proprietorship: Schedule C, the self-employed health insurance deduction up to net profit, the credit on MAGI. The policy can be in your name or the LLC’s; the deduction is the same. The sole proprietor page applies in full.

LLC taxed as an S corporation

Now you are an employee-owner. The LLC pays or reimburses the premium, adds it to Box 1 of your W-2 (not to Social Security or Medicare wages), and you take the deduction on your personal return. Miss the Box 1 step and the deduction is lost for the year. Details.

LLC taxed as a partnership (two or more members)

Premiums paid by the partnership for a partner are guaranteed payments: income to the partner, deductible by the partner above the line. The partner, not the partnership, takes the health insurance deduction.

Can the LLC offer a group plan or an HRA to its owner?

A one-person LLC with no employees has no group to insure, and a more-than-2%% S-corp owner cannot take an ICHRA or QSEHRA reimbursement tax-free. The individual market, with the deduction and the credit, is the route; once the LLC hires W-2 staff the question changes and Plans For Small Business takes over.