Running your own company doesn't automatically give you a group health plan. Let me walk you through how people with one-person LLCs, S-corps and smaller businesses find coverage while managing what they spend.
Hi, I'm Sam Jaber. I work out of Tampa as a licensed health insurance broker, helping people who own businesses of all sizes, from single-person LLCs to S-corps employing a spouse and small shops with a few workers. I hold licenses in 36 states, and we handle everything together over the phone.
When business owners call me, they generally want to know whether their company qualifies for group insurance and whether they can have the company cover the premiums. Both answers come down to the way the business is structured, and they aren't always what you'd assume. Let me explain how other owners are handling those decisions while bringing their insurance costs down.
Let's start with where you're eligible to shop. When the only people working for your company are owners or their relatives, you'll need to purchase coverage through the individual marketplace. Once you employ at least one person who isn't an owner or family member, the small-business marketplace, called SHOP, may become available. Workers paid on a 1099 don't meet that employee requirement.
Next, we need to figure out whether your household income makes you eligible for marketplace subsidies. If you're a sole proprietor or own a single-member LLC, we begin with your business profit after expenses. If you own an S-corp, we'll count your salary along with the business profits passed through to your personal tax return. We also have to include any additional income earned by your household.
The income limit for assistance is four times the federal poverty level. For a single person, that's somewhere in the low $60,000s, with the amount increasing as household size grows. See which situation below matches yours.
This is where plenty of owners find themselves during their early years, or when they're reinvesting much of their earnings into growing the company. In that situation, marketplace coverage will generally cost you the least, since that's the only place you can apply the premium tax credit.
Here's what makes it tricky: you're projecting earnings before the year is finished. Start with your previous tax return, factor in the contracts and expenses you expect this year, and revise your marketplace information if your profit changes significantly. If your estimate is too low and you leave it unchanged, you could end up repaying some of that credit at tax time.
Next step: Schedule a phone call and keep your previous year's tax return nearby. Together, we'll estimate your income and find coverage that works with that figure.
When your profits take your household above the eligibility limit, you lose the premium credit and pay the marketplace's full rates. If you're insuring yourself, your spouse and your children, that expense can become more than the business is comfortable paying.
For owners in good health, there's another possibility worth considering: medically underwritten private coverage. You'll complete health questions during the application, and if you're accepted, your health helps determine your rate. That can mean premiums considerably below the marketplace's unsubsidized prices. These policies use PPO networks spanning the country, so traveling for clients or taking your family on vacation doesn't automatically mean leaving your provider network.
One thing you should understand beforehand is that the insurer makes its decision based on your health information. Your application might be accepted, rejected, or accepted with coverage for an existing condition excluded. Since benefits aren't identical across policies, I'll review the details with you carefully before you make any commitment.
Next step: Give me a call, and we'll look at a nationwide PPO quote alongside what full-price marketplace insurance would cost your family.
If you've been growing your company while holding another job, remember that your employer-sponsored insurance will probably stop when you leave. That coverage loss generally gives you a 60-day special enrollment period to purchase a marketplace plan. You can also consider COBRA, but voluntarily canceling COBRA after choosing it won't create another enrollment opportunity. Let's work through that decision before you complete the COBRA forms.
Estimating your earnings is especially difficult during your first year operating the company full time, and that uncertainty directly affects whether you qualify for a subsidy.
Next step: Contact me while you're still employed, and we'll arrange your replacement coverage so it's ready when your existing insurance comes to an end.
A lot of business owners think they lost access to PPO coverage when they left their corporate jobs. That's understandable when their marketplace offers only HMOs and EPOs, or lists PPOs at prices they can't justify. But PPO coverage is still available. I can arrange nationwide PPO plans throughout all 36 states where I'm licensed. If you're in good health, call me and let's see what yours would cost.
Your tax preparer should make the final determination here, and I'll encourage you to speak with them. But I can explain the general IRS guidance. Sole proprietors, partners and S-corp shareholders with ownership above 2% may qualify for the self-employed health insurance deduction, up to the amount of net business profit. When an S-corp pays or reimburses premiums for a shareholder owning more than 2%, those payments become part of the shareholder's W-2 wages. You also can't claim the deduction for months when an employer-subsidized plan was available to you, including coverage offered through your spouse's employer.
Before we talk, having these details nearby will help:
You won't pay anything for my assistance. I'm compensated by the insurance company once you've enrolled in coverage.
Straight answers, no sales pitch.
The deciding factor is your company's tax treatment. Sole proprietors, business partners and S-corp shareholders owning over 2% can generally deduct self-employed health insurance premiums, but only up to their business's net profit. Your tax preparer can explain how those rules work for your particular structure.
You can purchase a plan through the individual marketplace or choose private coverage outside it. To access the small-business marketplace, your company needs at least one employee who isn't an owner or related to one.
Simply owning an LLC doesn't entitle you to a special free insurance plan, and it doesn't change your coverage shopping options. What can lower your premium substantially is qualifying household income, which may make you eligible for a marketplace premium tax credit.
Absolutely. If you're healthy and earn too much to receive marketplace subsidies, you can consider private coverage using nationwide PPO networks. I can help arrange those plans throughout the 36 states in which I hold licenses.
To get started, just tell me how your company is structured, about how much net profit it made, and who needs insurance. I'll explain your choices, show you the costs, and help you see what makes sense. If keeping your current plan is the better move, I'll be upfront about that too.
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