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Health Insurance Options for Entrepreneurs

Updated: Jun 19

Owning a small business comes with both challenges and great rewards. While navigating the options for healthcare coverage may be one of those challenges, there are many health insurance options available to small business owners that can help them save money and maintain good health.

Options for Health Coverage

While employed counterparts can rely on their employers’ group plans, self-employed individuals must look to alternatives. In the absence of an employer-sponsored plan, anyone seeking health insurance coverage must obtain an individual health plan. Individual plans can be obtained independently at any time.

In addition, affordable plans through the Health Insurance Marketplace are common for self-employed business owners. While enrolling in a Marketplace plan is normally limited to the annual Open Enrollment period, experiencing a scenario known as a Qualifying Life Event (QLE) allows an individual to enroll outside of Open Enrollment. Qualifying Life Events include getting married, having a baby, relocating, or losing existing health coverage (even as a result of leaving employment where health insurance was offered). Marketplace plans offer a subsidy for those under a certain income level, making these plans potentially even more affordable– a welcome option for those in the start-up phase of their business.

Depending on various eligibility factors, small business owners may also have the option to enroll in a group health plan with their spouse, domestic partner, or parents, if these individuals have health coverage through an employer or other source. Group insurance plans often have affordable premiums, making this a cost-effective option.

Are Health Insurance Costs Tax-Deductible?

Like other business expenses, health insurance premiums can be a tax deduction. This helps alleviate some of the financial burden of entrepreneurship.

  • Sole proprietors and single-member LLCs: Those who file their taxes on a Schedule C can claim the self-employed health insurance deduction on Form 1040, reducing their taxable income by the amount paid for health insurance premiums.

  • Partnerships and S-Corps: While health insurance premiums generally are not deductible expenses on the business’s tax return, they can be deducted on the partners’ or shareholders’ personal tax returns.

  • C-Corporations: Health insurance premiums paid by a corporation for its employees is an allowable business tax deduction.

Note that in any of these scenarios, the monthly premium payment can be deducted, but not the costs for healthcare services.

It’s important to consult with a qualified tax professional for guidance regarding business tax deductions. Tax laws may change year-to-year, and other scenarios can affect what deductions are allowed.

The Importance of Health Coverage for Entrepreneurs

Many small business owners overlook the importance of health insurance due to other financial obligations of running their own business. However, getting coverage is crucial for various reasons:

  • Protection for health: Health insurance provides coverage for medical expenses, including preventive care, illnesses, accidents, and medical emergencies. This coverage ensures that self-employed individuals can access necessary healthcare without worrying about unexpected and extreme costs.

  • Reducing risk on business operations and ensuring sustainability: Health issues can arise unexpectedly and might not only affect personal well-being but also cause strain on the sustainability of the small business. Health insurance allows business owners to mitigate the financial risks associated with sudden health problems, reducing the impact on their business operations. This allows them to focus more on building their business and less on worrying about a potentially large financial burden.

  • Attracting new talent and compliance with laws: For those small business owners who have employees or who are considering hiring employees, offering health insurance can help attract and retain better talent. In addition, depending on the number of employees and state laws and regulations, a business owner might be legally required to offer a group insurance plan.

Health insurance coverage is an investment that serves as a safety net, protecting both the entrepreneur and their business from unexpected health-related financial challenges.

How to Enroll in a Health Plan

We know how confusing it can be to find your health insurance coverage. The smartest course of action is to enlist the help of a licensed insurance agent to help you enroll in an individual health plan or a Marketplace health plan, so you can focus on your business instead.

An agent can help you find the most affordable plan for you and your family, with coverage that works best for your needs. LEB Insurance Group can get you started on the right path today.


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