Group Health Benefits for Your 1099 Contractors

As many of us struggle to find the right people to add to our professional teams, benefits continue to be at the top of the list for prospects. Health insurance is a key benefit that everyone is searching for. Can you extend these benefits to your 1099 contractors?

What is the difference between 1099 contractors and W-2 employees? A 1099 contractor is defined by the IRS as self-employed. Many states do not require businesses to offer health insurance to non-employees. With a W-2 employee, the employer has more control over the scheduling and work output of their employees. W-2 employees also have their wages and taxes paid communicated to Social Security by their employer.

Why should I offer 1099 contractors health benefits? Most employers contribute to their employees’ healthcare premiums as a benefit. A 1099 contractor may not want to claim this benefit, since it is considered taxable income. An advantage of offering benefits and contributing to the benefits you offer may allow your business to qualify for coverage. This may also reduce the healthcare premium of your existing plan due to the increase in the number of eligible participants. Offering benefits can make for a happier and healthier workforce.

What do I need to qualify for a group plan? A small group has between two and 50 employees, including the owners. You will need to prove you are a legitimate business. This is easily accomplished by having a business license or articles of incorporation. When considering how many individuals will be affected, it is important to know that when you offer insurance, you need to offer it to everyone you determine to be qualified. If working 30 hours a week qualifies someone, then anyone who works 30 hours a week needs to be offered coverage.

We are a phone call away when reviewing your 1099 contractors and have questions about adding them to your group health benefits.