How much is health insurance for 1099 workers?

Must-knows about insurance for independent contractors.

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With full- or part-time employees, the process of offering health insurance as a benefit is straightforward. However, it becomes much more complicated when dealing with 1099 workers (independent contractors).

But health insurance for independent contractors isn’t out of the question. In fact, it’s a great way to attract and retain top talent. You just need to consider several factors before deciding whether or not to to offer coverage, with price being one of the most important.

Not sure if you should bring on your next all-star as a contractor or employee? Wondering if you need to convert an existing contractor to full-time employment? Find out using our Contractor vs. Full-Time Analyzer.

Should you offer health insurance for 1099 workers?

The first thing you need to know is that you’re not legally required to provide benefits to contractors. But that doesn’t mean you shouldn’t—it just means that you don’t have to. 

In many cases, you’re allowed to offer health insurance to independent contractors as long as you follow applicable state laws and regulations. For example, 1099 workers are required by law to declare health insurance benefits as taxable income. 

There’s no right or wrong answer to the question of whether you should offer independent contractors health insurance. It depends on factors such as:

  • Your relationship with the contractor.
  • Your company’s financial standing.
  • The cost to you and your contractor.

Don’t make a rash decision. Instead, compare the pros and cons and only move forward once you’re confident in the direction you’re heading. 

Benefits of offering health insurance to independent contractors

With the growth of the gig economy across the globe, the competition for top contractors is greater than ever before. So, anything you can do to attract these workers is something to strongly consider. Health insurance definitely fits into that category.

Here are some additional benefits:

  • Retention: When you provide health benefits, contractors are more likely to stay on board. 
  • Job satisfaction: You want your workers—employees and contractors—to have an enjoyable and satisfying work experience. Offering health insurance can help with this. 
  • Cost savings: If you have a large group of 1099 workers, increasing your group health plan headcount can lower your premium cost per employee. 

Note: check with your group health insurance provider to ensure that they allow you to offer coverage to independent contractors. 

How much does it cost?

There’s no one-size-fits-all answer to this question. Answer these questions to more accurately determine how much health insurance will cost for your 1099 workers:

  • How much does it cost full-time employees to purchase a policy?
  • What portion of the premium do you pay? How much are your employees responsible for?

The answers to these questions will help you better calculate the cost of covering your contractors. For a more accurate quote, contact your insurance provider. Tell them what you’re trying to accomplish and they can provide a clear idea of the process and cost to both you and your contractors. 

What about 1099 workers in other countries?

This is more complicated than offering health insurance benefits to 1099 workers in the United States, but it’s not out of the question.

The first step is to contact your group provider to ask if international coverage for contractors is an option. If it is, request more information on how to proceed. 

If your current group provider doesn’t allow this or you’re interested in making a change, open your search to any and all options. With the help of a service provider such as Oyster, you can quickly find, compare, and choose an international group health insurance policy. 

With this approach, you don’t have to personally do as much work. Your only job is to compare available plans to choose the one that’s best for both employees and independent contractors.

Questions to answer

Now that you have a foundational understanding of health insurance for 1099 workers, you can turn your attention to questions related specifically to your situation. Here are four to start with:

  • How many independent contractors do you have?
  • Do you generally maintain long-term relationships with your contractors?
  • Have you asked your contractors if they’re interested in group health insurance?
  • How will your decision benefit you and your team of contractors?

Once you’ve answered these questions, you can make a final decision on whether or not to offer health insurance to 1099 workers. If you decide offering coverage is the right move, create an Oyster account to learn more about how we can help. 

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

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