Can A 1099 Employee Get Group Health Insurance?

As an employer, you have a lot of different things you have to worry about. From making sure you have enough people on staff to meet the demands of the company to making sure taxes are paid on time and so on, it’s easy to see how things can get confusing and overwhelming.

This rings even truer when dealing with providing health insurance to your employees, especially when it comes to the question of full-time W-2 employees versus 1099 contractors. Many employers are left wondering: Can a 1099 employee take part in group health insurance?

Any employer who has at least 51 full-time employees or their equivalent could face heavy penalties down the road. Beginning this year, any large employer who doesn’t offer some form of health coverage to any eligible employee will wind up with tax penalties. The same applies to employers who don’t provide employees with an affordable option or an option that doesn’t meet all of the minimum requirements.

If you have less than 50 employees, that doesn’t mean you don’t have to worry about insurance exactly. You still have to make sure your employees are classified properly. Otherwise, you could get hit with a substantial fine by the government.

This is where people get confused in trying to figure out who is classified as a 1099 employee and who is a regular full-time employee.

Understanding What Employees Are

First, you need to understand what the relationship is between the individual who is performing the services for the business and the business itself. A hired individual can either be a 1099 independent contractor or a common law employee.

Common Law Standard

Employers typically classify an employee based on how many hours they work. If the employee works at least 30 hours per week, they are generally referred to as full-time employees. Beyond working a certain amount of hours per week, there also has to be some sort of established relationship between the employee and the employer.

Under common law rules, anyone performing work for an employer is deemed an employee if that employer is the one who will control what is going to be done and how. This is still true even when employees are given freedom to do certain actions on their own.

The main thing to remember is that this occurs when the employer can control all of the fine details of how the employee is going to perform the services needed.

Independent Contractors

Individuals are called independent contractors when they are the one controlling the end result of the job, but not how it is going to be done. While this might seem simple enough, it really isn’t. There are a whole host of different factors that come into play that determine whether an individual falls under this category or not.

1. Behavioral – Is the company able to control how the worker does this job?
2. Financial – Does the payer control the business aspects of the individual’s job?
3. Relationship – Do you have a written contract with this individual that outlines benefits?

Instead of classifying your employees wrong, you need to speak to someone who can better assist you. There are far too many penalties and rules that could land you in over your head.

Since laws vary from one state to the next as to whether a 1099 employee is eligible for coverage or not, you need to discuss your concerns with a licensed professional. Take the time to contact us and go over all of the details of your business and what you are looking to accomplish. We will make sure you are taken care of and get the coverage your employees need.