Only W-2 employees can be covered by a group plan, an ICHRA or a QSEHRA. What a business can and cannot do for its 1099 contractors, the misclassification risk, and where to send them.
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Half the small businesses that ask about health benefits have a team that is partly 1099. The benefit rules draw a hard line there, and so does the IRS.
A group quote, an ICHRA costing and the owner’s own plan all start from the same census: who is on payroll, their ages and home counties. Enter your ZIP and a licensed agent runs all four routes for your business, free.
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Group plans, ICHRAs and QSEHRAs are for common-law employees. Independent contractors cannot be enrolled or reimbursed tax-free, and offering them benefits is one of the facts the IRS and state agencies weigh when deciding whether they were really employees. A business that wants to help its contractors does it with pay, not with a plan.
Contractors are not counted in full-time equivalents or average wages for Form 8941, which can keep a business under the 25-FTE line; converting several contractors to W-2 can push it over.
Salons with booth renters, brokerages with agents, construction companies with subs, gyms with trainers, clinics with 1099 clinicians: the business-type pages on this site say which half of the team the plan can reach.