Running a solo business comes with freedom and responsibility. One of the biggest concerns for sole proprietors is health coverage. Without the backing of a large company, many wonder: Can a sole proprietor get business health insurance? The short answer is yes, but it’s not always simple.
This blog walks you through the available options, what to expect when applying, costs, and how to make smart decisions for your health and your business.
What Is Business Health Insurance for Sole Proprietors?
Business health insurance typically refers to a health plan purchased by a business owner to cover themselves and potentially their employees. For sole proprietors, it usually means buying a plan through the individual market or qualifying for a small group plan if certain conditions are met.
Even though a sole proprietorship doesn’t separate business and personal finances the way an LLC or corporation might, sole proprietors are still eligible for health coverage. In many cases, the coverage can be deducted as a business expense, making it more financially manageable.
Individual Plans vs. Group Health Insurance
As a sole proprietor, you’re mostly navigating between two choices:
1. Individual Health Plans
Most sole proprietors purchase insurance through the Health Insurance Marketplace or directly from insurance providers. These plans are available regardless of income level or health condition, thanks to the Affordable Care Act (ACA).
Pros:
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Easy to apply
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Wide selection of providers
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ACA protections (like coverage for pre-existing conditions)
Cons:
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Premiums can be high
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Limited business tax advantages
2. Small Group Health Insurance
In some states, if you have at least one employee (even if it’s a spouse or domestic partner), you may qualify for small group health coverage. These plans are generally designed for businesses with 1–50 employees.
Pros:
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Business expense tax deductions
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Possibly better rates and benefits
Cons:
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Must meet group eligibility requirements
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More administrative work
Qualifying for Small Group Health Plans as a Sole Proprietor
To be eligible for business health insurance through a small group plan, you must typically show proof of having at least one full-time W-2 employee who isn’t the owner or spouse. This employee must be working a minimum number of hours each week, often 30 or more.
Some states offer flexibility. For example, in California and a few other, a spouse working full-time may count as your second employee. Check your state’s rules through the Department of Insurance or a licensed broker to see what qualifies.
Read Full Blog: What Are the Requirements for Small Business Health Insurance?
Can You Deduct Health Insurance as a Sole Proprietor?
Yes. If you’re self-employed and not eligible for a plan through a spouse’s employer, you can typically deduct 100% of your health insurance premiums from your federal income taxes. This includes premiums for:
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Medical insurance
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Dental insurance
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Long-term care insurance (with some limits)
The deduction goes on your personal tax return (not Schedule C) and reduces your adjusted gross income. It’s not a business expense in the traditional sense, but it can still lead to substantial tax savings.
Health Insurance Marketplace: A Popular Option
The Health Insurance Marketplace, created under the ACA, is often the go-to resource for sole proprietors. You can shop for individual and family health plans during open enrollment (or with a qualifying life event).
Depending on your income, you might qualify for subsidies or cost-sharing reductions. This makes business health insurance more affordable for many self-employed individuals.
Plans are categorized into metal tiers:
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Bronze: Lowest premiums, highest out-of-pocket costs
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Silver: Balanced costs and coverage
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Gold: Higher premiums, lower out-of-pocket expenses
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Platinum: Highest premiums, lowest out-of-pocket expenses
Choosing the right tier depends on your healthcare needs and financial situation.
Private Insurance Brokers: Another Route
Instead of using the public marketplace, you can also go through private insurance brokers. They often offer a wider range of plans, including some not listed on the exchange.
When working with brokers:
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Compare costs carefully
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Ask about plan limitations
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Verify licensing and reviews
Private brokers may also help if you’re close to qualifying for a small group plan and need help organizing the paperwork.
Health Sharing Plans: A Non-Traditional Option
Some sole proprietors turn to health-sharing ministries or cooperatives. These are not insurance policies, but rather member-based cost-sharing programs. They’re often more affordable, but they come with strict rules about what is and isn’t covered.
Keep in mind:
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Not ACA-compliant
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No guarantee of payment
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Often exclude pre-existing conditions
Use caution and thoroughly read the fine print if considering this route.
Benefits of Having Health Insurance as a Sole Proprietor
Beyond the obvious—access to healthcare—having business health insurance can give your operation more credibility, peace of mind, and even financial stability in the long run. Consider the risks of going without coverage: one emergency room visit could derail your savings.
Here’s what proper coverage can help you with:
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Preventive care and annual checkups
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Emergency medical costs
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Prescription medications
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Chronic condition management
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Mental health services
Without coverage, you’re financially exposed in ways that could seriously harm both your health and your business.
Find Out More: Business Health Insurance Florida for the Modern Workforce
Tips for Choosing the Right Plan
The process of finding the right coverage can feel overwhelming. Here’s how to make smarter choices:
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Assess your health needs: Do you need frequent doctor visits or prescriptions?
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Estimate your income accurately: This affects subsidy eligibility.
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Compare total costs: Don’t just focus on premiums; look at deductibles, copays, and maximum out-of-pocket limits.
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Check provider networks: Make sure your doctors and hospitals are included.
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Read customer reviews: Real user experiences can help avoid future headaches.
When to Enroll
Open Enrollment for the Health Insurance Marketplace usually runs from November 1 to January 15 (dates may vary slightly by state). Outside that window, you’ll need a qualifying life event (marriage, birth, loss of coverage, etc.) to sign up.
If you’re applying for a small group plan, you can often enroll at any time of the year.
How Much Does It Cost?
There’s no one-size-fits-all answer. Individual premiums vary widely based on age, location, coverage level, and tobacco use.
To give you a rough idea:
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A Bronze-tier plan might cost around $350–$500/month
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A Silver-tier plan could be $500–$700/month
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A Gold or Platinum plan might exceed $800/month
Subsidies from the ACA can bring these numbers down, sometimes significantly.
Alternatives Worth Considering
If traditional health insurance isn’t financially feasible right now, consider:
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Short-term plans (for temporary gaps)
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Catastrophic plans (for emergencies only)
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HSAs (Health Savings Accounts): Pair with high-deductible plans to reduce tax burden
Each of these has its pros and cons, so evaluate carefully before enrolling.
Final Thoughts: Is Business Health Insurance Worth It for Sole Proprietors?
Absolutely. Even if you’re running a business of one, your health is your most valuable asset. Investing in business health insurance means investing in your longevity, stability, and peace of mind.
Whether you choose a marketplace plan, a small group plan, or another route, having a safety net in place protects not just you—but your ability to continue operating your business through life’s unexpected twists and turns.
Need Help Choosing the Right Plan?
We’ve worked with self-employed individuals and small business owners who need reliable, flexible solutions for health insurance. If you’re ready to protect your health while running your business with confidence, get in touch today and see how Ricky Rash can help you find the right plan for your unique situation.
Ricky Rash is committed to helping business owners make informed, confident decisions. Whether you’re just starting out or looking to upgrade your coverage, we’re here to help you stay protected so you can focus on growing your business.
