In California, Group health insurance has many protections under State law such as Guaranteed Issue elibility.  Many people these days, work as 1099 or Contract workers and that has an impact on their health insurance options.  In order to qualify for coverage through an employer-sponsored health plan, there must be an employer-employee or ownership relationship.  1099 contract workers are not employees as they do not show on the DE6 or quarterly payroll report to the State of California.  Essentially, in the eyes of the State, they are self-employed.  Because of this status, they typically cannot enroll on a Group health insurance plan.

Health Insurance options for 1099 Contract workers

Unless a contact worker is brought on as a full employee and appears on the DE6, he/she should look to get either separate California individual health insurance or his/her own Small Group people if the company is eligible.  You can find more information on Small Group eligibility to see this is an option. 

There pros and cons to both individual health coverage and Small Group in California for the 1099 contract worker.  Ultimately, if a person thinks their ongoing status will likely remain on a 1099 contract status, they really should obtain their own coverage.

What if a 1099 contract worker is offered full employment and Group health coverage

Occasionally, 1099 contract workers will be offered employment from the company they are doing business with.  There are, however, some important issues to consider first before canceling your individual coverage.

How is your health?  If you have a chronic or serious health issue (i.e. you can no longer qualify to get individual health insurance), it can be scary to cancel an individual plan.  We have had clients that retained their individual coverage even while taking employment that offered group health insurance due to their health.  Essentially, they did not want to go through the underwriting process again.  You do have Cobra and HIPAA options as mentioned above, but those are either expensive or temporary. 

How likely is the job (and health insurance) to be permanent or long term?  If you are not sure how the job will work out, it might make sense to keep your individual plan for a period of time to see if the company works well for you.  If you get into a company and three months later, decide to leave, you may not qualify based on health for individual coverage if your prior plan was cancelled.

The key take away for 1099 contact workers is that they are NOT covered by California State law AB 1672 which regulates Small Group health insurance.  They must establish their own health insurance plan on an individual or group basis as they are considered self-employed.  This is a major consideration when deciding whether to take employment based on an employer-employee relationship or contract 1099 status.

Other important concepts to help you understand your California group health insurance quote are:

Individual versus Cobra option
Qualifying for individual health insurance
Guaranteed Issue and AB 1672
Download the health application or apply online
California group health insurance