How to Get Health Insurance for LLC Owners? (2025 Guide)
If you’re a member of an LLC and want to get health insurance, there are several ways to acquire one.
As a corporate attorney who assisted several businesses with formation and insurance, I’ll share my insights about the topic and include input from financial experts.
Keep in mind that choosing the right plan will depend on the business structure, as well as membership and employee status.
Quick Summary
- To get health insurance for LLC owners, you need to choose a plan based on your business structure, cost, tax status, and benefits.
- The members have the option to obtain individual policies, avail of group insurance, provide reimbursement arrangement, or enroll in a health insurance exchange.
- In 2023, over 16 million individuals obtained coverage through the exchanges nationwide.
- If you're unsure of which health plan to buy or have questions, I advise that you consult with an insurance expert.
How Can LLC Owners Get Health Insurance?
LLC owners can get health insurance through individual plans, group coverage, or health insurance marketplace.
However, many LLC owners opt to apply online, which is the fastest way. To do this, you need to go online, create an account, and scroll through options in your area [1].
1. Individual Health Insurance
An individual health insurance plan offers flexibility but can be costlier since the premiums are more expensive.
2. Group Health Insurance
For small businesses, group health insurance grants access to multiple providers while potentially saving on costs compared to individual plans.
Employees may be required to contribute a nominal monthly premium. For more details, I advise clients to consult reputable insurance providers or brokers in their area.
Consider the pros and cons before deciding on the most suitable option for your needs.
3. Health Insurance Exchanges
A health insurance exchange or marketplace is an online platform in which private health insurance companies list their plans.
The public can choose from a range of government-regulated healthcare plans offered by the insurance companies participating in the exchange.
In 2023, 87% of counties in the USA had more than one insurer participating in the market, which is a significant improvement from 52% of counties in 2018 [2].
This change indicates increased competition and options for consumers
As Venture Smarter, we always advise clients to explore available options in their state for suitable and affordable health coverage.
4. Health Reimbursement Arrangement
The 2020 data from the Census Bureau shows that private health insurance was more common than public, covering 66.5% of the population [3].
This indicates a significant portion of LLC owners might opt for private health insurance plans that can be integrated into HRAs.
Most small business owners are now opting for a health reimbursement arrangement.
An HRA is an agreement between you and your employer to be reimbursed tax-free for medical expenses.
You set money aside each month to cover anticipated healthcare costs.
The nice thing about an HRA is that you can use it with individual or group health insurance plans. You can also use it to cover expenses that your regular group health plans don't cover, such as dental or vision care.
Choosing The Right Health Plan
Before choosing health insurance coverage, you have to determine membership and employee status to help you understand which plan you can acquire.
Consider the following:
- If you filed as a non-member employee, consider getting individual health insurance [4].
- If you filed as self-employed, you can obtain group health insurance plans directly from an insurance company or brokers.
- If you filed as a partnership and you and the other partners wish to get group health insurance (which can be inexpensive), I would suggest talking with an accountant or tax advisor to see if that's possible for your company.
- If you filed as a corporation, your options would be generally limited, and health coverage costs would be substantially higher than LLCs and other unincorporated entities.
"Make the right choice, choose to be insured."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
Health Insurance and LLC Taxation
The taxation of an LLC can significantly impact the type of health plan you're able to purchase.
1. Single-Member LLC Taxed as a Sole Proprietorship:
If you're the only member of your LLC, it will be taxed as a sole proprietorship or partnership. You can avail an individual health insurance plan, the premiums of which can be deducted from your personal income tax.
2. Multiple-Member LLC Taxed as a Partnership or S Corp:
If you're part of an LLC with multiple owners or members, it will be taxed as a partnership or S corp. It is a better option to obtain group health insurance directly through an insurer, through a public exchange, or a broker.
LLC Taxed as a Corporation: If your business is taxed as a corporation, the type of health plan you're able to purchase will be significantly more limited, and the costs will generally be much higher.
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FAQs
How Much Does Health Insurance Cost?
The cost of health insurance varies, depending on the type of coverage you choose, and the benefits included in the policy.
How Do I Provide Health Insurance if I Own a Small Business?
To provide health insurance if you own your own small business, you will have to choose between several options. You can purchase coverage on your own or join a group health insurance plan through an association or professional organization.
Who Is Eligible for Government Health Insurance?
Small business owners with employees are eligible for government health insurance through SHOP (Small Business Health Options Program).
Getting Health Insurance for LLC Owners: Venture Smarter Answer
Navigating the health insurance landscape as an LLC owner can be complex, but it's essential for protecting your health and financial well-being.
The key takeaway from Venture Smarter is to assess your specific situation—considering your business structure, number of employees, and tax status—to find the most suitable health insurance plan.
Options range from individual health insurance plans, group health insurance, and health reimbursement arrangements (HRAs), to exploring the health insurance marketplace.
Each option comes with its pros and cons, and what works best for one LLC owner may not be the best for another.
References:
- https://www.investopedia.com/ask/answers/112315/can-llcs-have-employees.asp
- https://www.mckinsey.com/industries/healthcare/our-insights/the-individual-health-insurance-market-in-2023
- https://www.census.gov/library/publications/2021/demo/p60-274.html
- https://www.healthcare.gov/apply-and-enroll/how-to-apply/
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