Health Insurance for 1099 Physicians (2026): Marketplace Plans, COBRA, Spouse Plans, HSAs and the Self-Employed Deduction

A physician who works as an independent contractor, whether full-time locums, 1099 shifts or a practice of their own, has no employer buying their health insurance. The choices are a Marketplace plan, a spouse's job, COBRA from a past employer, or, with a practice of your own, a plan through the business. This guide compares them for 2026 and the 2027 enrollment season, with the tax rules that decide what each one really costs. The tax side of contracting, including estimated payments and retirement plans, is in our guide to 1099 physician taxes.

Your options at a glance

Marketplace plans in 2026 and 2027

The enhanced subsidies ended after 2025

From 2021 through 2025, the premium tax credit had no income ceiling, and a high-earning household paid no more than 8.5% of its income for the benchmark silver plan. Those enhancements expired on December 31, 2025 (KFF). The House passed a three-year extension in January 2026 (Ballotpedia), but the Senate had not passed it, and no extension had become law as of late October 2026. If Congress acts before or during open enrollment, check HealthCare.gov or your state's exchange for the new rules.

Under the rules now in force, the credit is available only to households with income between 100% and 400% of the federal poverty line. In 2026 those households are expected to pay between 2.10% and 9.96% of income for the benchmark plan (Rev. Proc. 2025-25). Above 400% the credit drops to zero; there is no gradual phase-out.

Figures use the 2026 HHS poverty guidelines for the 48 contiguous states and DC (ASPE); Alaska and Hawaii are higher. For 2026 coverage, the single-person line was $62,600. Almost every practicing physician is above it. The exceptions are years with little income, such as a gap between jobs or a planned break, where the credit can be large. Two cautions apply:

• Income is the whole year's. Eligibility uses your household's modified adjusted gross income for the full tax year, so a fellow who starts locums in July counts the fellowship salary too.
• Overestimating the credit now costs the full amount. Starting with 2026 tax returns, the cap on repaying excess advance credit payments is gone, so every dollar paid in advance above what you qualify for is owed back at tax time (IRS). If you aren't sure your income will stay under the line, you can take less of the credit in advance, or none, and claim it on your return.
• An offer through a spouse's job matters too. If you can enroll in employer coverage that counts as affordable (your share for the family costs no more than 9.96% of household income in 2026, and 10.22% in 2027), you can't get the credit (Rev. Proc. 2026-26).

What a plan costs without a credit

KFF's averages for a 40-year-old show the full monthly price before any credit. Your price depends on where you live and your age: insurers can charge older adults up to three times what they charge younger adults, and tobacco users up to 50% more (HealthCare.gov).

Source: KFF, average Marketplace premiums by metal tier. Prices will rise again for 2027: in KFF's review of 276 insurers' filings, the median proposed increase was 15% (KFF). Final 2027 prices appear on HealthCare.gov and state exchanges when open enrollment opens on November 1.

When to enroll

On HealthCare.gov, open enrollment for 2027 runs from November 1, 2026 to January 15, 2027. Enroll by December 15 for coverage that starts January 1; plans chosen from December 16 to January 15 start February 1 (HealthCare.gov). States that run their own exchanges can set different deadlines. Outside open enrollment you need a qualifying event, such as losing job-based coverage, which opens a 60-day special enrollment period even if you quit.

A spouse's employer plan

For many married contractors this is the cheapest option, because the employer pays most of the premium. In KFF's 2026 survey, family coverage averaged $28,303 a year, of which workers paid $7,471; single coverage averaged $9,804, with workers paying $1,672 (KFF). The employee's share usually comes out of pay before income tax and before Social Security and Medicare tax through the employer's cafeteria plan (Pub. 15-B).

The trade-off is the deduction. You can't take the self-employed health insurance deduction for any month in which you were eligible to join a subsidized plan through your own job, your spouse's, or a dependent's, even if you didn't enroll (Form 7206 instructions). So if your spouse can add you to a subsidized plan and you buy a Marketplace plan instead, you pay its full price with no deduction. Price both before deciding.

Two more things to check: whether the plan charges extra to cover a spouse who has another option, and whether your spouse elects a general-purpose health FSA, which would block your HSA. Our open enrollment guide walks through those elections.

COBRA after leaving a job

If you leave an employer with 20 or more employees, you can usually keep its group plan for 18 months, or longer after certain events. The plan can charge up to 102% of its full cost, employer share included. You have at least 60 days to elect COBRA, and at least 45 days after electing to make the first payment, which then covers you back to the day your old coverage ended (Department of Labor; employer guide).

At KFF's 2026 average premiums, 102% is about $10,000 a year ($833 a month) for single coverage and $28,869 ($2,406 a month) for a family. Employer plans with rich benefits cost more. COBRA makes the most sense when you are midway through a deductible, in treatment with doctors you want to keep, or need a few months to bridge to a new job.

• Switching later. Losing job coverage gives you 60 days to choose a Marketplace plan. If you take COBRA instead, you can switch to a Marketplace plan during open enrollment or when COBRA runs out, but dropping COBRA voluntarily at other times does not open a special enrollment period (HealthCare.gov).
• Deducting it. The IRS hasn't said directly whether COBRA premiums for a former employer's plan count as insurance "established under" your business for the self-employed deduction, and tax preparers disagree. Ask yours. If the deduction isn't allowed, premiums can still count as an itemized medical expense, but only the part of your medical costs above 7.5% of AGI is deductible (Pub. 502).

The self-employed health insurance deduction

If you have self-employment profit, you can deduct premiums for medical, dental and qualified long-term care coverage for yourself, your spouse, your dependents and any child under 27, as an adjustment to income on Form 7206. You don't need to itemize. The rules that limit it (Form 7206 instructions):

• Not for months with a subsidized employer option. Any month you were eligible for a subsidized plan through your employer, your spouse's, a dependent's or a child under 27's is out, whether or not you enrolled. A physician with a W-2 job that offers coverage and 1099 work on the side usually can't take it.
• Limited to the business's profit. The deduction can't exceed the net profit of the business under which the plan is established, minus the deductible half of self-employment tax and any retirement contributions for you from that business.
• Income tax only. You can't subtract it when figuring self-employment tax, so it saves nothing on Social Security and Medicare tax.
• Net of any premium tax credit. Only the part of the premium you pay yourself counts. If you also claim the premium tax credit, the two are figured together (Pub. 974).

What it is worth

These examples run the site's 2026 tax model for a physician whose only income is 1099 profit, with the premium deducted and without it (as if the physician had been eligible for a subsidized plan through a spouse).

Self-employment tax is the same in every pair ($31,606, $35,115 and $34,665). The savings differ because of the 20% qualified business income (QBI) deduction:

• Above the QBI phase-out (the single physician at $400,000), the deduction saves the top bracket rate, 35%.
• Inside the phase-out (the single physician at $300,000), lowering taxable income also brings back part of the QBI deduction, so the deduction saves 43% of the premium.
• Below the threshold (the married physician in Georgia), the premium also reduces qualified business income, so the deduction saves about 80% of the bracket rate plus Georgia tax: $5,080, leaving an after-tax cost of $15,920.

The model uses 2026 federal and state rules and leaves out retirement contributions and other income. Run your own numbers in the locum rate calculator, which deducts the premium the same way.

If you own an S corporation

A shareholder who owns more than 2% of an S corporation is treated like a partner, not an employee, for health benefits (Pub. 15-B). Family members are counted too: a spouse, child or parent of a more-than-2% shareholder is treated as owning that stock. The deduction still works, but only through a specific route (IRS; Notice 2008-1):

1. The S corporation buys the policy, or reimburses you for a policy in your own name, such as a Marketplace plan.
2. It reports the premiums as wages in box 1 of your W-2 (W-2 instructions). Paid under a plan for employees, they are not subject to Social Security, Medicare or federal unemployment tax (Pub. 15).
3. You deduct them on your return as self-employed health insurance. The limit is your Medicare wages (W-2 box 5) from that S corporation.

For example, with a $150,000 salary and a $21,000 premium, box 1 shows $171,000 before any retirement deferrals, boxes 3 and 5 show $150,000, and the $21,000 deduction on your return takes the premium back out. The premium ends up free of income tax and payroll tax. If you pay the premium personally and the corporation never reimburses it or puts it on your W-2, you lose the deduction. Set this up with your payroll provider before the last payroll of the year.

HSAs work differently for owners as well: more-than-2% shareholders can't contribute through pre-tax salary reduction (Pub. 15-B). An S corporation contribution to your HSA is included in your W-2 income, and you deduct it on Form 8889 (Notice 2005-8). Whether an S corporation makes sense at all is covered in the S corporation section of our 1099 tax guide.

HSAs for self-employed physicians

You can contribute to a health savings account for any month you are covered by a high-deductible health plan (HDHP) and have no disqualifying coverage, such as Medicare, a spouse's non-HDHP plan that covers you, or a general-purpose health FSA (Pub. 969).

Sources: Rev. Proc. 2025-19 (2026) and Rev. Proc. 2026-24 (2027).

• Bronze and catastrophic plans now qualify. Starting in 2026, any bronze or catastrophic plan offered as individual coverage through a Marketplace counts as an HDHP, even if its deductible or out-of-pocket limits don't match the table (IRS; Notice 2026-5). Silver and gold plans qualify only if they meet the HDHP limits; the plan listing usually says whether a plan is HSA-eligible.
• Direct primary care is allowed. A direct primary care arrangement costing no more than $150 a month for one person, or $300 for more than one, no longer blocks contributions, and the HSA can pay the fees.
• How you contribute. Without an employer, you contribute directly and deduct it on Form 8889, which lowers income tax but not self-employment tax. Contributions for a year can be made until the tax filing deadline the following April.

For the single Texas physician with $400,000 of profit above, a $4,400 self-only contribution saves $1,540 of 2026 tax. Our HSA strategy guide covers investing the account.

ICHRA and QSEHRA if you run a practice

Two kinds of health reimbursement arrangement let a practice pay for employees' individual health insurance instead of sponsoring a group plan. Reimbursements are tax-free to employees and deductible for the practice.

• Individual coverage HRA (ICHRA). Any size employer; employees must have individual coverage, such as a Marketplace plan, to be reimbursed. There is no dollar cap, and the employer can set different amounts for classes of employees (HealthCare.gov). In September 2026, CMS and the Small Business Administration began calling ICHRAs "CHOICE Arrangements"; the rules are the same 2019 regulations, and a bill to write them into law had passed the House but not the Senate (Groom Law Group).
• Qualified small employer HRA (QSEHRA). For employers with fewer than 50 full-time-equivalent employees that offer no group plan. The 2026 maximums are $6,450 for self-only and $13,100 for family coverage (Rev. Proc. 2025-32; HealthCare.gov).

Neither one covers the owner. Sole proprietors, partners and more-than-2% S corporation shareholders are not employees for these purposes; the IRS says a 2-percent shareholder-employee is not eligible to participate in a QSEHRA (IRS). Owners use the self-employed deduction, or the S corporation route above, for their own coverage. An HRA offer can also affect employees' eligibility for the premium tax credit, so the arrangement needs the required notices; a benefits attorney or administrator can set it up.

Association, short-term and sharing plans

Professional association plans

A 2018 Labor Department rule let self-employed people with no employees join association health plans as if they were employers. A federal court struck down key parts of it in 2019, and the department rescinded it in 2024 (Department of Labor). In August 2026 the department sent a new draft rule to the White House for review that would broaden association plans again (CNBC); no new rule had been finalized as of this writing. If a medical society or specialty association offers members a health plan, ask whether it is a group plan you actually qualify for, an individual Marketplace plan sold through the association, or a product that isn't ACA-compliant, and check the answer with your state insurance department.

Short-term plans

Short-term, limited-duration plans don't have to follow ACA rules: they can turn you down or exclude pre-existing conditions, cap benefits and leave out services such as maternity care or prescriptions. A 2024 federal rule limits them to a 3-month initial term and 4 months in total (2024 final rule). In August 2025, the Departments of Labor, Health and Human Services and the Treasury said they would not prioritize enforcing those limits while they write a new rule (Groom Law Group), and state law still applies; several states ban these plans or set shorter limits. A short-term plan can bridge a gap of a few weeks, but it is a poor fit for a physician with a family or any ongoing condition, and losing it doesn't give you a special enrollment period for a Marketplace plan.

Health care sharing ministries

Sharing ministries are not insurance. Members contribute monthly and the ministry shares eligible bills, but it has no legal or contractual obligation to pay, it can exclude pre-existing conditions and services that ACA plans must cover, and in most states it isn't regulated as insurance (Michigan Department of Insurance and Financial Services; Louisiana Department of Insurance). In 2020 the IRS proposed letting sharing payments count as deductible medical expenses (proposed rule), but that rule was never finalized. For a physician who can afford a Marketplace plan, an unpaid six-figure hospital bill is a larger risk than the premium savings justify.

How to decide

1. Check employer options first. If your spouse's employer offers subsidized family coverage, price it against a Marketplace plan with no deduction, since being eligible removes the deduction anyway.
2. Price Marketplace plans on total cost. Add a year of premiums to the out-of-pocket maximum for a bad year. Look at the bronze plans, which are now HSA-compatible.
3. Check the provider network. Many Marketplace plans are HMOs or EPOs with narrow networks and little out-of-area coverage, which matters if you travel for locums. Confirm your own doctors and the hospitals near home and near your assignments.
4. Estimate your income honestly if you might be near 400% of the poverty line, because excess advance credit is now repaid in full.
5. Set up the deduction correctly. Keep premium records for Form 7206; if you have an S corporation, make sure premiums are reimbursed and on your W-2.
6. Fund the HSA if you choose an HDHP, and coordinate with your spouse's FSA.
7. Don't miss the deadline. Enroll by December 15 for January 1 coverage, or within 60 days of losing job-based coverage.