Do 1099 Employees Get Benefits?

Nowadays, the number of gig workers has been growing exponentially, urging organizations and businesses to alter the way they operate to accommodate 1099 employees. While 1099 employees are called this, this is a misnomer because they are actually independent contractors.

In essence, 1099 is a form provided to self-employed workers for them to document their earnings. It’s also known for its full name which is 1099-NEC, or non-employee compensation. Now, this makes people wonder, “Do 1099 employees get benefits?” Since full-time employees get health benefits and the like, are 1099 workers also eligible for any of these?

Read more to discover the benefits 1099 employees can get.

Who are 1099 Employees?

As defined under the law, 1099 employees are not regular employees. Some firms hire self-directed or independent contractors instead of going for long-term or permanent employees.

They offer their services to several clients and often work on a per-project or contractual basis. They can also get hourly pay for their services when necessary. Thus, they have autonomy over how they pay for their health insurance, retirement savings, and taxes.


Health Benefits for 1099 Workers

While contractors can always purchase their own self-employed insurance, they can also get the following health benefits from their employers or clients.

Group Insurance Coverage

Employers have the option to offer their 1099 employees the same health insurance benefits as their W-2 employees.

Employers CAN offer this health plan to their 1099 employees depending on the head count. Some insurance companies allow 1099 workers to be added to group insurance plans.

But this rarely happens unless you’re a long-term contractor for a specific, larger company. Otherwise, you’re on your own, not just for health insurance type benefits, but for all of the other ancillary or voluntary benefits that most employees take for granted.

Health Stipend

A health stipend allows employers to pay their 1099 employees for medical expenses up to the set allowance per month.

This also means that 1099 employees have to report their reimbursements as part of their income on their tax returns.

Again, if you’re contracting with a single larger company – like on a defense contract, for example – this may be offered, but never to a freelancer-style, by the task worker.


Retirement Benefits

There are several benefits 1099 employees can take advantage of such as the savings incentive match plan for employees (SIMPLE IRA), 401(k) plans, money purchase plans, and simplified employee pension (SEP).


1099 employees or contractors can fill out Form 3504-SIMPLE or Form 5305-SIMPLE to become eligible for this benefit. They also have to open an IRA with a financial institution or bank.

This is a DIY approach as it doesn’t offer the suite of pre-selected funds or investments typically provided in a 401K by an employer. Pros and cons to this of course.

Simplified Employee Pension (SEP)

According to the Internal Revenue Service (IRS), 1099 workers can contribute a maximum of 25% of their earnings to a SEP. They’ll have to complete a Form 5305-SEP from the IRS or utilize the plans offered by a banking institution. Then, they can set up their SEP-IRA without any problems.

Of course, the Gig Worker Solutions program comes with access to a 401K, which is by far the most popular retirement savings plan format in the US. And because payroll services are included with the program, that 401K contribution can be automatically deducted from your check.


Wellness Benefits

Wellness benefits are the most sought-for and requested benefits for all kinds of employees because everyone’s mental and physical well-being should always be a priority.

Wellness benefits are offered to traditional employees because they have been shown to improve productivity and contribute to job satisfaction.

1099 and even W-2 employees can get wellness benefits by acquiring a monthly allowance for their wellness expenses negotiated into their long-term contract.

Or with participation in the Gig Worker Solutions Program. The program offers an incredible set of wellness benefits that are INCLUDED in membership through the Doctegrity Telehealth program.

Benefits like 24/7/365 access to physicians and mental health professionals and prescription discounts

Learn more about that here.

Do 1099 Employees Get Benefits?

The short answer is: yes, they can. However, this is not required, so it’s up to the employer’s discretion or upon the employee’s request. But in this competitive industry, employers would want to retain their top talents. That is why they’ll most likely offer these benefits to their independent contractors. If you’re a 1099 employee and interested in these benefits, you can ask your present or future employer about it.

If you want to learn more about the benefits that await you but are too reluctant to start searching, you can always contact us for more questions or enroll in our program. We can help you from the ground up and help you become more successful in your journey as a 1099 employee.