Quitting your job to go solo means losing the one thing nobody talks about until they need it: health insurance. The replacement options are confusing, expensive, and full of edge cases. Here is the decision tree, made compact.
The four options on the table
- Marketplace / public plans — buy directly from a national or state exchange. Subsidies often available based on income.
- Spousal coverage — join your partner's employer plan. Almost always cheaper than buying solo.
- Professional / industry plans — freelancer unions, chambers of commerce, professional associations sometimes pool members for group rates.
- COBRA continuation — keep your old employer's plan for up to 18 months, paying the full unsubsidized premium yourself. Almost always the most expensive option but useful as a bridge.
Marketplace plans demystified
Marketplace plans (US) come in metal tiers: Bronze, Silver, Gold, Platinum. Counterintuitively:
- Bronze: low premium, high deductible — for the rarely-sick.
- Silver: where most subsidies concentrate — best value if your income qualifies.
- Gold and Platinum: high premium, low deductible — only worth it if you have ongoing medical needs.
Silver is the default recommendation for most solo founders specifically because the cost-sharing reductions (CSRs) layered on top make Silver mathematically cheaper than Bronze for many income brackets, even though the sticker premium is higher.
Spousal coverage as a hidden subsidy
If your partner has employer-sponsored health insurance, doing the math on switching to their plan should be the first thing you do — before researching marketplace plans, before pricing fintech accounts, before anything else. The savings can easily run into five figures annually.
The catch: if spousal coverage is "affordable" by the IRS definition, you become ineligible for marketplace subsidies. So even if you would prefer to stay on your own plan, your subsidy gets clawed back. Run the numbers both ways.
When to incorporate purely for benefits
I have never met a solo founder for whom incorporating purely for health benefits made financial sense. The administrative burden of running an S-corp or Ltd just to deduct premiums almost always exceeds the tax savings at solo-founder income levels.
However, if you were already considering incorporation for liability or tax reasons, the ability to deduct premiums as a business expense rather than a personal deduction is a meaningful bonus. Consider it a tiebreaker, not a reason on its own.