Advisory firms and agencies are often built out of independent producers with a small W-2 service team behind them. The producers and the staff are treated completely differently for health insurance, and the owner usually sits in a third category of their own.
Who the advisory firm or agency can cover
Client service, operations and paraplanning staff on a W-2 are employees. So are advisors and agents the firm employs on salary or salary plus bonus.
Independent advisors and agents paid on a 1099 are not employees and cannot be placed on the firm’s QSEHRA or ICHRA.
Owners of an RIA or agency set up as an S corporation who own more than 2% have their premium run through their W-2 and take the self-employed health insurance deduction on their own return.
Three ways to pay for staff
Across the 23 states I work in, median pay for employed financial advisors from $65,150 to $123,380, employed insurance agents from $44,990 to $70,650 and client service staff from $35,580 to $46,020 (BLS, May 2024). That spread decides which option works.
A QSEHRA reimburses employees tax-free for individual coverage they buy, up to $6,450 for self-only and $13,100 for family coverage in 2026. It is for employers with fewer than 50 full-time-equivalent employees that offer no group plan, it has to be offered on the same terms to every eligible employee, and a shareholder owning more than 2% of an S corporation cannot use it.
An ICHRA — HealthCare.gov now calls it a CHOICE Arrangement, though the IRS still uses the old name — has no cap and no size limit. You set amounts by class of employee (full-time, part-time, seasonal, salaried, hourly, location and a few others), and within a class the amount can rise with age, up to 3 to 1, and with family size. Employees must be enrolled in individual coverage to use it. An offer that leaves the lowest-cost Silver plan costing an employee more than 9.96% of household income in 2026 is unaffordable, and that employee can decline it and take a premium tax credit.
A small-group plan puts everyone on one policy and one network, with participation and contribution minimums set by the insurer. It is still the right answer when the team is older or someone needs a specific specialist network, and it is the only route to the Small Business Health Care Tax Credit, which runs through SHOP.
Variable income and the 2026 subsidy rules
Commission and bonus-heavy pay is exactly the income the 2026 rules punish. Subsidies end above 400% of the poverty line — $62,600 for one person, $128,600 for a family of four — and there is no longer a cap on repaying excess subsidy at tax time. For an independent producer buying their own plan, a conservative income estimate in November can become a full repayment in April. For employed advisors, an ICHRA can set salaried and hourly staff as separate classes so a big bonus year does not change what the firm offers.
What works for different firms
- Solo advisor, one W-2 assistant. You on an individual policy (Form 7206); the assistant on a QSEHRA.
- Agency with independent producers and a service team. Service team on a QSEHRA or ICHRA; producers buy their own.
- RIA with employed advisors. An ICHRA with salaried and hourly classes, priced against a small-group plan.
What changed in 2026
Three things matter to anyone in a advisory firm or agency. The enhanced premium tax credits ended, so subsidies stop again at 400% of the poverty line: $62,600 for one person and $128,600 for a family of four. Starting with the 2026 tax year there is no cap on paying back excess advance subsidy, which falls hardest on anyone whose income moves around. And bronze and catastrophic plans now count as HSA-eligible, so an owner on a bronze plan can put $4,400, or $8,750 for a family, into an HSA.
Financial Advisory Firms and Insurance Agencies by state
- Alabama
- Arkansas
- Colorado
- Florida
- Georgia
- Illinois
- Indiana
- Kansas
- Maryland
- Michigan
- Mississippi
- Nebraska
- Nevada
- North Carolina
- Ohio
- Oklahoma
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- Wisconsin
Sources: HealthCare.gov, CHOICE Arrangements (formerly individual coverage HRAs); IRS Notice 2017-67, Qualified Small Employer HRAs; IRS Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits; IRS, S corporation compensation and medical insurance issues; IRS, Instructions for Form 7206, Self-Employed Health Insurance Deduction; IRS, One Big Beautiful Bill provisions; IRS Notice 2026-5, Expanded availability of health savings accounts; U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2024.
Questions owners ask
Can an insurance agency cover its independent agents’ health insurance?
Not through a QSEHRA or ICHRA, which only cover employees. Independent agents paid on a 1099 buy their own coverage and take the self-employed health insurance deduction.
How does an S corporation advisory firm owner deduct health insurance?
If they own more than 2%, the premium the firm pays is included in their W-2 wages, not subject to Social Security and Medicare tax when paid under a plan for employees, and they take the self-employed health insurance deduction.
Why is variable income a problem for marketplace subsidies in 2026?
Subsidies stop above 400% of the poverty line, and from the 2026 tax year there is no cap on repaying excess advance subsidy, so a year that ends higher than estimated means repaying all of it.