Clinicians spend all day inside insurance networks and still find their own coverage confusing, mostly because the practice side and the personal side follow different rules. This covers both: what the owner can deduct, and what a practice of two to fifty people can offer the medical assistants, nurses and front office that keep it running.
Who the medical practice can cover
Medical assistants, nurses, billers and front-office staff on a W-2 are employees.
Clinicians are the question. Group therapy and physical therapy practices often pay clinicians as independent contractors on a 1099; those clinicians are not employees and cannot be put on the practice’s QSEHRA or ICHRA. A W-2 clinician can.
Owners who practice through an S corporation and own more than 2% follow the shareholder rule: the premium runs through their W-2 and they 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 medical assistants from $34,800 to $47,610, medical secretaries from $35,910 to $46,880 and lpns from $48,850 to $73,820 (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.
Picking a network for people who know networks
Your staff know exactly which systems and specialists they use, and a single group plan picks one network for everyone. An ICHRA hands each employee an amount and lets them buy the individual plan whose network fits, which tends to go over well with medical staff. The catch is that marketplace plans in many counties are HMOs or EPOs with no out-of-network coverage at all, so the choice they make matters more than it would on a broad group PPO.
What works for different firms
- Solo clinician, two staff. Owner on an individual policy; staff on a QSEHRA.
- Group therapy practice with 1099 clinicians. Only the W-2 office staff can be covered through the practice. Contractors buy their own.
- Multi-provider clinic, 15 to 40 people. An ICHRA by class (clinical, administrative, part-time) or a small-group plan; price both, because a group PPO can still win when the team is older.
What changed in 2026
Three things matter to anyone in a medical practice. 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.
Medical Practices 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 a therapy practice reimburse 1099 therapists for health insurance?
No. A QSEHRA or ICHRA only covers employees. Therapists paid as independent contractors buy their own coverage and take the self-employed health insurance deduction.
Can a small medical practice offer an ICHRA instead of a group plan?
Yes. An ICHRA, which HealthCare.gov now calls a CHOICE Arrangement, can be offered by an employer of any size with at least one employee who is not an owner or an owner’s spouse. Employees must enroll in individual coverage to use it.
How does a practice owner deduct their own premiums?
A sole owner deducts them with the self-employed health insurance deduction on Form 7206. An owner of more than 2% of an S corporation has the premium added to W-2 wages and then takes the same deduction.