For the ACA Marketplace, the requirements for enrolling as an individual are something like you just can't be eligible for health insurance by an employer's rules with some caveats that you could apply for an appeal to enroll if your employer does not offer a plan that meets the Minimum Essential Coverage requirements based on benefits and affordability. Being self-employed, whether that is a straight passthrough entity such as your own identity as a sole proprietorship or LLC, or some more exotic structuring isn't really the issue.
In fact, this could work even if you're a W2 employee who is not granted eligibility for health insurance coverage such as places with very draconian eligibility waiting periods or because you decided to work several part time jobs under the legal hourly limits before employers are required to provide health benefits. You wouldn't be able to use the Self-Employed Health Insurance Deduction, but you'll still be eligible for the Premium Tax Credit as long as you meet a list of requirements including MAGI in a certain range.
The appeal of being a 1099 is that it's far easier to finely control your MAGI, be it for this ACA PTC or any other type of subsidy/credit/benefit that is tied specifically to MAGI/AGI and can thus be gamed into legally but artificially giving you income status as being near poverty levels.
Of course, this is only really relevant for youngish people who are in an accumulation phase way before retirement and have frugal enough annual expenditures that you can sock away the vast majority of your income in tax-deferred accounts and still survive or have family that provide financial support anyways. There are also tradeoffs to consider in deducting traditional pre-tax contributions to retirement plans rather than Roth, but if you are in the situation that this scheme seems appealing for consideration, then there is a very good chance that you have somewhat unstable income streams, prefer your own working pace, or would even like to take breaks to go back to school/self-study/bootstrap_a_startup/whatever, that you could always smooth that out in future years by converting pre-tax to post-tax during times of relative famine. And if you're the type looking for early retirement going full throttle in your 20s/30s, it makes much more sense to defer taxes rather than pay upfront in Roth given your upcoming break/slowdown from the workforce.
Of course, I'm not your tax attorney, so please read the various rules and regulations and figure applicability for yourself. :)
In fact, this could work even if you're a W2 employee who is not granted eligibility for health insurance coverage such as places with very draconian eligibility waiting periods or because you decided to work several part time jobs under the legal hourly limits before employers are required to provide health benefits. You wouldn't be able to use the Self-Employed Health Insurance Deduction, but you'll still be eligible for the Premium Tax Credit as long as you meet a list of requirements including MAGI in a certain range.
The appeal of being a 1099 is that it's far easier to finely control your MAGI, be it for this ACA PTC or any other type of subsidy/credit/benefit that is tied specifically to MAGI/AGI and can thus be gamed into legally but artificially giving you income status as being near poverty levels.
Of course, this is only really relevant for youngish people who are in an accumulation phase way before retirement and have frugal enough annual expenditures that you can sock away the vast majority of your income in tax-deferred accounts and still survive or have family that provide financial support anyways. There are also tradeoffs to consider in deducting traditional pre-tax contributions to retirement plans rather than Roth, but if you are in the situation that this scheme seems appealing for consideration, then there is a very good chance that you have somewhat unstable income streams, prefer your own working pace, or would even like to take breaks to go back to school/self-study/bootstrap_a_startup/whatever, that you could always smooth that out in future years by converting pre-tax to post-tax during times of relative famine. And if you're the type looking for early retirement going full throttle in your 20s/30s, it makes much more sense to defer taxes rather than pay upfront in Roth given your upcoming break/slowdown from the workforce.
Of course, I'm not your tax attorney, so please read the various rules and regulations and figure applicability for yourself. :)
For starters see:
Pub 974: Self-Employed Health Insurance Deduction and PTC https://www.irs.gov/pub/irs-pdf/p974.pdf
Form 8962: Premium Tax Credit https://www.irs.gov/forms-pubs/about-form-8962