Current compensation conditions

[Brian St. Pierre]

On Mon, Nov 22, 2010 at 1:58 PM,  <mnolin at embedded-unlimited.com> wrote:
> On Mon Nov 22 13:38 , mark sent:
> On Mon, Nov 22, 2010 at 1:23 PM, Michael ODonnell <michael.odonnell at comcast.net> wrote:
>> I might be invited to join a team of developers on what they're calling a
>> "contract" basis (tho it'd actually be a W2 rather than 1099 relationship;
>> hourly, no benefits) and they've asked me to quote a rate.
>
> If you need insurance or other
> benefits, increase the hourly amount accordingly; e.g., if you have an
> opportunity to acquire heath insurance under COBRA, and the premium is
> $1,200 per month, then (1200 x12) / 2080 = an extra $6.92 added to the
> per-hour rate.
>
> The cost of private health insurance 1000+ per month is only deductible as a
> business expense against business income.. with W2 income you many not even qualify
> for a Health Savings account.

I may be wrong, but I don't think W2 income will disqualify you for an
HSA. See IRS Pub 969. Deductibility of premiums is a separate issue.

If you go the HSA route, the premium is only part of the equation --
be sure to budget extra to cover the deductible. And health insurance
is only part of what you've got to consider for other costs. You need
emergency funds for when you get sick and can't go to work for a week.
If you were on the 1099 side, you need to set aside extra for taxes.
If you were an IC, you may need E+O. If you're self-employed for long
enough, you can think about disability insurance.

As Mike Nolin mentioned, consider what you'll have access to for
retirement accounts (Solo401k, SEP, etc). I'd agree that
W2-no-benefits is the worst of both worlds.

-Brian