Some affiliate marketers are, of course, also employers. They have a staff. They make payroll at regular intervals. But most affiliate marketers’ businesses employ no one other than themselves. These affiliate marketers are “self-employed.”

Are You Self-Employed?

• If you are required to file a Schedule C with your 1040 each year, then your answer is “yes.” Schedule C is the form used to calculate the profit you made as a self-employed person. This is the amount that is used to calculate income tax you owe.

• If you pay self-employment tax (FICA tax for the self employed), you are self-employed. You’re required to pay FICA at a rate of 15.3 percent.

If you are self-employed, you probably already know that your health insurance premiums (BEFORE health care reform) were 100% deductable. That hasn’t changed.

The Health Care Premium Deduction

The 100% health care premium deduction applies only to income tax. It does NOT apply to the self-employment tax.

All other businesses get a full deduction for health care costs. Health insurance premiums are considered an ordinary and necessary business expense for all employees, including owners.

Here’s an explanation from the National Association of the Self-Employed:

“Employees and the owner pay for their health insurance premiums pre-tax, and therefore they are not subject to FICA taxes. However, sole-proprietors (Schedule C filers) do not receive this ‘business deduction’ for health insurance premiums. The premiums are not paid with pre-tax dollars and are exposed to self-employment tax. Accordingly, the sole proprietor pays this tax (15.3 percent on self-employment income up to $106,000) on his insurance premiums.”

This inequity was not addressed in the health reform package and the rules remain the same.

“Health Exchanges”

In 2014 (four years hence) those of us who are self-employed will be able to shop for coverage in new “health exchanges,” a sort of online health insurance bazaar.

Health Care Insurance Premium Subsidies

Government-funded subsidies will be offered. Subsidies will be figured on a sliding scale. Subsidies for the self-employed will be available for single people who earn less than $44,000 per year and for a family of four who earn an income of less than $88,000.

What does all of this mean for the self-employed? It’s hard to say. Some of the provisions go into effect right away, while others will not be implemented for several years. That’s plenty of time for Congress to change the provisions in health care reform. All we can do is wait and see.