The draw of the “gig economy” is real. You get to work whenever you want for however many hours you want and in some cases, you can set your price for your jobs. But something you don’t get to do is sign up for employer-sponsored health benefits. So if you’re one of the 57 million Americans who perform freelance, contract or “gig”-type work, you’ll most likely have to source your own benefits.
The good news is, there’s a handful of options.
Option #1: ACA Marketplace
The Affordable Care Act was written and passed to benefit precisely the types of people who participate in the gig economy. As long as you live in a state like California or Washington, which has put resources into creating a viable insurance marketplace (insurance is state-regulated), you can go to Healthcare.gov, type in your state and a few other details, and start shopping for the health insurance immediately.
The only problem with the ACA marketplace is that the affordability of your options depend on the level of insurance coverage you need and how much money you make. In 2020, if you have a family of four and make less than $103,000 annually, you qualify for some government assistance with your premiums (the exact amount depends on your income and the number of people in your household). If you make more than that, you’ll have to pay the full price for your premiums.
Option #2: Portable Benefits (State, City or Employer-Sponsored)
Portable benefits are also known as multiple employer welfare arrangements where employers make contributions toward an employee’s health insurance policy based on the number of hours that employee works for said employers. These benefits aren’t tied to any of the specific employers so the gig workers have access to them regardless of where they’re working. These types of arrangements have existed in the construction industry for years and are just now gaining popularity in other industries.
Some state and local governments are also considering or have enacted policies that make portable benefits programs available to contractors:
- Washington state is working on a bill that would require employers who hire contractors to make contributions to nonprofit benefit providers for said contractors.
- Oregon automatically enrolls contract workers in an IRA plan.
- Several state and local governments like San Francisco have put in place city health coverage and HSAs to which employers contribute on behalf of the employee. If you’re signing on for a contract gig, ask your employer about the availability of a locally sponsored HSA and the possibility of them contributing to it based on the hours of work you complete.
Option #3: Create a Small Business
Even if you’re the only person working at your “company”, you can create an LLC and apply for health insurance as a small business. The ACA includes several provisions that make health insurance more affordable for small businesses and on top of that, you might be able to negotiate better insurance as a business than as an individual.
Option #4: Faith-based Healthcare-sharing
Due to the rising cost of healthcare, there are some religious organizations like Alliance of Healthcare Sharing Ministries, that are providing access to medical treatment through a “pool-your-money” scheme. How it works is, everyone involved puts money into a central pot and if you need health treatment, you appeal to the group to get your medical bills paid. A drawback to this type of scheme is, it’s cost-sharing instead of health insurance. So there’s no guarantee the group will agree to pay your bills.
Option #5: Partner's Health Insurance
If you have a spouse or domestic partner who has employer-sponsored health insurance, it might be worth getting on their plan, even if the employer doesn’t contribute towards your premium. Employers can often negotiate a better group rate for everyone (even non-employees) than an individual can get on his or her own so your partner’s health insurance might still end up being cheaper than the marketplace.
As gig and contract work rises in popularity, governments, employers and faith-based organizations are coming together to ensure employees have access to affordable medical care. That means you don’t have to buy an expensive health plan or go without. In fact, by exploring these options, you might find a better fit for your needs than a traditional group plan would offer.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.