The gig economy is doing more than changing how people work. It’s radically altering how they get health insurance.
According to a survey sponsored by Upwork and Freelancers Union, more than 30% of the U.S. workforce operates in the “gig economy” — a loose term for those who identify as freelancers, independent contractors, and self-employed businesspeople not tied full time to one company. Among Millennials, the percentage rises to 47%.
That same report predicts independent workers will represent the majority of U.S. workers in the coming years. Other studies corroborate its findings. MBO Partners’ 2017 “State of Independence in America,” for one, estimates independent workers total around 41 million, or 31% of the private U.S. workforce.
For many of your clients, the allure of being a free agent in the job market may be appealing. The freedom to work when, where, and how they want allows them to balance work obligations with personal pursuits, such as family time and higher education.
Bucking the 9-to-5 routine isn’t without its drawbacks, however. Freelancers commonly lack access to employer-sponsored benefits — chiefly, group health insurance that covers medical care and related expenses.
As people pursue this emerging work model, one of their first priorities must be to purchase health insurance in one form or another. After all, a change in professional status shouldn’t change their commitment to ensuring that they have full coverage.
How Agents Can Help Clients Get Covered
Clients working in the gig economy know they need health insurance, but may be put off from buying it because they think it will be too expensive. In fact, 14% of independent workers who responded to a poll by Stride Health said they declined to buy health insurance because of the perceived high cost.
Obviously, your clients cannot forgo medical insurance. The cost of suffering a major illness without it would be devastating financially and emotionally — much more so than paying a monthly policy premium. Therefore, explain the options available to them and emphasize the necessity of finding a plan that meets their needs at an affordable price. Major health insurance companies like Cigna and UnitedHealthCare offer individual policies, so you can start off by reviewing with your client the different price points and benefits included in various plans.
Since freelance income tends to fluctuate from month to month and year to year, your clients may also qualify for ACA subsidies and tax breaks should they shop on their state’s exchanges. If they plan to do so, be prepared to help them calculate their earning to determine how these credits may fit in. While the individual mandate is set to expire at the federal level, several states have moved to protect it — meaning that your clients may be fined should they forego coverage entirely.
When selecting a plan, it’s important your client understands the tradeoff between the monthly premium and the deductible. According to the Stride Health survey, many independent workers choose policies with a low monthly premium. In exchange for those low premiums, however, the policyholder is charged a higher deductible and out-of-pocket fees. For some of your clients, paying a higher premium each month may be more affordable than taking on a larger deductible amount.
Other Options to Consider
Earlier this year, the Trump administration proposed letting small business owners and self-employed proprietors band together as an association, a move which would enable them to buy health plans provided they work in the same geographic area and within the same industry.
Another alternative is to investigate the options offered by your client’s company, even if they just freelance there. Some businesses which operate in the gig economy — i.e., those with a lot of 1099 contractors — have begun to partner with firms like Stride Health to help their workers find health insurance.
A short-term health insurance policy can cover your clients between full-time jobs, as well. If a recent Trump administration proposal is enacted, short-term health insurance plans would be extended up to a year in place of the current three-month limit. Although a more permanent solution is always preferable, a short-term policy can provide an independent contractor with a temporary safety net in case of a medical emergency.
The American workforce is rapidly changing. For clients who belong to the growing gig economy, make sure that they have all of the information they need to make the right decision regarding their coverage. As their insurance agent, it’s up to you to guide them to the best options for their specific needs and their unique employment situation.