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Freelancers Need Health Insurance

Freelancers Need Health Insurance

The world is changing. More and more people are working from home, doing side jobs, and trying desperately not to spend their lives “working for the man.” How much is the freelance workforce growing? A lot. According to a recent report by Fiverr, an online marketplace for freelance services, there are “approximately 57.3 million freelancers in the US currently contributing $1.4 trillion to the economy,” and “it is anticipated that freelancers and independent workers will make up the majority of the workforce in the US within 10 years.”

Health Care is a Barrier to Entrepreneurship

This shift is problematic, though, in a country where the majority of workers get health insurance from their employer. Two challenges explained in a blog post by John Lee Dumas, founder & host of the Entrepreneurs On Fire podcast, are that 1) “health insurance is not cheap,” and 2) “finding the right plan isn’t the easiest search you’ll ever do.”

Put another way, when an employee works for a company that provides health insurance benefits, the employer does the work, often with the help of a knowledgeable agent, of selecting one or more health plans that the employees can choose from and usually subsidizes a significant portion of the cost. Without that employer contribution, health insurance is a much bigger expense, especially when a budding entrepreneur decides to make the leap to self-employment. Dumas emphasizes this point by saying “You’ve heard about COBRA, but who can actually afford that, anyway?”

It’s easy to see that the need for health care might keep some people from focusing all of their time and attention on their new venture. In fact, an Entrepreneur.com article about the Fiverr study points out that “41 percent of ‘side hustle’ freelancers say benefits is a key reason why they maintain a full-time job.”

Health Care is a Voting Issue for Freelancers

Given what we’ve learned, it’s not surprising that, according to the Fiverr report, over 40 percent of freelancers viewed healthcare as the biggest issue in the 2018 mid-term elections. With another election upon us, this will likely continue to be a big issue for independent workers. Here are some stats from the report comparing freelancers with the overall population:

Freelancers are much more likely to advocate for the Affordable Care Act (ACA) (54 percent vs. 44 percent), a single-payer healthcare system (59 percent vs. 48 percent) and increased funding of healthcare for low-income individuals than the general population (75 percent vs. 58 percent).

Because this is a big voting issue for a growing percentage of Americans who are choosing non-traditional employment, it is something that both political candidates and lawmakers would do well to focus on.

The Lesson for Brokers

For agents who sell individual health insurance, there are a few takeaways:

  • A LOT of people are doing freelance work, either on the side or as their only source of income.
  • Those who have left full-time employment in hopes of making it on their own are looking for quality and affordable health insurance solutions.
  • Many freelancers who continue to work full-time do so primarily for the health coverage.
  • Both of these groups are prospects for brokers who sell individual health coverage. Those already working on their own need solutions, and those who still have a full-time job might consider making their side gig their only gig if they only had some health insurance guidance.
  • What freelancers really need, it seems, is a good health insurance agent.

Brokers who would like to attract some of these prospects would do well to optimize their website for words like “self-employed,” “entrepreneur,” and “freelancer” (along with “health insurance,” of course). A few blog posts about different health insurance solutions for freelancers, pushed out through social media, might also help attract some new clients.

Finally, solutions for freelancers should not be limited to off-exchange individual policies. Many of these folks, some of whom are starting a new business and don’t yet have a steady income, might earn less than 400% of the federal poverty level, qualifying them for a premium tax credit. Others might qualify if they increase their contribution to an IRA, reducing their adjusted gross income. Those who do not qualify for financial assistance might do better with a short-term plan, which we all know can now last for up to twelve months and be renewed for up to three years. And entrepreneurs who have experienced some success and hired their first employee might even qualify for small group health coverage.

Long story short, a large and growing number of people who have traditionally relied on their employer for health insurance benefits may be looking for new solutions. If you decide to focus your attention on these freelancers, entrepreneurs, or whatever they choose to call themselves, you’ll have no shortage of prospects and may even become the go-to agent in your area for new business owners.

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