From driving for Uber to freelance writing, the gig economy is booming. In fact, gig workers make up 34 percent of the U.S. workforce, according to CNN Money.
Many are forgoing traditional employment for alternative income. Although many praise the flexibility and earning potential of side gigs, they present challenges. One main concern is the need for self-employed health insurance.
Virginia senator Mark Warner is trying to address these issues. Sen. Warner is introducing a bill that would provide comprehensive employment benefits to gig workers.
Find out what this bill entails and what it could mean for those who work in the sharing economy.
Paying for self-employed health insurance
Without employer-sponsored plans, gig workers are responsible for finding and paying for their own healthcare. It can be extremely expensive to go this route, so many workers forgo an insurance policy altogether.
Depending on your healthcare needs, your monthly premium for an insurance plan from HealthCare.gov could cost nearly $720. If you’re single and make more than $47,520, you don’t qualify for a healthcare subsidy. Instead, you’ll be responsible for covering the full cost yourself.
If you decide to skip insurance to save money, the government will charge you a penalty. This penalty is $695 for each person on your tax return who isn’t covered, or 2.5 percent of your income, whichever is higher.
Sen. Mark Warner’s bill
Because you could have a tough time affording independent contractor insurance, you’re at risk for higher medical bills. And this could mean more debt.
“Whether by choice or necessity, a growing number of Americans are working without a safety net and have difficulty planning and saving for retirement, health care needs, or on-the-job injuries,” said Warner in a press release. “The nature of work is changing rapidly, but our policies largely remain tied to a 20th century model of traditional full-time employment.”
Warner’s proposal will pilot a new approach to benefits, allowing gig workers to get access to perks normally associated with full-time jobs at a traditional employer. His plan would not just include self-employment health insurance, but also sick leave, retirement plans, and workers’ compensation.
His proposal also focuses on portable benefits, meaning benefits you could take with you from job to job.
How the Portable Benefits for Independent Workers Act would work
If passed, the Portable Benefits for Independent Workers Act would establish a $20 million grant fund. The fund would issue grants to organizations who create pilot programs. Local and state governments, non-profit organizations, and unions would be eligible to come up with a proposal and apply for the grant.
They will evaluate and test each pilot program for its effectiveness and efficiency, with the intention of broadening the model to a national scale.
If passed, the proposed legislation requires the Government Accountability Office to evaluate each program and send a report to Congress. The first grants would be issued in 2018, with evaluations taking place in 2020.
“With 55 million Americans freelancing, the time has come to build a new safety net to support independent workers as they move from gig to gig,” said Sara Horowitz, founder and executive director of the Freelancers Union. “The lack of portable benefits is one of the biggest impediments blocking independent workers from thriving in the new economy. ”
Company reactions to the bill
The response to the bill from major companies has been very positive. In a statement, Postmates CEO and co-founder Bastian Lehmann gave the bill his support.
“Postmates applauds Senator Mark Warner for kicking off a national conversation that both celebrates the on-demand economy as an engine of commerce and economic growth in our communities,” said Lehmann.
Lyft, one of the largest ride-sharing companies in the country, also applauded the bill.
“We are grateful for Senator Warner’s leadership in addressing the issue of portable benefits for all independent workers,” said Joe Okpaku, vice-president of government relations at Lyft. “The growing desire for flexibility among many workers has created a need to consider new approaches.”
What the bill means for you
If you’ve thought about joining the gig economy because of the flexibility and earning potential it offers, this bill could make a big impact. You might have hesitated to start a side hustle because of the cost of paying for your own health insurance or going without an employer-offered 401(k).
If passed, the bill is a first step to changing all that. You could get access to portable benefits you could take with you from job to job. If the pilot program is successful, gig workers nationwide could get retirement benefits, health insurance, and more. That could dramatically change how many workers seriously consider joining the gig economy.
However, keep in mind that the bill has not been passed yet. Even if it does, it will only target a small population at first. It could be years before a widespread portable benefits program takes effect. In the meantime, you still need to purchase your own insurance and manage your own retirement savings.
There are options available right now to help you manage costs as a gig worker. Research affordable alternatives to Healthcare.gov insurance plans, or consider a part-time job with an employer that offers health insurance to all its workers.
You can even take charge of your retirement savings without the help of an employer. Look into retirement accounts you might qualify for — just about anyone can open an IRA without the help of an employer, for example.
For more information on starting your own side hustle, check out how to make money in the gig sharing economy.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Rates (APR)||Eligible Degrees|
|Get real rates from up to 4 Lenders at once
Check out the testimonials and our in-depth reviews!
|2.63% – 7.75%||Undergrad & Graduate||Visit SoFi|
|2.57% – 6.32%||Undergrad & Graduate||Visit Earnest|
|2.80% – 7.02%||Undergrad & Graduate||Visit Laurel Road|
|2.68% – 8.79%||Undergrad & Graduate||Visit Lendkey|
|2.57% – 6.65%||Undergrad & Graduate||Visit CommonBond|
|2.62% – 8.69%||Undergrad & Graduate||Visit Citizens|