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.
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
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Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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