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||Variable APR||Eligible Degrees|
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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 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% 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.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
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.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.44%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|