The gig economy is gaining prominence in the United States and is starting to reshape the earning procedure for millions. From Uber drivers to freelance designers, a large number of workers are turning to flexible careers outside traditional employment terms. However, the major challenge related to freedom is health coverage.
Different from full-time employees, the gig workers and freelancers are usually not qualified for employer-sponsored benefits. As a result, they have to navigate a confusing insurance market, taking their own initiative. Here is where portable health insurance options prove beneficial – they are designed to provide the same protection to independent workers, so they don’t have to depend on coverage from a single employer.
In this blog, we have discussed the reasons for health coverage gaps and how freelancer health insurance in the USA is currently working, and why portable models are likely to be the future for gig workers’ health insurance plans.
So, why do gig workers in the USA not get health insurance benefits?
Traditional jobs in the USA often provide employer-sponsored health coverage to the staff. Since the gig workers are regarded as independent contractors, rather than employees, the employers are not legally bound to offer gig workers health insurance. So, the rideshare drivers, freelance writers, consultants and delivery couriers have to secure their own coverage.
But are the freelancers qualified for employer-sponsored health coverage?
In all truth and to be precise, the freelancers are not entitled to employer-sponsored health coverage. The employer-based insurance is tied to W-2 employment. The freelancers and gig workers file 1099 tax forms, which excludes them from these benefits. Most freelancers are reliant on the Affordable Care Act (ACA) marketplace, state-level exchanges, or private self-employed health insurance coverage.
The health risks of being uninsured as a gig worker
Gig workers indeed face serious risks without insurance. The expense of a single ER visit is about one thousand dollars. Next, the ongoing conditions, including asthma or diabetes, could bankrupt the uninsured individuals. Due to a lack of freelancer health insurance, gig workers and freelancers often lack access to preventative care. The worst part is that it increases their long-term medical costs and health risks.
How vast is the health insurance gap for gig workers in America?
As per the estimate shared by the Kaiser Family Foundation, nearly 30% of gig workers in the US lack health coverage – a relatively higher rate compared to traditional employees. Due to this gap, millions are now vulnerable to financial and medical hardships.
What percentage of freelancers in the USA lack health coverage?
According to the 2022 Freelancers Union Survey, approximately 25% of full-time freelancers are reportedly uninsured. The part-time gig workers are in the worst situation – the rates of uninsured individuals rise to nearly 40%.
Why is health insurance more expensive for all independent contractors?
Employers are covering an average of 73% of premiums for the traditional employees. However, some independent contractors pay the full premium out of pocket. This is how self-employed health insurance becomes much costlier in comparison to employer-sponsored plans.
What does portable health insurance mean for gig workers?
The portable health insurance options mean the coverage models the worker receives, not the employer. This means freelancers and gig workers are allowed to switch jobs or clients – they will not lose their benefits. Often these models are structured through associations, state-level programs or private insurers. Hence, the independent workers receive stable access to care.
How do freelancers in the USA receive help from the portable insurance models?
The portable health plans are likely to solve the biggest challenges in the gig economy – continuity of care. For instance, the rideshare driver in California or a freelance coder in Texas is allowed to keep the same plan, while they can even switch contracts. With this stability, the gig worker health insurance plans become more affordable and practical.
What are the government programs supporting healthcare for gig workers?
The Affordable Care Act marketplace is the primary option. Most gig workers are qualified for subsidies based on their income, which helps lower their monthly expenses. Another option for low-income gig workers is Medicaid, but eligibility varies by state.
The health coverage reforms are being discussed for the gig economy
Now the lawmakers are considering and granting portable benefit funds. In the portable benefit funds, gig platforms are contributing to a pool that covers freelancer health insurance and retirement benefits. States like Washington and New York have begun piloting models for extending protections without requiring the reclassification of gig workers as employees.
How do freelancers find affordable health insurance in the USA?
Comparing the plans on the ACA marketplace, the freelancers are joining professional associations that offer self-employed health insurance coverage or exploring co-ops designed adequately for all independent workers. The crucial steps include shopping during open enrollment and verifying eligibility for subsidies.
The best insurance options for rideshare drivers (like Uber, Lyft, and DoorDash)
The ACA marketplace has made the best health insurance for freelancers available for the rideshare drivers. A few gig platforms are even offering access to discounted plans through partnerships, while coverage is not employer-sponsored. Medicaid could even be an option based on income.
Are the gig workers able to get ACA marketplace coverage or subsidies?
The answer is yes. Several gig workers are eligible to get ACA coverage. In fact, nearly 60% uninsured gig workers are qualified for premium subsidies. Thus, it states that health insurance for gig workers is genuinely affordable.
Short-term health insurance is a good option for freelancers.
While the short-term plans provide a temporary relief, the essential benefits like maternity care, prescriptions or pre-existing conditions are excluded. These cannot be termed as a long-term substitute for self-employed health insurance coverage.
Do US States offer health insurance programs for gig workers?
In some states, the law has allowed going further than federal programs. For instance, the Covered California marketplace in California is offering additional substitutes. The Essential Plan in New York provides affordable coverage for lower-income freelancers. In Massachusetts, freelancers and gig workers receive state-level support for independent contractors.
Which states have the best health coverage options for freelancers?
In states where robust ACA exchanges and expanded Medicaid programs exist, such as California, New York, and Massachusetts, gig workers and freelancers in the USA rank their health insurance options the highest. But the stress, by contrast, is that in states where Medicaid is not expanded, such as Texas, gig workers have fewer options.
How are the health insurance gaps affecting gig workers in California, New York and Texas?
Let us take a look:
- California –
The strong ACA marketplace and state subsidies are reducing gaps.
- New York –
Gig workers can reduce their costs with the help of the Essential Plan.
- Texas –
Since the state has yet to expand Medicaid, the uninsured rates are high. The gig workers are in a vulnerable state.
To sum up,
With the gig economy growing, the urgency of solving healthcare gaps is expanding even further. The freelancers and independent contractors are facing higher costs, limited access and greater risks with no employer coverage. Portable health insurance options are likely the breakthrough solution to provide stability, affordability, and protection for America’s independent workforce. But for now, the gig workers should carefully explore ACA subsidies, Medicaid, and professional association plans for securing the best health insurance for freelancers. Nevertheless, as the portable models are gaining traction, the future could bring health benefits moving with the worker, not the employer.
Pamela is a creative content writer and editor with experience working with various multinational agencies. She is known for her dynamic approach and enthusiasm in publishing engaging and insightful articles.
