Photo: Aaron Thomas via Unsplash
The Affordable Care Act has made health insurance accessible for millions of freelance workers, a number that is expected to account for 40% of the workforce by 2020. For various reasons self-employment is also increasingly popular amongst millennials, with nearly 40% of the millennial workforce already describing themselves as self-employed. To put things into perspective, that is 60 million Americans, and the numbers are on the rise.
A freelance economy revolves around companies who hire independent workers on a short-term basis to complete a specific set of tasks. The term “freelancer” can also include consultants, solopreneurs, lifestyle entrepreneurs, and other types of independent workers able to contribute to a company’s operations while remaining lean to both parties’ benefit. This cohort, known for being nimble and resource-savvy, is key to job growth, economic innovation, and technological progress.
If the American Health Care Act act passes (currently passed by The House but not the Senate) and the Affordable Care Act is repealed, it is certain that the monthly cost of health care for self-employed individuals will skyrocket. This will make acquiring health care near impossible for many independent workers.
Under the law, individuals who make roughly less than $46,000, or families of four making less than $95,400, qualify for lower premiums. This means that they can pay as little as a third of the retail price for health insurance via federal taxcredits — that is, if they don’t already have access to health insurance through an employer.
Growth of the freelance cohort will stall as many new freelancers will be intimidated by the astronomical monthly expense without these credits — or simply put, they will be unable to meet the expense all together. Many existing freelancers will undoubtedly be forced to return to corporate life, surrendering the freedom and flexibility that made freelancing so attractive to begin with — or alternatively, forgo health care altogether if securing full-time employment at a company with health benefits is not an option.
The suggestion that the United States will not provide reasonable health coverage to its independent working population is troubling. Not only is it bypassing what should be a fundamental right for any member of a functioning society, but it stalls innovation in a competitive and ever-changing global economy. Let us not forget, many of our recent industry disruptors began their ventures solo and/or relied on contractors in the early stages of business.
Freelancers Union, a non-profit organization that aims to ensure that independent contractors receive adequate rights, protections and professional benefits, has handpicked health insurance plans on their website to fit freelancers’ needs. The online private exchange requires a qualifying event in order to apply (examples include: job loss, relocation, discontinued carrier plan). If qualified, HMO plans with a deductible of $5,500 for an individual ($11,000 for family) start at $285 per month for freelancers in the state of California through plans offered by Kaiser, Blue Shield, Anthem, and Sutter Health. For a lower deductible, plans start closer to $760.00 per month.
The Affordable Care Act has made healthcare available to millions of Americans striking out on their own. By repealing it, we are placing freelancers in a precarious position. Health care will become too expensive for the fastest growing segment of today’s soon-to-be largest workforce. As a result, we are not only inhibiting the health and wellness of this large cohort of Americans, but we are limiting the options for the workers of tomorrow’s economy.