Healthcare Needs of Gig Workers
About 24% of full-time freelancers purchased their plans themselves, while 21% and 19% obtained health insurance through Medicaid and Medicare, respectively. About 15% obtained health insurance through their spouses, 12% through their employers, and 7% through their parents. Below is an overview of the findings, as well as an explanation of the methodology.
- According to the Freelancing in America (FIA), an annual report commissioned by Freelancer Union and Upwork, about 57 million Americans worked as freelancers in 2019. A Fiverr report found that about 40% of U.S. freelancers consider healthcare as their biggest concern. About 20% of freelancers have health challenges that would prevent them from working normal jobs.
- The 2019 FIA survey (screenshot provided in the attached Google Doc) found that about "83% of full-time freelancers" had health insurance. Additionally, full-time (47%) and part-time (35%) reported paying more for health insurance in 2019 than in 2018.
- When asked how they obtained their health insurance, 24% of full-time freelancers purchased their plans themselves, while 21% and 19% obtained health insurance through Medicaid and Medicare, respectively. About 15% obtained health insurance through their spouses, 12% through their employers, and 7% through their parents. A similar trend is observed among part-time freelancers.
- Among all insurance plans available to freelancers (based on the available sources), higher deductible plans are the most likely to be purchased privately/individually. These plans are mainly reserved for medical emergencies, as opposed to regular treatment. Under this plan, insured individuals usually pay out-of-pocket for routine health expenses, but are eligible for discount rates.
- Generally, people choose high-deductible plans because they do not qualify for subsidized care. Also, it is attractive to healthy individuals since they get to save on premiums if they do not require treatment.
- Typically, these plans have deductibles of "at least $1,400 for an individual or $2,800 for a family." Out-of-pocket expenses cannot exceed $6,900 or $13,800 for an individual or family, respectively. However, these plans can be combined with a Health Savings Account (HSA), which cuts up to $3,550 and $7,100 in individual and family plan costs, respectively.
- The challenges faced when obtaining high-deductible health insurance would include the high out-of-pocket costs and higher initial deductible amounts in some cases.
- Medicaid is a government-sponsored plan that is available to low-income freelancers and self-employed individuals. The federal government supports each state in running and funding its own program. While eligibility for Medicaid varies by state, it is usually available to people whose income levels are "up to 133% of the federal poverty level," although some states allow up to 200% of the FPL.
- There is no set cost or pricing for Medicaid (either for freelancers and non-freelancers) since states can "impose copayments, coinsurance, deductibles, and other similar charges on most Medicaid-covered benefits, both inpatient and outpatient services, and the amounts that can be charged vary with income." Premiums can be charged to high-earners (above 150% FPL) and out-of-pocket copayments may be charged for certain prescription drugs. Simply put, the amount paid is determined by individual state policies and the user's income level.
- While there are no challenges faced specifically by freelancers, the general challenges to obtaining health insurance through Medicaid include the long waiting period and the stringent eligibility criteria, which would disqualify high-earning freelancers.
Spouse's Health Insurance
- Some married freelancers join their spouses' employer-provided health insurance plans, either at an additional premium or for free. Also, unmarried freelancers may qualify to join their domestic partners' employer-based plans.
- The cost of this plan may vary based on the employer's plan. Also, payments and rates are on a cost-sharing basis, i.e., the employer may cater for a certain portion of the premium. Experts believe that this is a better alternative than government insurance options.
- The main barrier/challenge that would be faced by freelancers is that entry is subject to approval by either the spouse's employer or the insurance company.
Employer's Health Insurance
- Freelancers also take advantage of the "Consolidated Omnibus Budget Reconciliation Act (COBRA)" program, which requires employers to extend a leaving employee's health insurance coverage for up to 18 months, whether their departure is voluntary or not. However, they are required to pay 100% of the plan's premiums.
- The likely reason why freelancers and self-employed individuals would choose to obtain insurance via COBRA is because it gives them time to transition before having to look for insurance options.
- The cost of COBRA is usually 100% of the cost of the employer plan, plus an additional 2% administrative fee. Therefore, the COBRA plan will cost a freelancer a total of 102% of the plan's total cost. In 2017, for example, COBRA users paid at least $569 and $1,595 for individual and family coverage, respectively.
- The general challenges to obtaining health insurance through COBRA include the 60-day application deadline and the high premiums. Also, COBRA is only available for a limited period.
Parents' Health Insurance
- The Affordable Care Act allows freelancers or self-employed individuals to stay in their parents' plans until they are 26 years old. Individuals can remain on their parents' plans even if they are married, live separately, or are no longer dependents.
- Choosing this option is free since the parents are already paying for the insurance costs. Also, this may be the main reason why freelancers would be attracted to this plan. However, the main challenge is that only younger freelancers may obtain cover since there is an age limit.
Our initial research produced survey reports with information on ways in which freelancers typically obtain health insurance. The research team then leveraged media, industry-focused, and third-party resources to determine specific health insurance covers that would be obtained by freelancers through the aforementioned ways/sources. We found multiple resources discussing the health insurance options that are available to freelancers, whence we managed to get descriptions of the insurance covers. We also found and provided the costs for most of the plans, as publicly available. Notably, the cost of Medicaid and that of joining a spouse's plan are not readily available. This is because the amount paid for Medicaid is determined by individual state policies and the user's income level, while the cost of joining a spouse's plan varies based on the employer's plan and policies.
Unfortunately, it was not possible to find any data on why freelancers/self-employed individuals chose to obtain health insurance in the identified ways, or the challenges to obtaining the covers. Apart from searching through the public domain in the hope of finding media reports with expert sentiments/analyses and/or data from freelancing industry reports/surveys, we also searched through the databases/websites for freelancing companies such as Upwork and Fiverr for any relevant reports. We also explored various freelancing welfare/professional associations such as the Editorial Freelancers Association (EFA) and the Freelancers Union. Our hope was that we would find research reports, surveys, or white papers that would provide the required information. Although we managed to find related statistics on U.S.-based freelancers, including their healthcare needs and concerns, there was nothing on the two subjects of interest.
Regardless, the research team was able to make some assumptions based on the available data. We made assumptions regarding the challenges to obtaining the identified health insurance covers that would be faced by freelancers. For this, we considered the overall challenges, cons, and barriers to entry. In some cases, we assumed that the positive/attractive attributes of the health plans would be the reasons why freelancers/self-employed individuals chose them. Our logic was that freelancers would be attracted to the same factors, or face the same challenges, as all individuals who obtain health insurance through these ways.