Individual and Family

Will a Gig Economy Job Offer Health Insurance?

Published on May 21, 2018


The gig economy refers to the growing number of people who work as contract and freelance workers. Some common examples might include drivers for ride-sharing services, contract software developers, and freelance writers. Very often, a third-party website or mobile app will connect remote workers with employers. However, some freelancers may work directly for clients or work through more traditional temporary agencies.
The simple answer is that when working a gig economy job, you’re probably working on a gig by gig basis, and are considered a contracted worker—which means the employer is not required to offer you health insurance. Companies don’t qualify these workers as regular employees and will report earnings with a 1099 tax form instead of a W-2. In most cases, these workers cannot expect gig economy health insurance or other employee benefits from their employers. At the same time, these freelancers can still buy various kinds of self-employed health insurance from many health insurance companies.

What to know about the gig economy 

The Bureau of Labor Statistics says that it cannot supply one legal definition of the gig economy. The government loosely defines it to describe situations where workers get paid for tasks or projects and can work for multiple employers. Some examples of industries that have increased the number of freelancers that they rely upon include creative work, transportation, and technology.
These are important things to understand about the gig economy:

  • While some definitions of gig economy employees may include the type of control that employers can exert about how work gets done, in reality, the difference between a W-2 or 1099 employee often comes down to an agreement between the employer and employee, according to CNN Money.
  • The Analysis Group, an economic and financial consulting company, estimated that as many as one out of every six workers had this kind of non-traditional employment arrangement. They mention that this kind of arrangement can benefit workers by offering them flexibility, but many gig economy employees have concerns over such benefits as self-employed health insurance.
  • In most cases, members of this growing class of workers have to get gig economy health insurance on their own. Even though they don’t work for an employer who offers them group benefits, they still may have to pay an Affordable Care Act (ACA, or Obamacare) tax penalty if they lack qualified medical coverage in 2018. On the other hand, people who need gig economy health insurance might also qualify for tax credits that can defray some of the cost of Obamacare premiums.

Types of gig economy health insurance plans

Gig economy employees have choices they can make about the type of self-employed health insurance that will serve them best. As with other kinds of insurance, workers should consider costs, benefits, and in some cases, how different options can impact taxes.
A previous eHealth article about gig economy health insurance noted these common sources of coverage:

  • Obamacare offers self-employed health insurance with mandated benefits. In addition, some workers will qualify for tax credits and deductions that can offset premiums. These qualified gig economy health insurance plans will keep insured people from paying the ACA penalty for not having qualified coverage.
  • People who just need temporary gig economy health insurance might consider short term health plans that usually last from one to three months. These affordable, temporary health plans won’t provide a penalty exemption on their own, but they can offer a good alternative when it’s not possible to get an ACA health plan.
  • Some people rely upon medical insurance packages that can help limit liability for a variety of health costs. Medical insurance packages also won’t qualify as self-employed health insurance coverage under the ACA, but they can help pay doctors, dentists, and even hospitals.

Can employers offer self-employed health insurance?

No law prevents employers from offering 1099 workers access to their group health insurance plan. Some businesses could even benefit from extending coverage to contract or freelance workers. Since laws don’t force employers to offer any gig workers benefits, companies could select those contract employees who they have a consistent relationship with. The employer also doesn’t have to offer to pay part of the premium.
Employers may decide to offer gig economy health insurance for a few reasons:

  • Businesses may hope to encourage good freelancers to remain available.
  • Some small companies may need these additional people to qualify for group coverage.
  • In some cases, adding more employees or younger employees can help businesses negotiate for cheaper premiums.

Where to buy gig economy health insurance

Freelancers have plenty of options when they want to buy gig economy health insurance for themselves and their families. The quote system at eHealth can display multiple premiums and plans within seconds for self-employed health insurance, medical packages, short-term medical plans, dental coverage, and much more. Small employers who want to consider offering gig economy health insurance to contract and freelance employees can even research group health plans.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

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