Freelancers and health insurance

http://jenamiller.com/notes-from-a-hired-pen/reader-q-what-do-you-do-about-health-insurance/

by bengarvey • 14 years ago

57 50 14 years ago

This probably applies to start-ups as well. I wonder how many would-be start-up founders changed their minds after realizing they would not be able to afford health insurance without a full-time job.

Reminds me of an article I read last year about how there are more start-ups in Norway because the country has a really wide and extensive social safety net, so people don't have to worry about hitting rock bottom if they quit their job to pursue their own endeavors.

slantyyz2• 14 years ago

I'm lucky to live in Canada which has pretty decent health care, but I looked into supplemental health insurance (for dental coverage, etc) when I started contracting, and the premiums for the services you got were just ridiculous.

The annual premiums were way more than I would ever spend, and I would have to be paid in for three years before I would even get any dental benefits.

I ended up going without supplemental health insurance until I got married, upon which I got coverage under my wife's plan.

msbarnett2• 14 years ago

Who were you getting supplemental insurance through? Blue Cross kicks in dental after a couple of months, from what I recall.

jfb_1973• 14 years ago

Not to make this too political, but this is the big issue no one talks about when discussing healthcare. For many small businesses, providing health insurance is a major cost, and a major distraction from their core business.

Whenever I talk to my conservative friends I try and point this out. Many entrepeneurs with kids who might be out there 'creating jobs' can't because the healthcare industry owns our politicians.

kgrin• 14 years ago

I've said this a few times here, and I'll say it again - I was able to start two businesses in Massachusetts precisely because of the MA health reform, i.e. "RomneyCare" (which, for the underattentive, has roughly the same model as the Affordable Care Act, a.k.a. "ObamaCare").

Anechoic• 14 years ago

As a self-employed Bay Stater, I am in complete agreement. I have a self-employed buddy in Hartford, he applied for health insurance with a CT agent. The questionaire he had to fill out for the application asked if he had ever felt depressed - not diagnosed as clinically depressed, just if he had ever been depressed. Well, as anyone who has ever worked for themselves can understand, it's hard to not ever experience a moment or two of depression. He answered honestly 'yes'; the agent told him that counted as a pre-existing condition and he was denied coverage.

I am so grateful that is something I didn't have to deal with on MA.

dazzawazza• 14 years ago

I'm a UK resident and I've never thought about any of those things, ever. I just take so much for granted.

I just do what I want and know I am covered for everything. We really do live in completely different worlds.

rada2• 14 years ago

I have several friends in the UK and Canada and they tell me that universal coverage is more comparable to the US situation than everyone thinks, for several reasons.

If you are healthy, it's a wash because, well, you are healthy and it makes no sense for you to have health insurance at all, just pay out of pocket for what little you need. If you are sick, it's a wash because there are waiting lists and eligibility requirements, so they (my friends) all choose to carry extra insurance, for which they pay out of pocket, just in case by the time they are able to get that fancy heart surgery, they may no longer be alive.

What is your take on that?

Edit: Curious that all the responses so far are all about money. Surely going bankrupt beats dying because you never got that life-saving surgery on time?

A less dramatic example: I just had a wrist fracture. According to google, if I were a Canadian or a Brit, I would have had to walk around with a broken wrist for roughly 2.5 months (official average wait times).

I am not saying the US healthcare system is not broken. Of course it is. I am just saying universal coverage is not all it's made out to be either. At the end of the day, if you want good healthcare, you have to pay.

beagle3• 14 years ago

If you are healthy and rich, it makes no difference.

I've known quite a few freelancers and unemployed people in the US who had no insurance because they couldn't afford it (and, in the pre-obamacare days - because no insurer will take them).

The big difference becomes visible when something in your condition changes. Lost your job? in the US, you lost your coverage (COBRA[1] is only partially a solution). Found a new job, but had a pre-existing condition? too bad, you didn't get into the new healthcare plan. (Obamacare is solving that now, after a few decades)

Part time employee in a low wage job? You're unlikely to have had health insurance until recently.

Switched jobs? You're likely to have to switch your doctor, because your old doctor / hospital is not on your new network.

I've heard people in the US complain about pains and then say "but it's not horrible enough for me to go to the doctor - I can't spend the $150 right now". That's unthinkable in universal healthcare systems.

mseebach• 14 years ago

The state of US healthcare is certainly detriment to meaningful debate of reform.

muhfuhkuh• 14 years ago

The difference is that there aren't 1 out 6 people (50 million) without health insurance in the UK and Canada. Another difference is that no one in the UK or Canada would ever have to go bankrupt trying to get that "fancy heart surgery" or "fancy cancer treatment" or "fancy kidney transplant".

"just in case by the time they are able to get that fancy heart surgery"

And, the 50 Million people who could never, ever hope to get that fancy heart surgery because they can't afford the surgery or the insurance (or don't qualify)? What of them?

Saying they are comparable in any way except "doctors perform treatment on patients in a licensed and regulated manner" is reaching.

pessimizer3• 14 years ago

>it's a wash because there are waiting lists and eligibility requirements

It's not quite a wash, because you don't lose your home and your kids don't have to drop out of college if you can't afford insurance and you get sick.

For people who want private rooms and immediate service, added insurance seems perfectly reasonable.

>by the time they are able to get that fancy heart surgery, they may no longer be alive.

This will always be the case, no matter how much insurance you buy. There's no plan yet that brings the dead back to life.

wmeredith• 14 years ago

I'm US resident. I'm the Project Manager at a small web development/design agency with 7 healthy males under 45. My premiums are $748/month to insure my family (I'm married with 1 child). It is a "health savings account" plan with no copay. The deductible is $5,000k out of my pocket, then it covers everything. I can put pre-taxed money into a health savings account to use on expenses up to my deductible. I put $200/month into it.

So... I pay $948/month for health insurance for my family. I can buy a middle class home (I'm in Kansas City) for that kind of monthly investment.

I've investigated other options multiple times and this really is as good as it gets for us without switching to a big corp job.

ereckers• 14 years ago

From the post: "If you cannot afford health insurance, you cannot afford to freelance."

I'd say that's true (in the US). Health insurance is just but one cost of working for yourself. Since freelancing, I've found that I've been bumping my deductible up over the years to keep up with the 15% YOY price increases, but it is what it is, "catastrophic" insurance. I'm definitely not covering acupuncture.

One thing I always wished there were was a pool for sole proprietors, which would allow you to negotiate better terms, just as if you were a large company.

It's starting to look like this might be part of ACA with the creation of state run exchanges, or at least I hope that's a possibility, so it will be interesting to see how that turns out.

jsiarto7• 14 years ago

I always thought this was a smart idea. Lump all the single biz owners together and buy coverage as a mega-group. That makes way too much sense to be considered...

count• 14 years ago

What's wrong with this idea? I figured that's how many folks did it?

rwhitman2• 14 years ago

Health insurance for healthy people without kids shouldn't be a deterrent to freelance. Self employed health insurance is generally relatively affordable and easy to get, provided you are in good health and don't have any dependents.

If you have kids or health problems it might give pause but there are options - you need to attempt to get on a group health plan of some sort. Here in NYC we have freelancer's union but a little known trick I learned recently is that in most cities you can actually use the health insurance plan associated with your local chamber of commerce, which they offer as an enticement to joining.

rwmj• 14 years ago

This is such a silly thing to have to worry about. You're starting a company but first you have to spend a day or two along with a bunch of money finding a group health insurance plan (whatever that even means).

When I started a company in the UK, I didn't have to consider this.

TheHegemon• 14 years ago

You're starting a company but first you have to spend a day or two along with a bunch of money finding a group health insurance plan (whatever that even means).

I wish it were that easy. You also have to figure out if there even any doctors nearby that will accept your insurance.

We currently have to drive around 30mins-1hour to take my newborn to the doctor, and of course only during work hours.

You also have to deal with the fact that insurance companies mess up, a lot it seems. We've had to deal several times with our insurance mistakenly denying coverage and have to fight tooth and nail just to get them to pay it.

It's incredibly alarming to come to a $9000 bill in your mailbox because someone accidentally put the wrong ID number while typing.

Spoom• 14 years ago

Health insurance coverage, primarily for my wife, is one of the biggest reasons I have a full time job right now instead of expanding the contracting I was doing previously or trying to start a business. For various reasons, she is nigh-uninsurable, and she's working two part time jobs, which of course offer no health insurance whatsoever. When I was contracting, we had two separate private insurance policies, with a combined deductible of something like $6,000.

The bolded point at the top of the article is absolutely true: If you cannot afford health insurance, you can't afford to freelance. I often wonder if being shackled to a job by the specter of being uninsured isn't built into the system on purpose.

jsiarto7• 14 years ago

"I often wonder if being shackled to a job by the specter of being uninsured isn't built into the system on purpose."

I've often wondered this too. It just seems so asinine that we tie healthcare to the employer--it's bad for employers and employees.

Dove3• 14 years ago

I don't think it was intentional. My understanding is that getting health insurance through your employer became a major thing when wage controls during World War II prevented employers from competing on salary. It remains a major thing because it enjoys a status as non-taxable income (also dating from World War II).

But even if it was accidental, it is morally perverse. For anyone with a serious illness, you can turn the statement around -- "You can stop working for me, but then you won't be able to get the medicine you need" -- and it sounds a lot like slavery.

One of the things that's perverse about it is that medical "insurance" is handled on a monthly basis, rather than on a per-diagnosis basis. Think about how insane that would be in another field. What if car insurance paid for things on a monthly basis rather than a per-accident basis? What if life insurance worked per-month rather than per-death?

My dream health insurance plan would insure me against the possibility of getting cancer -- and if I was diagnosed with it, it would be their responsibility to cover treatment, not just in any month in which I paid my premiums, but for the lifetime of any disease discovered while I was current on the plan. My dream health insurance plan would be willing to help me insure against variations in the cost of treatment for pre-existing conditions, but for conditions I truly couldn't pay for, would refer me to a charity.

I'm of the opinion that the misalignment is a result of businesses trying to keep employees healthy rather than the natural result of individuals mitigating risk.

The link between health insurance and employment needs to be severed yesterday.

rwhitman2• 14 years ago

I really feel this way as well. Its as if the system is designed specifically to punish self-employed workers.

pessimizer3• 14 years ago

I absolutely think that the system is preserved that way to keep down wages, but has the perverse systemic effect of lowering labor liquidity. There's no lobbying group for labor liquidity, though.

jsiarto7• 14 years ago

This is absolutely true! I believe that the current structure and cost of healthcare in the US is one of the largest detriments to entrepreneurship. This is never brought up in political debates and is rarely talked about in media. Before the ACA, providers would deny people applying for individual coverage for the silliest pre-existing conditions and once you were denied, you wen't getting healthcare anywhere (black list).

This was a huge struggle for me early on in my career--and it wasn't until our company had a group (3+ people) that would could affordable plans. Even then, we were paying over $1000/mo to insure 3 healthy 26-year-olds.

You can read more about my story here: http://thecreativecareer.com/2009/03/30/us-healthcare-system...

EDIT (In case the above is TL;DR):

"This means that many entrepreneurs and innovators—those of us paving the way on our own—are left with costly insurance or no insurance at all. Because of the limited choices for affordable healthcare, the decision to become an entrepreneur looks increasingly less attractive. Even if an individual is to secure an individual policy, the rates will be higher, and the coverage will be less than policies available through an employer."

mw63214• 14 years ago

I've always thought it would be cool to have employers offer "MAKEation" days instead of vacation days. This would be time accumulated to take a month, a quarter, or even a year off to build your own product/service/dream. The company offering this would also provide mentors, resources, and periodic sit-downs to discuss investment into your new product/service/dream. You maintain your insurance throughout this time also. When you return to work, instead of having a meeting to "be brought back up to speed", you discuss with managers how to integrate your new business into the company, what you learned, and then make a presentation to the rest of your business/department. The idea being that every business can be it's own incubator of sorts. I would imagine this would attract top talent to your company, allow for new sources of revenue, keep your business fresh, and promote innovation among those that might otherwise be more risk-averse.

msbarnett2• 14 years ago

"In addition to" vacation days, I could see it, but in lieu of? No thanks.

Taking time away from work is an important part of my mental health. The last thing North American culture needs is another way for corporations to replace leisure time with yet more work.

zzzeek• 14 years ago

http://freelancersunion.org/ ?

That's what everyone in NYC uses, at least. I've been on and off of it for years without any issues, definitely the cheapest option here.

Dove3• 14 years ago

It's not health insurance, but for day to day health care, anyone in Seattle paying their own way should consider http://www.qliance.com . Together with a (very) high deductible plan, I was able to get insurance and primary care for myself at around $100/mo.

The main selling point is the excellent access to care, though. When your time is money, you don't want to be bouncing around between three doctors for a month to treat an allergy that prevents you from sleeping. When I was on Awesome Traditional Insurance when I worked at BigCo, it sometimes took over a week to diagnose and treat a simple problem that was preventing me from working. With Qliance, I've gone from call-with-problem to prescription-and-plan-in-hand in under 3 hours. That's a big deal for a freelancer.

I understand there are other organizations around the country functioning on a similar model. You can google Direct Primary Care to find them.

jsiarto7• 14 years ago

What happens if you get really sick (cancer, etc.) or hit by a bus?

klbarry• 14 years ago

For a young person, improbable illness is probably best handled by bankruptcy.

Dove3• 14 years ago

That's what the high deductible plan is for. You pay your (in my case, $11k) deductible, and everything else is covered. Set your deductible according to what you have in the bank and what you're comfortable losing.

Of course, if that happens, your startup is probably going to be on hold, too. And that will be the least of your worries. ;)

My point in advocating Qliance is that it makes the sort of care you'll probably actually need -- you know, annual physicals, broken toes, vaccinations, "help, doc, I can't sleep" -- really cheap compared to trying to get that stuff done on a traditional plan.

Your other options are (A) get a comprehensive insurance plan, which in my case would be $300/mo instead of $50, (B) pay for primary care visits yourself, at over $100 for a week's wait and a 15-minute visit that ends in a referral, or (C) ignore health problems.

Those are all really expensive. I'm saying if you're paying for your own health care, you should do the efficient thing. Having a primary care physician on retainer for $60/mo is fantastic for your health and peace of mind, and pays for itself the first time you use it, in time saved alone.

mistercow2• 14 years ago

This article rests on a potentially false premise: that you are likely to find a job that provides health benefits in today's economy.

jsiarto7• 14 years ago

While this is true--any skilled position at a major employer will offer health coverage. I have a full-time staff of 3 people. If I didn't offer health insurance, I'd have a full-time staff of 0.

EDIT: Hell, if I didn't offer health insurance, I wouldn't work for me...

mistercow2• 14 years ago

And whether you can get a "skilled position at a major employer" depends heavily on where you live and the job market there as it applies to your skill set. Remember, the current job market is such that we have people with college degrees leaving them off their resumes when they apply to jobs so that they aren't rejected as "overqualified".

ryanwaggoner• 14 years ago

Important! Overall a good piece, but one glaring inaccuracy: if you are self-employed in the US, you can deduct your health and dental insurance premiums without needing to reach the 10% of gross income threshold. The 10% threshold [probably] does apply for health care costs other than premiums [1]. Assuming family premiums of $1k / month and a marginal tax rate of around 40% (which may be low after state is taken into account), being able to deduct your premiums is worth about $5k / year in tax savings, so this is not a minor detail.

Source: http://www.irs.gov/publications/p535/ch06.html#en_US_2011_pu...

1. Depending on whether you setup an entity through which you do freelance work (and what type), you may be able to setup a plan that allows you to pay for healthcare expenses with pre-tax dollars, even if you don't reach the 10% threshold. See your friendly CPA for details.

Vivtek• 14 years ago

Itemization is where you can deduct out-of-pocket if it gets high enough, but you are correct.

ilaksh• 14 years ago

The reality is that its not as easy as that.

Its not like "oh well, I can't be a freelancer because it doesn't provide healthcare, so I guess I am forced to just take that $90,000 a year job with full benefits."

The reality is, and I know I'm not the only one, that it can be much easier to find "freelance" or "contract" work than full-time employment with full benefits. And the alternative can often be zero income, because unemployment insurance doesn't cover a lot of circumstances, and it really doesn't apply (or shouldn't) when you can easily pick up a "freelance" or "contract" job.

The closest thing to 'full-time with benefits' that I have had (recently) has been 'contracting' jobs through staffing agencies, and there were no useful health benefits. Actually they had sort of a token health insurance, but it wasn't good for anything.

My health condition makes it harder for me to pick up and stick with one of these supposed full-time with benefits jobs that would probably be huge a waste of time anyway. I have a startupy idea and sort of a businessish that I am working on, and they are just much more useful ideas than most jobs I could pick up. And almost all of the most joblike jobs I have ever had have involved bosses who didn't know what they were doing wasting my time, office politics, and usually a few completely useless coworkers who I couldn't stand.

So I have been doing the "freelancing" thing, and even though the budget for this latest project basically has been on fumes for many months and I have to work for peanuts and can't afford healthcare, if I did manage to find a regular "job" after we get our new version into production, I don't think that would really be a win. It would suck all of my energy and time out just to support some asshole's lavish lifestyle on the basis of what would (odds on) just be a business based on some spammy bullshit marketing hacks or some other way to suck money out of the economy without providing any real benefit or innovation. Literally the only reason I would do that would be to take advantage of the healthcare after X months, assuming it somehow covered pre-existing conditions.

My hope is that the next day gig will have a better budget, and also that I can finish the startupish thing and that will provide money for me in a way that is not a waste of my time and allow me to eventually get rejected for health insurance and then reapply to the other California program and then get the insurance and then finally get my Nissen fundoplication.

sirmarksalot• 14 years ago

"I live in New Jersey, which is a fair coverage state, so I’ve never had to deal with being rejected from a plan because of pre-existing conditions."

This is a huge omission. If you don't live in a fair coverage state, you have a high chance of being ineligible for individual health coverage based on preexisting conditions. Preexisting conditions include migraines, depression, and benign conditions with scary-sounding names, like "subaortic stenosis." There was a Planet Money interview recently with an insurance broker who generally rejected 50% of applicants. Granted, this selects for people who think they need health insurance, so the actual number may be a bit lower, but it still stands to reason that a large number of people are getting denied coverage.

If you don't fit the platonic ideal of "healthy," you may have no choice but to work for "the man."

filth• 14 years ago

Starting in 2014 it will be far cheaper for many to pay the health insurance tax and enroll for coverage as necessary.

zerohp• 14 years ago

I'm leaving my job in 2 weeks. I'm planning to get insurance through ACM if it's cheaper than COBRA.

http://www.acm.org/membership/insurance

Freelancers and health insurance

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