Healthcare is an ongoing conversation in the US. Unfortunately, until very recently those conversations have centered largely on how to connect traditional employees with quality healthcare through their employers, keeping these benefits tethered to specific types of work. But what about health insurance for freelancers who regularly move between jobs? Currently, they’re solely responsible for finding affordable healthcare in the public market, which is only getting more difficult. But how would things change if these workers could have portable benefits that traveled with their careers?
The freelance workforce is picking up steam, becoming a greater share of overall employment every year, and fortunately, lawmakers are paying attention. Senator Mark Warner (D-VA) \ introduced legislation last year that would create a $20 million fund to experiment with portable benefits. Though this legislation has stalled, there are others making their way through state houses across the country. These reforms could not only provide better health insurance for freelancers, but also better benefits for everyone.
What are Portable Benefits?
Essentially, portable benefits are health, retirement, or other benefit plans that move with employees as they switch jobs or change projects. This concept already works when it comes to Social Security. Employees pay into that system for retirement, and it’s always maintained by the federal government. There are many different programs across the country trying to expand this to other areas of employee benefits.
Oregon recently began a portable IRA program – called Oregon Saves – that allows workers to automatically deduct 5% of their earnings to put into a private retirement account. The state acts only as a pass-through entity, with fund ending up in private, low-cost funds. Washington State is also experimenting with diverting contributions to non-profit benefit providers, where these funds can cover not only retirement but also health insurance and other benefits. New York and several other states are also working towards providing paid family leave and sick time across the board. So though federal legislation might have failed, states and municipalities are moving forward.
A Gray Area for Businesses
While many groups support the concept of portable benefits, the finer details are still arguable. For instance, companies worry that if they pay into a system for portable benefits, then it could make them vulnerable to claims that hired contractors are actually employees. Of course, a potential solution could be to create a mandate that simply explained that the employer was pre-paying into a portable system for individuals who are solely contractors and not employees. As with any legal issue, the language would need to be completely explanatory.
The workforce is undoubtedly changing, and it’s time to create a benefits system that works for all workers and not a select few. This legislation could be the answer so many people have been waiting on.
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