How the Senate’s health care bill would impact freelancers

Unless you’ve been on quite a bender of a deadline, you’ve probably heard that the Senate is discussing new legislation that would dramatically impact health care in America.

What does it mean for you, the freelancer?

Here’s an explainer:

Freelancers who purchase insurance in the individual market

Currently, the Affordable Care Act (also known as the “ACA” or “Obamacare”) provides subsidies for people who are purchasing insurance on the open market who earn less than 400% of the federal poverty line ($47,550 for an individual or $97,200 for a family of four).

The proposed Senate bill would only provide tax credits for those earning 350% of the federal poverty line ($41,580 for individuals and $85,050 for a family of four), and would only kick in those subsidies toward a less generous health plan.

Patients would be expected to contribute more of their income toward their health insurance before receiving tax credits, and the proposed bill would also tether these credits to less generous plans.

Those who are under the poverty line would be newly eligible for tax credits.

Freelancers who purchase insurance on the individual market but don’t receive subsidies

Individual plans on the open market may also change because the Senate bill includes a provision to allow states to opt out of ACA provisions to provide certain types of health care, including Essential Health Benefits, which require health plans to cover certain services like maternity care and prescription drugs.

Because the Senate bill also eliminates the individual mandate that requires everyone to purchase health insurance or pay a fine (it replaces it with a “lockout” period for people who forego insurance), in theory this could allow younger and healthier freelancers to purchase cheaper, skimpier insurance plans or forego coverage entirely without having to a pay a fine.

But older and sicker freelancers may find that they would have to contribute more to their care, especially since the lack of an individual mandate may cause more younger, healthier people to forego insurance, which could drive up costs for the people who do have insurance and then cause more people to drop out. Freelancers who live in rural areas may also be more likely to experience high premiums and coverage gaps.

Overall, the Congressional Budget Office estimates that average insurance premiums would decrease by about 20% by 2026, primarily through skimpier plans with higher deductibles, and because older and unhealthier individuals will have been priced out of the market. But in total, Americans would end up paying more in health care overall due to the higher deductibles and fewer covered benefits.

Freelancers who receive insurance through Medicaid

The ACA expanded Medicaid to anyone below 138% of the poverty line in the 31 states who chose to participate in the expansion. The federal government pays at least 90% of the state’s costs to expand coverage.

The Senate bill would reduce this spending starting in 2021, to 75% of the state’s cost by 2023. It would also cap federal Medicaid spending on a per capita basis and expand overall Medicaid spending more slowly, rather than the current system, which is more open-ended.

The Congressional Budget Office estimates that this reduction in funding would result in 15 million fewer people having insurance through Medicaid by 2026.

Freelancers who make over $200,000

The Senate bill would eliminate some taxes imposed by the Affordable Care Act, including a 0.9% payroll and self-employment tax cut on those making more than $200,000 and a 3.8% tax on investment income for those making more than $200,000.

Freelancers who have insurance through their employer or spouse’s employer

While the bulk of the healthcare changes in the Senate bill are oriented toward the individual market and Medicaid, freelancers who have insurance through their employer or spouse’s employer may still experience changes in their coverage. This is because the Senate bill would allow states to opt out of a provision that prohibits private insurance plans from imposing annual and lifetime limits on the amount of coverage they provide.

The bill also eliminates a penalty for large employers who do not provide coverage to their employee, which may result in fewer companies offering health insurance as a benefit. The Congressional Budget Office estimates that 4 million people could lose coverage as a result.

Freelancers under 26 who are covered under a parent’s plan

The Senate Bill keeps a provision that allows individuals to stay on their parent’s plan until they’re 26 years old.

Feel strongly about this bill? Call your Senators

This bill still has a ways to go before it becomes law, which means it’s up to freelancers everywhere to let our leaders know that we need better benefits solutions for the independent workforce.

Freelancers need to be able to retain coverage as we go from gig-to-gig. We need coverage that is affordable and provides value. We need to be able to form groups, outside of the traditional employment structure, to engage on the market.

Employers have figured out how to achieve economies of scale by grouping their employees, and it’s time to allow freelancers to do the same thing by linking together in groups run by institutions that understand our needs. Furthermore, these institutions should function not for profit, but for the people they serve.

Right now, we have an opportunity to call our representatives and let them know that the freelance workforce is 55 million strong, contributes $1 trillion to the economy, and needs a better way to build a social safety net. Let’s make our voices heard.

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