How to Get Insured If You’ve Ditched Your 9-5 Job to Join the Gig Economy

No one can agree on who exactly qualifies as a gig worker. The U.S. Bureau of Labor Statistics estimated that 3.8% of American workers–5.9 million people–held “contingency jobs” in 2017. Two Ivy League economics professors estimated 15.8% of American workers were involved in “alternative work arrangements” in late 2015. Upwork and Freelancers Union put the number of American freelancers at 56.7 million in a 2018 report. 

Investopedia defines the gig economy as based on flexible, temporary, or freelance jobs, often involving connecting with clients or customers through an online platform. KPMG divides these online platforms into 2 categories: labor-based platforms that enable workers to provide activities like driving a car (e.g. Uber) or assembling flat-pack furniture (e.g. TaskRabbit); and asset-based ones which allow people to rent or sell unused assets (e.g. Airbnb, eBay).

There might not be complete consensus on what constitutes a gig worker, but one thing everyone can agree on is that being a gig worker has its challenges. One of a gig worker’s biggest worries is figuring out how to get insurance coverage. In the U.S., people are accustomed to having their employers arrange their private health insurance–and often life insurance too. 

For millions of American gig workers, the option of having HR take care of their coverage isn't an option. Being in the gig economy means taking responsibility for one’s coverage. 

Here’s what you need to know:

Health Insurance

The 2010 Affordable Care Act (also known as ACA or Obamacare) made private health insurance mandatory for virtually all Americans, except those eligible for Medicare. Although the 2017 Tax Cuts and Jobs Act removed the penalties for not having private insurance, it’s still a good idea to purchase coverage.  Unless you qualify for Medicare, the only way to protect yourself from expensive medical bills and prescriptions is to obtain private health insurance. 

Ninety-nine percent of American employers offer health coverage to full-time employees, 98% to dependent children, 94% to opposite-sex spouses, and 85% to same-sex spouses, according to the Society for Human Resource Management (SHRM). 

If you’re self-employed (or unemployed, or employed but prefer to select your own health insurance), you have broadly 3 options:

1. An ACA-compliant Marketplace plan. Registration opens between November 1 and December 15 each year.
2. A non-ACA plan, also known as a short-term option. A non-ACA plan is more expensive than an ACA plan and designed to fill in the gaps between enrollment periods.
3. If you live in one of the 39 states that have accepted Medicaid expansion (including Idaho, Nebraska, and Utah, which came into effect in 2019), and you earn up to 138% of the federal poverty limit, you may be able to enrol in Medicaid.

Whether you take up job-based insurance or purchase coverage yourself, you will have to pay for deductibles, co-payments, some drugs, and some other costs. One way to pay for cost-sharing is to set up a health savings account or flexible spending account.

Life Insurance

In addition to health insurance, many organizations offer employees other forms of coverage such as life, pet, and divorce insurance. According to the SHRM, 85% of organizations offer company-paid group life insurance, 80% offer supplemental life insurance for employees, and 70% of organizations offer life insurance for dependents. 

Life insurance has one central purpose: to replace your earnings if you die. A life insurance policy protects your dependents from being liable for any debts you leave behind, such as a mortgage, car loan, or even your funeral costs. 

Life insurance policies can be divided into 2 main categories:

• Term life insurance. As the name suggests, this covers the policyholder for a specific term of 5-30 years. The death benefit is only paid if the policy holder dies during the term of coverage. 
• Whole life insurance. This is a broad term encompassing 3 types of insurance–traditional whole life, universal life, and variable universal life–and there are variations of each type. What all these policies have in common is that they guarantee a death benefit whenever you die–even if you live past 100. Whole life coverage costs more than term life and accumulates a cash value over time.

Home Insurance

The average office worker uses company-issued work equipment. It’s the employer’s responsibility to provide the computer, desk, office chair, and whatever else–and to pay for equipment coverage. Employers pay for countless things employees never have to think about, such as office space, utilities, and parking. Equipment coverage is just another of those expenses.

If you’re a gig worker who works from home, you need to think about coverage. In recognition of the growing gig economy, many home insurance providers now offer an optional add-on for computers and home office equipment. Others offer a broader add-on that covers the home for when it’s used for anything other than living in, e.g. as a home office or an Airbnb residence.

Car Insurance

Motorists in 49 states are legally required to purchase liability coverage, New Hampshire being the only state where it is voluntary. In some states, drivers are also required to purchase personal injury protection (also known as medical payments) and/or uninsured/underinsured motorist coverage. Auto insurers also offer a range of add-ons, such as equipment coverage, gap coverage, and rental coverage.

Like home insurers, car insurance companies have begun offering a new type of add-on for gig workers: rideshare coverage. Rideshare coverage is designed for people who work for Uber, Lyft, or other ridesharing services. Most standard auto policies exclude coverage for incidents that occur when the vehicle is being used to transport paying passengers. Rideshare coverage fills the gap by covering the policyholder when they have paying passengers in the vehicle.

How to Find Insurance in the Gig Economy

The gig economy offers many benefits, including greater independence and flexibility and the potential to earn more than a salaried job. But to be a gig worker, you should also be prepared to put some time into getting insured.

When it comes to health, life, home, and auto insurance, the good news is there’s plenty of competition in the marketplace. Taking the time to go comparison shopping is a great way of finding the level of coverage you need at a price you can afford from the best life insurance companies.