Health Insurance and California’s Gig Economy
The Golden State has more than 1.4 million workers who receive their primary or supplemental income as gig workers. They might love the moment-to-moment freedom of being self-employed, but one thing most don’t love is the challenge of accessing affordable health insurance.
Where and how do they find affordable freelancer health insurance in the gig economy? Is there such a thing as rideshare health insurance?
The state has answered those questions with Covered California for gig workers, but you have to know whether you qualify and how you can obtain coverage. Read on.
Understanding California’s Gig Economy and Health Coverage Landscape
Gig workers are self-employed and are often known as independent contractors or freelancers. Examples of gig workers can range from freelance writers and graphic designers to dog walkers, tutors, and those who earn income through app-based jobs.
That last category includes those who make money as rideshare drivers for Uber or Lyft or food couriers for web-based companies like Instacart or DoorDash.
The one thing all of these workers have in common is that they’re not employees of the company or companies that pay them. They work for other brick-and-mortar or web-based companies on an as-needed or on-demand basis.
Being self-employed, gig workers don’t participate in any employer’s group health insurance plan. They must seek and buy coverage on their own. By not being a part of a larger pool of covered workers and not having a portion of their coverage paid for by an employer, the cost of coverage can be prohibitive.
That’s why it pays to understand Covered California. This program offers gig workers affordable coverage via a health insurance marketplace established under the federal Affordable Care Act (ACA), more popularly known as Obamacare.
Lower-income Californians who don’t have coverage through an employer or other government program can get quality coverage, including dental and vision, for very low premiums. It will often cost only a few dollars a month, and in some cases, your policy is even cost-free. The rates are set according to your ability to pay.
Covered California can be an ideal solution for gig workers who are considered to be self-employed and not part of any employer-sponsored group plan.
Deciphering AB5 and Its Impact on Health Insurance in California
When is a gig worker not a gig worker? That’s the question the State of California hoped to answer with Assembly Bill 5 in 2019. State lawmakers felt there were too many companies calling too many of their workers independent contractors rather than employees. The motivation for such a move is that the companies would not have to pay taxes or benefits, including health insurance, to workers who aren’t employees. State lawmakers felt some businesses were abusing that relationship.
What AB5 set out to do was precisely define what an independent contractor relationship is — and isn’t. By definition, it was determined that rideshare drivers were actually employees of companies like Uber and Lyft, not self-employed contractors. Therefore, they’d be eligible for company group health plans and other employee benefits.
But that determination only lasted until Proposition 22 hit the state.
Grappling With Proposition 22 and Its Effect on the Gig Economy
As a result of AB5, rideshare companies threatened to close their operations in the state rather than having to assume the cost of defining their drivers as employees rather than self-employed independent contractors.
This led to a 2020 statewide ballot initiative known as California Proposition 22. The vote was whether to exclude app-based employers such as Uber and Lyft and food courier companies such as Instacart and DoorDash from the AB5 ruling that would define their workers as employees.
The companies won the vote. As a result, many workers who might have received group health coverage and other employee benefits through AB5 lost that possibility in 2020. That’s why Californians who get their work as needed through app-based employers must still be responsible for getting their own healthcare.
One benefit that rideshare drivers received through Proposition 22 became known as the Uber healthcare stipend. This was an amount of money that the rideshare companies must give their eligible drivers to help pay for their Covered California healthcare premiums.
Covered California maintains its position as a resource of critical importance to gig workers in the state.
Finding the Right Health Insurance Plan as a Gig Worker in California
If you’re a self-employed independent contractor who must purchase your own health insurance, you’ll find Covered California to be an ideal solution. At Acceptance Insurance, we can help you enroll in Covered California – your application will tell you if you are part of the 1 in 5 Californians who is eligible to receive free healthcare. Our agents will walk you through the process easily and there is no cost for this service.
Covered California Open Enrollment and Special Enrollment
You can apply to Covered California at any time to find out if you qualify for Medi-Cal, California’s free or low-cost health insurance. To receive benefits through the marketplace, which may also be very low cost depending on your income, you must apply during Open Enrollment (OE), which typically runs from the end of October through January.
If you miss OE, there are many reasons you could qualify during Special Enrollment, which runs the rest of the year.
Learn More About How Acceptance Insurance Can Help You With Health Insurance in California
We’re here to answer all of your questions and help independent contractors find affordable health insurance for themselves and their families. Simply call Acceptance at 877-423-1534 to find a knowledgeable independent insurance agent with experience serving the unique insurance needs of gig workers like you.
FAQ: Health Coverage Insights for California Gig Workers
Here are answers to a few of the most commonly asked questions regarding how California gig workers can find and access affordable health insurance. You’ll find answers to more frequently asked health insurance questions here.
What Constitutes a Gig Worker in California?
In general, a gig worker is an independent contractor or freelance worker. That means they’re self-employed, and the companies that give them work are their clients, not their employers.
Unlike an employer, the clients hiring gig workers will turn in a 1099 tax form to the IRS, not a W-2. While an employer will withhold taxes and offer benefits such as group health insurance and paid time off, a client only pays the gross amount of income earned, leaving the gig worker with the responsibility of paying all taxes and buying their own healthcare policy.
How Do Gig Workers Calculate Their Income for Health Insurance Applications?
It can be tricky. But in order for the state to be able to calculate what you’ll be charged for your health policy (or if you qualify for reduced or free coverage), you must provide an estimate of the income you’ll make that upcoming year of coverage. One strategy you might consider is averaging what you’ve made in several recent months and using that average to project a 12-month estimate for the upcoming year.
Don’t worry if that number is off. You can change your estimate on your account page at any point if you see that your actual income is turning out to be much higher or lower than your estimate.
What Should Gig Workers Know About COBRA Continuation Coverage
While some Californians become gig workers by choice, others fall into that employment category because they lose their jobs with conventional employers. In addition to the job loss, you might have also lost affordable health insurance that you and your family held through that previous employer’s group health plan. COBRA is a federal law designed to help such ex-employees.
COBRA states that employers with 20 or more employees must offer their group insurance plan to former employees for up to at least 18 months, or longer in some situations. However, the former employer doesn’t have to pay for a portion of the coverage, as was most likely done when the worker was employed at the company. That means that COBRA coverage will likely be more expensive than your premiums as a company employee, but it might cost less than you’d have to pay for solo coverage as a gig worker.
California passed a law called Cal-COBRA that works the same way as the federal law but covers workers who used to work for companies with between two and 19 employees (with the federal law addressing employers with larger workforces).
Where Can California Gig Workers Find Support in Selecting the Right Health Plan?
Call the bilingual and professional agents at Acceptance. We will provide you with information on affordable coverage options for Californians of all income levels, including the self-employed. You’ll also be able to enroll for your chosen healthcare plan.
As a California gig worker, you’ll find help and guidance through a knowledgeable independent health insurance agent at Acceptance Insurance.
