The simple guide to freelancer insurance and other benefits. 

When deciding whether to go freelance, one of the first things that many consider is access to benefits. Where can you find an affordable health care plan, how much will it cost, and what type of coverage is available? Nearly half of freelancers in the U.S. report difficulty accessing health insurance. And if you’ve never paid premiums out of pocket, it can be surprising once you tally up the cost. 

One of the ways to access benefits like health insurance as a freelancer is by working with a staffing agency as a W-2 employee. However, before accepting an opportunity, it’s helpful to understand the differences between a W-2 freelancer and an independent contractor, what to consider when evaluating benefits, and how to move forward with fewer surprises.

W-2 freelancer vs. independent contractor: who qualifies for benefits?

Your classification as a W-2 freelancer versus an independent contractor plays a large role in how you access benefits. When working with a staffing agency as a W-2 freelancer, you’re an employee of the staffing company. The staffing agency withholds taxes and Social Security and may also offer a comprehensive benefits package.

However, not all packages are the same, and agencies have flexibility in when and how they provide benefits. For example, eligibility might depend on the average number of hours worked each week or the length of the assignment. In contrast, independent contractors aren’t classified as employees and are responsible for paying their own taxes and providing their own benefits.

So, when you receive an offer from a staffing agency, one of the first things to explore is your classification—W-2 or independent contractor—along with your access to benefits and the quality of those benefits.

Understanding your freelancer insurance options

When considering a W-2 freelance opportunity with a staffing agency, it's essential to carefully evaluate the health insurance benefits offered. Don't just assume all “benefits packages” are created equal. To make an informed decision, you need to understand the specifics of the coverage, including the types of plans available, eligibility requirements, and any associated costs. Let's break down the key factors to consider:

Coverage and eligibility

When evaluating health insurance as a freelancer, it's important to understand the different types of coverage available. Many staffing agencies offer Minimum Essential Coverage (MEC) plans, sometimes called “skinny plans,” to meet the basic requirements of the Affordable Care Act (ACA). These plans are generally more affordable, which can be appealing to both freelancers and the staffing agency. However, MEC plans typically only cover preventive care, like annual checkups and immunizations, and may not cover unexpected events like injuries or illnesses. They may also have limited prescription drug coverage.

Some staffing agencies go beyond these minimum requirements for freelancer insurance and offer more comprehensive Major Medical insurance plans. These plans provide broader coverage, including hospitalization, surgery, and emergency care. However, there's often a catch. Agencies may require you to meet certain eligibility requirements, such as working full time or for a specific duration (like 12 months) before you qualify for these plans. This can be a barrier for freelancers seeking shorter-term assignments.

Fortunately, some agencies recognize the need for flexibility. Aquent Talent, for example, offers Major Medical insurance even for short-term and part-time assignments. This provides a valuable safety net for those who require comprehensive coverage without being tied to long-term assignments.

Premiums and deductibles 

Take a close look at the cost of the freelancer insurance plans and what you’re getting for the price. A low-premium plan might seem appealing, but it could come with extremely limited coverage. Even if you’re young and healthy, unexpected injuries—like breaking an ankle—require care that a skinny plan might not cover. When comparing plan costs, ask agencies if they offer a subsidy, which helps offset the cost of your monthly premiums. Aquent Talent, for instance, offers a subsidy toward health insurance for every hour worked.

Eligibility for benefits can vary—many agencies require full-time hours, but some agencies offer coverage even for part-time roles.

Additional benefits considerations

Beyond health insurance, consider additional benefits like flexible spending accounts, paid sick time, and retirement plans. For retirement plans, does the agency match your contributions? If so, are you 100% vested right away, meaning you can take the matched funds with you at any time? If not, the employer match might not be as valuable since you’ll lose some of the match if you’re not fully vested before your assignment ends.

You should also ask about paid time off for vacations and holiday pay. Does the company shut down for two weeks during the winter holidays? If so, will you be compensated, or will you have to take the time unpaid? Every contract is different, so it’s important to clarify these details.

Consider if an agency matches retirement contributions and if you're 100% vested from day one.

Taking control of your benefits as a freelancer

Many freelancers want to focus on the work they enjoy, often with the added flexibility freelancing provides. Working with a staffing agency lets you do that while solving one of the biggest challenges: accessing freelancer insurance and other benefits. Understanding the classification of a new role and getting a clear picture of the benefits package can help you make a more informed decision for your next opportunity.

Do you want more guidance on evaluating your next freelance job offer? Check out our comprehensive guide.

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