The perks of working as a freelancer are self-evident: You can set your own hours, work wherever you like and be your own boss.
Among the complications, however, is the fact that contract laborers rarely have access to the benefits many employees take for granted. That means freelancers have to find and purchase their own health insurance, set up their own retirement funds and grapple with taking unpaid vacation and sick days.
Many freelancers don’t seem to mind: 70 percent said they’d rather buy their own benefits if it means taking home more pay, according to a 2017 survey of 6,000 people commissioned by Upwork, a freelancing platform, and Freelancers Union.
Yet, in response to a different survey question, 35 percent indicated that they hesitate to freelance full time precisely because they want to keep the benefits their employers offer.
There’s some effort to increase the safety-net options for freelancers. In 2017, senators and representatives introduced into Congress a bill, titled ” Portable Benefits for Independent Workers Pilot Program Act,” that would provide the Department of Labor with $20 million to create and test pilot programs designed to enable workers to take their retirement and health insurance plans with them as they move from job to job.
In the meantime, contract workers don’t have to devise their benefits plans wholly from scratch. Organizations like Freelancers Union, which represents 350,000 freelance workers, offer guidance and sell health, life, disability and liability insurance plans to contract laborers.
Plus, “there’s a lot of new financial startups right now that are finding ways to cater to freelancers and help them with everything from planning their finances to saving to sending invoices,” says Caitlin Pearce, executive director of Freelancers Union.
Still, she acknowledges, “it’s not always easy for freelancers to know all of what they need to protect themselves.”
These are the safety-net systems experts recommend contract workers consider:
[See: 14 Best Jobs for Work-Life Balance.]
Retirement Funds
Many employers help their workers set up stock market accounts through which they can invest portions of their salaries to use as income after they retire. Companies often match some of the money employees put into these 401(k) or 403(b) accounts.
In lieu of this benefit, freelancers should open IRA or Roth IRA accounts, advises Emily Brandon, senior editor for retirement at U.S. News and author of “Pensionless: The 10-Step Solution for a Stress-Free Retirement.” They offer similar tax breaks as 401(k) plans but aren’t tied to employment.
Account holders can deposit up to $5,500 a year in 2018; workers ages 50 and older can contribute up to $6,500. For traditional IRAs, investors deposit money that hasn’t been taxed; they pay taxes when they withdraw funds. For Roth IRA accounts, investors deposit money on which they’ve already paid taxes. When they withdraw money, it usually isn’t taxed.
[See: 10 Secrets of Successful Retirement Savers.]
Health, Dental and Vision Insurance
The federal Affordable Care Act requires most people to have health care coverage or pay a penalty.
Some freelancers are covered by the insurance policies of their parents, spouses or domestic partners.
But a quarter of full-time freelancers buy their own health insurance, according to the Upwork/Freelancers Union survey. Some get theirs through the ACA individual Health Insurance Marketplace, which enables self-employed people to buy a plan. Others purchase insurance through group plans offered by professional associations or chambers of commerce.
Resources to consult before purchasing insurance include the Henry J. Kaiser Family Foundation, the Georgetown University Health Policy Institute and the National Association of Health Underwriters.
Disability Insurance
Unlike many workers in the corporate world, freelancers don’t get paid sick days. If they find themselves too ill to work, they simply forgo the income they would ordinarily have earned.
Accordingly, “we see many freelancers looking for disability and other plans like that to help cover them in the case of sickness,” Pearce says.
Disability insurance provides policyowners with money in the case they are too sick to work for a prolonged period, often at least 30 days. The amount freelancers receive may depend on their annual income and age.
Liability and Life Insurance
In case of accidents or mistakes, self-employed workers are vulnerable to lawsuits from clients. Purchasing liability insurance offers protection from these kinds of legal claims. These policies are available from many commercial sources, such as Geico and Progressive.
Freelance workers whose families depend on their income should consider buying life insurance. These policies provide lump sums to named beneficiaries in the event that the policyholder dies. Some banks sell life insurance policies to their clients, while other options come from large companies such as AIG, MetLife and Prudential.
[See: 7 Companies With Perks That Will Totally Make You Jealous.]
Legal and Financial Advice
Contract workers don’t have human resources departments they can consult to get help filing government forms. So it’s important for freelancers to get solid advice when they’re setting up shop to avoid legal and financial mistakes, Pearce says.
That may mean seeking help from a lawyer when drawing up contracts used to make agreements with clients. Or it could entail finding an accountant to help figure out which expenses may count as business deductions when filing taxes.
Freelancers Union holds regular workshops, called SPARK meetings, around the country to help contract workers learn more about legal issues and other topics.
Workspace
Many freelancers like the freedom their careers afford to work from home, the library or the neighborhood coffee shop. Those who prefer a more structured environment, however, may be interested in exploring the plethora of co-working spaces that have emerged in recent years.
Companies like WeWork, The Wing, Hera Hub and Cove sell memberships that allow workers to take advantage of their trendy shared offices, which come with internet access, printing and mail services and professional development and networking opportunities.
Plus, who can pass up that unlimited office coffee?
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How to Create a Freelancer Benefits Package originally appeared on usnews.com
