Freelancers will face new financial decisions with the new health care bill. Above, Katz Drugs on Graham Avenue. — Photo by Diego Cupolo

It’s been a few weeks since President Obama and the congressional Democrats succeeded in turning their health care bill into law, but there is still much confusion as to how this will affect various segments of society.

Without knowing exactly how the health care system will respond — ominously, the market is bullish on nearly all health care-related stocks — it’s difficult to predict the effects. People on the payrolls of companies with more than 50 employees will be automatically enrolled in law-mandated coverage, or their employer pays a fine (if the worker is eligible for subsidy). But what about the average freelancer, a category into which many Bushwick residents probably fit?

Those freelancers wondering if they now have health coverage as a result of the bill may be dismayed to discover that they do not. The bill requires all citizens to obtain private insurance, and provides a subsidy to those determined unlikely to afford it based on multiples of the federal poverty level. A publicly run insurance option was discussed, and ultimately dropped from the bill as one of the many concessions made in order to pass it. The biggest changes in the bill, extending Medicaid coverage and providing the insurance subsidies, do not take effect until 2014. This is to give the government departments who will be overseeing these immense changes in policy (the Department of Health and Human Services and the IRS) a chance to sufficiently prepare for implementation, and to allow affected market segments to adjust.

Nonetheless, there are some immediate benefits of the bill. Insurance companies are no longer allowed to drop people from coverage once they are already sick and people with pre-existing conditions cannot be denied coverage. One quirky immediate effect of the bill: indoor tanning salons will be hit with a 10 percent sin tax. Everything goes into effect January 1, 2011 so make sure to get your fake tan by December.

What will it cost you? According to data from the Freelancers’ Union, the median income for writers, designers, photographers, and editors is $35,000-$45,000 — right around or below the cutoff for government insurance subsidies, or annual earnings of $43,321. The subsidies will work on a sliding scale, with earners between 133 and 400 percent of poverty level receiving different levels of subsidy. For those earning 400 percent of poverty level insurance costs will be limited to 9.5 percent of total income, at which point the subsidy kicks in; at 133 percent insurance costs are limited to 4 percent of income. All that is to say, freelancers earning at least $43,322 in a year will have to pay for insurance completely out of their pockets.

And those eligible for a small or no subsidy may have to choose between paying over $4,000 a year for insurance or pay the fine for not having insurance. According to the Freelancer Union-reported incomes, it sounds as though many freelancers will be forced into this decision. Given the size of the fine — $750 — many may choose to simply pay the penalty and buy the much more expensive insurance only once stricken with a serious illness.

For the record, the Freelancers Union advocated for a slightly different health care model than the one adopted by Congress and the President. Executive Director Sara Horowitz praised the steps taken thus far because they "provide a basic safety net for low-wage freelancers and workers with episodic incomes," but also expressed concern for freelancers making more than the subsidy cutoff income.

Middle-income freelancers may have a difficult decision to make come 2014 but there are some other reasons to be optimistic. One is that the Freelancers Union already offers a couple of insurance plans that are less expensive than where the government would cap health insurance costs for workers around 400 percent of poverty level. As mentioned above, the no-insurance fine may be an inexpensive option for those who don’t have an extra few thousand a year. The last is that the federal poverty level may be raised between now and 2014, granting more people government subsidies for health insurance.

Related Posts