The great gig break-up: Parting ways with employer benefits
59 million Americans no longer work in traditional, secure employment. But they can still access benefits, thanks to a new deal.
Getting sick is something all of us try to avoid, but for millions of Americans, their health is their wealth. Yet we all get ill from time to time — and access to health insurance is a safety net to avoid unforeseen surprises that can send personal finances into a tailspin.
However, health insurance has long been the privilege of the permanently employed. “Seventy years ago, it was a post-World War II system that gave a bunch of tax benefits to employers for creating and delivering guaranteed benefits to their employees,” said Noah Lang, co-founder and CEO of Stride Health, a health insurance and benefits platform for individuals. “We’ve been living in that post-World War II era benefits system where you go to your job, your employer picks your health plan and that implicitly picks the doctor and prescription drugs that you can choose.” Today, that employer-sponsored insurance model supports 157 million people across the country. It’s often front and center in businesses’ offer to potential employees: the security and sanctity of knowing if something goes wrong medically in your life, it’ll be financially covered.
But the world of work no longer works like that. 59 million Americans work outside the traditional employer benefit system, according to Lang — and more and more are moving away from that model as the gig economy grows. “People, during the pandemic, are taking a step back and thinking about the traditional job setting and asking: ‘Is this what I want to do?’” said Chiro Aikat, executive vice president of North America Product and Engineering at Mastercard. “That’s driving growth in the gig economy.” As the world of work has changed, barriers have been thrown up to exclude part-time, independent and gig-economy workers.
“Even though Americans are getting more flexibility in terms of employment, they’re losing some of the benefits traditional employment would bring,” said Aikat. All of which makes some think twice before making the great leap into gig work and freedom from employers. The surety of health insurance is keeping people in work situations they otherwise wouldn’t tolerate. One in three workers who receive health insurance through their employer would be very or somewhat likely to quit if their insurance disappeared.1
A shift in the way health insurance and benefits are handled has helped free workers from unfavorable working conditions and unlocked opportunity for the millions of gig workers entering the labor market. In October 2020, Mastercard and Stride Health partnered to bring portable benefits to gig and independent workers. It meant that leaving your job no longer meant leaving behind your health insurance. It allowed people to pursue their dreams of setting up their own business, or go it alone and dictate their own terms of work, without worrying about the consequences if they fell ill. “Anyone in any ZIP code in the country can access the coverage,” said Lang. “It doesn't matter how healthy or sick you are.”
“To me it is empowering these workers, where they now are in control. They have the ability to make the decision they want.”
Today, gig and freelance workers make up 34% of the US workforce — a number expected to continue to rise year-over-year.2 The pandemic has been an accelerant in that shift toward more independent work: One in eight of the U.S. workforce freelanced for the first time in 2020. By 2028, 90 million Americans will work independently, and they’ll need the flexibility of benefits that work for them, not just the company that employed them.3 The new world of work is being shaped in front of our eyes, and options such as the plans offered through the Affordable Care Act mean individuals can decouple their coverage from their employers, taking their benefits and insurance from job to job, wherever they work. “Most people don't know that they can get real, full health insurance for such a low cost,” said Lang.
“After a colorful resume of job choices these last few years that didn’t pan out like I’d hoped, I felt that it was finally time to focus on creating a path to be my own boss and in a way that I could financially support myself,” said Amber Huyghe, a gig worker who works in delivery and is a member of Stride Health. “The biggest drawback and also the crossroads I faced with myself was not having health care.” But Stride Health’s plans offered her low-cost insurance that fit her health needs. “The weekly frustrations will happen with any job; however, the solution to my health care dilemma created a space of more certainty that I was able to stay on the path a little longer at a job that gives me so much joy and freedom.”
That’s the goal for uncoupling benefits from employment. “It gives them the flexibility to have two or three jobs, but because they themselves have them independently, they can have access to those benefits wherever they go,” said Aikat. “It's about how you support that set of consumers so that they continue to drive benefits for society, not only for them and their own family, but also so they can continue to drive a positive impact to the economy.”
For gig workers, decoupling health insurance from employers means that the delivery driver and part-time barista can rest assured that their portable benefits move with them to whichever job they’re on at the time. For independent workers, it gives them peace of mind that they’re not second-class citizens in comparison to their full-time, contracted counterparts. And for part-time employees picking up an extra paycheck through a side hustle, it provides benefits that are often walled off from them unless they commit to full-time work. “To me it is empowering these workers, where they now are in control,” said Aikat. “They have the ability to make the decision they want.”
It’s a radical new update to a 70-year-old system, and it’s one that gives assurance to the new cavalcade of gig workers at a time of great uncertainty. “People want the flexibility, and it's a new way of work,” said Lang. “Oftentimes, they're earning more, and someone's got to protect them. But there’s still been that gap. And I think it's a long-term public and private sector problem to be solved — one which we hope we’re well on our way to achieving.”
1Policygenius Health Insurance Literacy Survey 2021
2International Labor Organization
3Upwork and Edelman Intelligence