Moving from a full-time job working for someone else to starting a freelance business is the dream of many. But before you make the switch there are a lot of things to think about: health insurance being one of them.
If you were taking advantage of your employers health insurance benefits, be ready for sticker shock when looking at plans meant for independent workers such as freelancers. In the United States, finding and paying for health care has been an issue for many home-based business people, and many go without because of the price tag.
Freelancers don’t have easy access to affordable health care, and they don’t have paid sick days, either. And even some small businesses don’t offer health insurance as part of their employment package any more. But going without is soon going to be against the law.
The Obama administration has awarded $341 million in loans to the Freelancers Union—a small organization with deep progressive ties whose board members have donated more than $11,000 to Democrats—despite a law suggesting the union should not be eligible for such a loan.
It was recently announced that health care cooperatives launching in eight states will be receiving a total of $638 million in federal loans. The White House hopes the program, created as part of Obama’s health care reforms, will create competitive alternatives to private insurers. Conservatives cite the program as another instance of cronyism.
The largest of these loans went to the Freelancers Union, a New York-based organization that helps independent workers gain access to health benefits, to start health insurance plans in three states.
According to the Freelancers Union, there are 42 million independent workers, of which 171,000—0.4 percent of the total—are members. Of those 171,000, about 93,000, or 54 percent, are based in New York City.
The federal loan is nearly three times the group’s $120 million annual budget.
The board of directors of the Freelancers Union has given at least $11,700 in political donations between 2007 and 2011, all to Democrats.
Questions have been raised as to the legality of the loan to the Freelancers Union.
Membership in the union is free. The organization covers costs through commissions on benefits bought by members. But members of the union own the Freelancers Insurance Company, a for-profit organization—and have since 2008.
The CO-OP provision creators said the program will increase the overall level of competition in the commercial health insurance market.
A CO-OP plan is supposed to sell coverage through the new PPACA health insurance exchange system and get “substantially all” of its business from sales of coverage to individuals and small groups. A CO-OP plan could operate in a whole state or in part of a state, or in multiple states.
Freelancers Union notes in an announcement on its website that it has participated in the insurance industry in the past, by raising $17 million to set up the Freelancers Insurance Company in 2009. Freelancers Insurance is a social-purpose insurer that now provides coverage for about 23,000 residents of New York state, the group says.
The Freelancers Union CO-OPs “will be open to everyone, with financial help available to lower-income Americans,” Freelancers Union says.
The new CO-OP program will have no effect on Freelancers Insurance Company, the group says.