Whether you’ve built your whole career working as a freelancer or have come to self-employment after working full-time, the question often arises, do I need to buy a benefits package and is it worth it? After all, it takes time to find the right program, and they aren’t inexpensive, with the result that people often wonder how important it is to have benefits.
To answer this question – are benefits worth it? – we start by giving a big shout out to Canada’s universal healthcare system. It’s hard to imagine being a freelancer in the U.S. where individuals have to pay for basic healthcare. Even with “Obamacare” these costs are significant. For example, a 30-year-old New York State resident pays approximately $340/month for basic healthcare, and that’s with a $3000 deductible! Yikes!
We recently learned that Canada is the only country in the world that provides public healthcare yet does not cover prescription drugs (at least not for those younger than age 65). Also not covered are dental care, eye exams, prescription glasses, home care, para-professional services, medical devices and more. This means that most Canadians pay out-of-pocket for these services or rely on private insurance. The Canada Health Care Act also refuses coverage for all emergency medical expenses once you leave the country. In fact, the Government of Canada urges all Canadians to purchase supplemental health insurance when travelling outside of the country.
So what does this mean for freelancers who are trying to make this decision? First let’s look at a few basics on standard benefit plans:
Most programs are offered by insurance companies.
They often include some level of coverage for prescriptions, dentals visits, paramedical services such as private nursing, eye exams, orthotics and hearing aids.
They usually have some element of Life Insurance, Accidental Death and Dismemberment (AD&D) and, in some cases, Long-Term Disability.
Benefit levels are often capped and some have a co-pay element to them.
Premium costs vary by age, province and family status. (No surprise that benefits are more expensive for older people who are more likely to use the plan).
Younger people often don’t buy travel insurance and when they do, it’s not expensive. Older folks tend to make sure they have it and are willing to pay more for it.
For those who regularly require any combination of dental care, prescription drugs and medical services, the cost of the premiums may be less than what they would pay out-of-pocket. In these cases, a benefits plan is definitely worth it. In this category also fall couples and people who have families, as most plans are more cost effective when multiple people are covered. Even though the premiums are higher, more people take advantage of the services. There are also those who place real value on the security they get from knowing they have coverage for unexpected medical needs, and are willing to pay a little extra to have that insurance.
For some freelancers the purchase of benefits may be lower on their list of priorities. For instance, there are those who have coverage through a partner’s plan. That’s a no-brainer. There are also those who are younger, healthy and confident that all they need in a given year is a trip or two to the dentist for check-ups and cleaning and perhaps the odd prescription. For these people there’s a chance that what they spend for these services in a given year will be less than the premiums they would pay. They also (consciously or not) assess the risk of unexpected events and decide that the chances aren’t high that they’ll need coverage.
So – considering all of this we have concluded that benefits insurance is not an absolute necessity for all, and that ultimately the decision to enroll is a personal one based on a calculation that each person makes of the costs of the plan versus what they’re likely to use and need.
Sure – that may be the case, but it still does not make it easy to decide as an individual. First, most of us don’t really know what we need. How much did you spend in the last couple of years for health, medical and dental services? How well can you assess what you will need in the year ahead?
Secondly, the research can be a bit daunting. The topic is not exactly exciting and it’s actually not that easy to compare plans since each one is a little different. There are already too many non-income-generating activities keeping freelancers busy as it is, and nobody really wants to spend hours on this subject if they can avoid it.
That’s one of the reasons why Living Freelance chose to offer healthcare benefits – we want to give you a good option quickly. We like the program that we’ve found because it offers 6 different plans to choose from, single, couples and family coverage, easy opt-in (or opt-out), travel insurance and it’s sourced by the only not-for-profit health and benefits provider in Canada.
So what’s the bottom line you ask? Unfortunately there is no one right answer and each one of us has to decide what’s right based on our own circumstances. For some, this might be just what we’ve been looking for. For others, this may not be the right time at all. Only you can decide if a benefits plan is necessary and “worth it.”
– LF Team