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Health Insurance for Freelancers

Posted by: John Tozzi on November 21, 2008

I missed this bit of news because I was away last week, but the Freelancers Union just started a health insurance company in New York. This is a big idea from a group that is trying to build an infrastructure to support entrepreneurs and microbusinesses. (Hat tip to Crain’s New York.)

Freelancers Union is a 12-year-old national non-profit that advocates for independent workers. Since 2001, they’ve offered members the ability to buy private health insurance from third-party providers. (Full disclosure: I was once insured through them.) Now, with philanthropic backing, the group is starting Freelancers Insurance Company to meet the needs of members in New York State, where its members are concentrated.

From founder Sara Horowitz’s announcement:

We’ve shown that it’s possible to create a group with the strength and longevity to be a sustainable “risk pool” for health insurance. Independent work arrangements are here to stay, and the market is finally recognizing that.

The more than 20 million companies with no employees by far make up the largest share of businesses in the US. Because of the employer-based health care system, it’s difficult and expensive for these people to get insurance if they don’t have a spouse whose company can provide it.

As the Crain’s story points out, some members are unhappy with the move because premiums on some plans rising. But I want to highlight the announcement, because any new models for getting entrepreneurs health care are worth noting.

The big picture is that our health care system hasn’t kept pace with our economy. Workers are more mobile, less likely to spend long periods of their career working for one employer, and more likely to work for themselves at least some of the time.

Compare health insurance to retirement planning. For decades the model was that people would work for the same company for most of their careers and retire on a pension from that employer. Most people don’t do that anymore, and IRAs and 401(k)s were developed in part as retirement planning tools for people who would not get employer pensions.

Employer-based health insurance depends on a world where most people work as full-time employees of large companies. That world is changing, and health care needs to change to keep up with it. It looks like the Freelancer’s Insurance Company is a start.

Reader Comments


November 23, 2008 1:17 PM

Mr. Tozzi - please dig a little deeper into the issue you present.
Most FU members would have been more than happy to pay higher premiums, if given the same type of plans. We used to have a comprehensive plan with BC/BS and now we get an experiment.
The best and most expensive plan they offer is subject to very high co-insurance (20%) on standard services (X-ray, MRI, ultrasound and other digital imaging) without annual maximum out-of-pocket! Hospital Inpatient is now subject to $4000 co-pay not including the price of these special digital imaging!
Additionally, this new insurance company features customer service that is clueless about the offered plans - definitely not reassuring.

FU are NOT offering any safety net to those who really need it. Many people that only joined the union the past month were not told about the coming changes. A lot of people need a better health care NOW, we can not wait and see if this experiment with a new health insurance company will work, especially with such unstable economy.
Read more on the members blog -

For someone interested in a free-market experiment, this maybe an interesting case, but if the health care and security of freelancers is the focus, this is a very bad idea.

Sarah Smith

November 24, 2008 1:22 PM

I did a quick search on the web because of the two articles I saw written above. I was not aware of the Freelance Union health care, nor the opposition to it. It seems as if Sarah was just excited to know that freelancers had a chance to get medical insurance, while the commenter already has a “better” insurance in from the FU. Some insurance is better than no insurance, but if you have insurance – fight with all your heart to make/keep it optimal!!! I am not aware of the option in my area yet, but I will keep my eyes open. Good luck.
Sarah (


January 17, 2009 11:02 AM

Leaving FU is right. We actually had a decent plan with them last year. What makes mo sense at all is the fact that I was able to find a better plan for the same price on my own. I had to switch carriers, but the carrier I'm not with is still a major national provider and all my doctors are the same. If I was able to find that by myself, there's no reason why the Freelancer's Union couldn't have offered us a better plan than they did.

I. Rachman, M.D.

January 11, 2010 12:31 AM

I am not an insurance specialist, but as a practicing internist (and an owner of a small medical practice) the most cost effective option is a plan with the following criteria:
1. HSA-compatible plan
2. Defined maximum out-of-pocket amount that matches your allowed annual tax deduction (according to HSA rules)
3. $0 after the deductible has been met!
4. Choose the lowest monthly premium plan among most popular (i.e. accepted by most docs) plans in your area.

good luck

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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