Health Reform WK-EDGE Employers are turning towards freelance gigs to avoid ACA penalties
Monday, May 16, 2016

Employers are turning towards freelance gigs to avoid ACA penalties

By Bryant Storm, J.D.

Large employers are planning to hire more freelance workers to avoid tax penalties under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) employer mandate, according to a Field Nation study entitled "The Gig Economy." The study, which surveyed 959 freelancers and 600 human resource decision makers at companies with 1000 employees or more, indicated that the shift towards freelance workers is due to a convergence of factors—an increased availability of skilled freelance workers and peaking health insurance coverage penalties under the ACA.

Employers. The study revealed that 60 percent of surveyed companies will hire more freelance workers by 2020. For many companies, the ACA is a significant driver behind the shift—29 percent of companies reported the ACA is having a very high impact on their plans to hire freelancers and 39 percent reported the health reform law is having a high impact. Additionally, while 89 percent of surveyed companies indicated that health care benefits are key to attracting and retaining talent, almost one-third of surveyed companies expressed an intention to eliminate health care benefits because of the ACA.

Freelancers. Among the surveyed freelance workers, 58 percent indicated that the ACA has not affected them, often because they have health care coverage obtained through a spouse’s employment. However, 21 percent of freelance workers reported needing to work additional hours to cover health care costs. Similarly, 12.8 percent of freelancers indicated they needed to take on additional clients and 9.3 percent reported they had to do additional projects for existing clients to pay for health care.

Companies: Field Nation

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