M is for Money

Many people dream of working for themselves as a freelancer. Everyone wants to be their own boss and working freelance gives you that opportunity without the expense and hassle of employees. You can set your own hours and reap the rewards of your hard work. But in the US there are a lot of risks to going it alone, employers provide many basic services like health insurance and retirement plans. Enter the Freelancers Union, an organization which provides advocacy and benefits to freelance workers.

I didn’t realize that such a group existed until they plastered their advertising all over buses in LA. It sounds like a wonderful idea, benefits work best when you have a large group to spread the risk and cost. But freelancers are typically alone, without the power of the group. By banding together they have a voice and a large enough number to set up insurance plans at group rates. But is it more hype than promise and what are the costs to join?

Membership in the Freelancer’s Union

First, anyone can join the Freelancer’s Union. They will only review your eligibility if you want to take advantage of their insurance products. For insurance, eligibility is limited to freelancers (independent consultant, contract, self employed etc) who are US residents and work in certain industries (like the arts). You will have to prove you have earnings in your field, so wannabes need not apply.

Insurance Plans

I’m covered by my employer’s insurance, so I have no need for the Freelancer’s Union’s services. I can only go off the information on their site, not actual experience. Depending on where you live (31 states are covered), they offer health, dental, life and disability insurance. There are no fees to join the freelancer’s union, but they do have application and annual fees for their insurance programs. It also appears that you will be subject to many of the same limitations you experience when shopping for an individual health insurance plan – a review of your medical history, exclusion of pre-existing conditions and a final rate higher than the initial quote. As with any health insurance, you must read through pages and pages of information to understand how the program works and to decide if it is right for you.

Retirement Plans

The Freelancer’s Union also offers members access to a 401(k) type plan funded via automatic monthly transfer or twice yearly check. Unfortunately, the fees associated with their program make it a bad deal. There is a $40 application fee, $11 monthly fee and a 3% administration fee. This is in addition to the management expenses associated with all mutual funds. You can set up an individual IRA fee free at many investment houses like Vanguard or T Rowe Price. Exorbitant fees sink many small investors.

Advocacy and Community

The last big benefit of the Freelancer’s Union is being part of a larger community. The site includes tools for networking, advertising and searching for jobs. As a group, they can take up causes of concern to their members. Obviously many issues from employment law to healthcare affect freelancers, whose voice can get lost among the larger and more powerful interests. By adding your name to their ranks, the group can better represent their constituency. For the 20 states not currently covered by their health plan, all that is needed are enough members residing in that state. Employers experience the same problems when looking for healthcare, without enough employees they are certain to pay a high price. The Freelancer’s Union has a long way to go before it can offer the same level of benefits to freelancers that employees enjoy. But all great efforts must start someplace and the Freelancers Union certainly has the right idea.


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