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Benefits on the Fringe: Portable Benefits

Benefits on the Fringe: Portable Benefits
From Recruiter - October 27, 2016

Welcome to Benefits on the Fringe, a new column from Recruiter.com writer Jason McDowell. Every month, McDowell will cover the most unique benefits that todays employers are using to woo talent, as well asadvances and innovations in the employee benefits realm.

With 50 percent of the workforce expected to be engaged in contract or freelance work by 2020, according to a studyjointly commissioned by Freelancers Union and Upwork (operating as Elance-oDesk at the time of the study), many professionals in the U.S. will have to face the difficult challenge of obtaining benefitsfor themselves outside of the traditional employer-sponsored framework. The Affordable Care Act (ACA) has simplified healthcare access for independent workers, but what about retirement? What about sick days? Paid leave? Unemployment?

Taking Your Benefits With You

Historically, gig workers have needed to plan far ahead to overcome these kind of obstaclesor simply go without. But what if companies thatemploy freelancers could offer innovative ways to make sure their contract workers are taken care of? Thats the idea behind portable benefits, a fairly new concept being implemented by some in corporate America.

The definition of portable benefits can be a bit murky, but essentially, portable benefits are just what they sound likethese are benefit programs such as healthcare and retirement that are portable from client to client and are linked to the contractor or consultant, not the client, explains Gene Zaino, CEO of MBO Partners, aprovider of business systems for independent workers that offers portable benefit plans to its contractors. Examples include a Solo 401(k) program or the benefits available through the ACA.

How a portable benefit system should be handled depends on how the worker is defined.

The real issue is understanding how to allocate the cost of these benefits and who bears the burden, says Zaino. In a gig economy, if you consider the workers self-employed, then the cost should be carried by the worker. In this case, the worker should factor these costs in to the price of their services, and therefore, the customer of the service ultimately pays. On the other hand, if the workers are considered employees, then the cost should be covered by the employer and factored into its business model. If there are shared employers, then a portable employment structure would make sense.

How It Works

On the surface, it seems like the idea behind portable benefits is for companies to give benefits to contract workers, but that isnt quite the case. The idea instead is that various companies will offer their freelancers access to benefits the workers can purchase themselves, and those benefits will follow the workers from gig to gig.



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