As a freelancer, you can build a customized benefits package, it just takes a bit of advanced planning. Leaving behind a job in corporate America is about more than just the steady paycheck, the structured routine and the benefits of having coworkers other than your dog to discuss the latest episode of The Walking Dead. The key is access to, and the ease of selecting, your benefits.
Employers typically offer a package of benefits from health insurance to employee assistance plans you access simply by clicking “yes” during open enrollment and paying your premiums from each check. There’s nothing like unlimited chiropractic visits — music to the ears of a writer who sits at a desk all day.
I quickly learned this level of coverage was basically untenable when I first went out on my own. However, as my freelance career grew, I’ve been able to source and put together a customized benefits package — from health and dental to retirement and pet insurance — that’s more or less equivalent to what I left behind. Here’s a closer look at evaluating providers, determining what you need and focusing on what to do when creating a benefits package for your own freelance career.
Determine Your Priorities: Creating a Customized Benefits Package
While the average freelancer is unlikely to be able to access (or afford) benefits equivalent to a Fortune 500 company, you can still build your own benefits package. Strategically investing in your benefits starts with determining your priorities. For most, there’s a threshold level of important benefits to look for, and what you focus on most can vary by person.
For example, healthcare insurance is a key concern for many people. However, if you have a large mortgage or your family relies on your income as the primary breadwinner, finding a way to get life insurance or disability coverage is part of your long-term strategic planning. Consider factors such as:
- What is your full wish list of benefits?
- Within each category, what level of coverage or type of benefit would you like access to?
- What’s your budget — in total and by category?
- If forced to make trade-offs, what are your top one, two or three priorities?
Understanding what you have to work with and where you’d like to invest puts you in the right position for the next step.
Understand Your Options
If you’re a freelancer, you’ll likely be in favor of being able to access portable benefits, regardless of where or for whom you work. In some cases, there are options already available, such as purchasing private health care or setting up your own SEP 401k. However, getting up to speed on freelance benefits and understanding the full range of options requires some due diligence. Personally, I used a three-step process.
- Contact an organization in your field, such as the Freelancer’s Union, and find out what resources they provide. Many professional associations actually offer discounted plans for their members and supply helpful background information that can get you up to speed on your options.
- Find a benefits broker with experience helping self-employed individuals or small businesses. Schedule time for a dedicated consultation. These are typically free, as they make a commission off any benefits you enroll in. Regardless, consider paying for this as an unbiased consult to get customized recommendations.
- Get a second opinion. See another broker or run the recommendations by your accountant. Make sure the coverage fits with your needs and falls within the scope of your business’ ability to sustain the premiums over the long term. From there, you’ll have your own decision rubric in place and at least two sets of outside recommendations to help you make your decisions. Remember, you can always add coverage. Start with what you feel comfortable doing today, and be ready to reevaluate in the future.
Consider Your Own Open Enrollment Period
Companies have open enrollment periods each year, because employees’ needs change. People get married, have kids or buy a house and suddenly want to carry enough life insurance to pay the mortgage, for example. A freelancer’s benefits needs don’t stay static, either. If you get married and your spouse’s employer offers group health care, it may be more cost effective — or get you access to better coverage — to enroll. Don’t simply evaluate your needs during big life events (although that’s a smart time to do so). Make a benefits audit part of your annual planning, and ask yourself:
- What benefits do I currently have, and what am I paying?
- Do I pay for benefits I’m not currently utilizing?
- Has business growth made it possible to upgrade my existing coverage or add new benefits?
- Is there a specific area I’d like to increase coverage or add to my lineup?
As the explosive growth of freelancing is still taking place, there’s no clear playbook for how to build a customized benefits package or even what benefits you should include as a standard part of your plan. A single 20-something may have dramatically different needs than a fast-growing family or someone with health issues who’s approaching retirement. Look at your unique situation to determine what benefits you need. Remember, flexibility is one of the key advantages of working for yourself, and that extends to how you invest your benefits budget, as well.