Do Canadian Freelancers Need Benefits?
Whether you’ve built your whole career working as a freelancer or have come to self-employment after working full-time, the question often arises, do I need to buy a benefits package and is it worth it? After all, it takes time to find the right program and they can be expensive. So how to decide?
Let’s start by giving a big shout out to Canada’s universal healthcare system. If you’re a freelancer in the U.S. you have to pay for basic healthcare and these costs can be significant. We got a quote based on a 30-year-old New York State resident earning $50k. The most basic version cost approximately $340/month for basic healthcare, (with a $3000 deductible). Yikes!
Canada is the only country in the world that provides public healthcare but doesn’t cover prescription drugs. Canadians also pay out-of pocket or rely on insurance for dental care, eye exams, prescription glasses, home care, para-professional services, medical devices and more. We also need travel insurance since The Canada Health Care Act does not cover all emergency medical expenses outside the country.
To understand what this mean for freelancers let’s look at a few benefit plan basics:
- Most programs are offered by insurance companies
- They often include some level of coverage for prescriptions, dentals visits, paramedical services such as private nursing, eye exams, orthotics, hearing aids
- They usually have some element of Life Insurance, Accidental Death and Dismemberment (AD&D) and, in some cases, Long-term disability
- Benefit levels are often capped and usually require a co-pay
- Premium costs vary by age, province and family status. (No surprise that benefits are more expensive for older people who are more likely to use the plan)
For those who regularly require any combination of dental, prescription drugs and medical services, the cost of the premiums may be less than what they would pay out-of-pocket. In these cases, a benefits plan is definitely worth it. Since most plans are more cost effective when multiple people are covered, couples and families may also get more than they spend on benefits. Sure the premiums are higher but more people take advantage of the services. Finally- there’s the insurance element for those who place real value on the security they get from knowing they have coverage for unexpected medical needs, and are willing to pay a little extra for that.
For some freelancers the purchase of benefits may not be ‘worth it’. Those who have coverage through a partner’s plan- well, that’s a no-brainer. There are also those who are younger and healthy and don’t normally need many services. For these people there’s a chance that what they spend in a given year will be less than their premiums. They also (consciously or not) assess the risk of unexpected events and decide that the chances aren’t high that they’ll need coverage.
So – considering all of this we have concluded that benefits insurance is not an absolute necessity for all, and that ultimately the decision to enroll is a personal one based on a calculation that each person makes of the costs of the plan versus what they’ll likely need at a given point in time.
This still doesn’t make it easy to decide as an individual. First, most of us don’t really know what we need since we rarely track what we spend on health, medical and dental services or plan what we’ll need in the year ahead.
A second issue is that the research can be challenging since it’s not easy to compare plans. Each one is a little different and it’s tricky to do an apple to apples comparison and nobody really wants to spend hours on this subject if they can avoid it.
That’s one of the reasons why Living Freelance decided to offer healthcare benefits- to give Canadian freelancers a good option quickly. We like our program because it offers 6 different plans to choose from, single, couples and family coverage, easy opt-in (or opt-out), travel insurance, and it’s sourced by the only not-for-profit health and benefits provider in Canada. http://livingfreelance.org/benefits/
So what’s the bottom line you ask? Unfortunately there is no one right answer and each one of us has to decide what’s right based on our own circumstances. For some, this might be just what we’ve been looking for. For others, this may not be the time to make this a priority .
Minda Sherman – Founder – Livingfreelance.ca