Washington, D.C. – Today, Representative Mike Carey (OH-15) announced that he is working on legislation to allow companies the ability to contribute to the Health Savings Accounts (HSAs) of independent contractors without making them full-time employees.
The drafted legislation called the Gig-Worker Health Savings Account Contribution Amendments Act, would clarify that companies may contribute to a gig worker’s HSA and clarify that a contribution to a gig worker’s HSA does not make the gig worker an employee.
Millions of Americans work as independent contractors. Gig workers enjoy benefits from working on a part-time basis, like flexible hours, which would be negatively impacted by moving to full-time work. However, without clarity, companies are unable to provide health benefits like an HSA contribution, which is often used as a retention tool for both businesses and independent contractors.
Carey’s bill will make it easier for businesses to offer these benefits while the gig workers can maintain the flexibility that work provides.
Background:
According to a McKinsey survey, about 59 million Americans identify as independent contractors or participate in the gig economy. Moreover, this population continues to grow; research from Statista projects that 90.1 million U.S. workers will participate in independent contracting by 2028.
However, current law prevents companies from providing independent contractors to the same health insurance benefits that are enjoyed by full-time employees without losing the flexibility of the independent contractor designation. While full-time employees use tax-free dollars when paying premiums, gig worker premiums are not tax-favored the same way – they must use after-tax dollars to pay premiums. Additionally, while gig workers can and do have HSA coverage, they often do not receive funds from their contractors the same way full-time employees do.
A discussion draft of the Gig-Worker Health Savings Account Contribution Amendments Act is available here.