State of the Market: Health Care for Technical Communicators
by David Alt, Berkeley Chapter

Welcome to the Market for Healthcare. You have the right to remain silent.

Technical Communicators, like most people, need Healthcare. Since, in the US, Healthcare is treated as a commodity rather than a right, it should not come as a surprise that buying access to Healthcare in bulk is cheaper than buying it individually.

Because of this (and because insurance companies want to ensure they get paid,) the most common way of obtaining access to Healthcare is through an employer. In fact, since its passage in 1947, the Taft-Hartley Labor Act has mandated that health insurance be counted as compensation, subject to the vicissitudes of collective bargaining. So even through your employer negotiates the rates and availability of your access to Healthcare, when push comes to shove, this "benefit" counts against your salary (despite the fact that copayments and deductibles come out of your pocket, and despite the fact that most employees, especially Technical Communicators, are not unionized.)

So what are your options if you want to be self-employed? Are there ways out of the Healthcare quagmire?

Like other aspects of operating as an independent, it helps to think about Healthcare from the perspective of a professional, rather than an individual. In case you have a difficult time thinking of yourself as a Capitalist and setting appropriate rates, just remember that implicit in any contract (whether it be hourly or fixed-bid) is the sum you must turn over to line the pockets of the CEOs of the Healthcare industry. When you consider that most health insurance policies carry a maximum lifetime benefit on the order of a million dollars, you see that someone like William W. McGuire, CEO of United Health Group, who was paid $54 million last year, apparently considers your entire life to be worth about a single week of his.

Options for Independents
In case you don't have access to Healthcare, don't take it personally; you're in good company: the U.S. Census Bureau claims that 41 million people lack any health coverage at all, 65 million people lack prescription drug coverage, and that 60 million people lose coverage for some period of time in any given year. It may be unsuprising that medical bills cause 40 percent of personal bankruptcies.

Ironically, as Daniel Pink describes in "Free Agent Nation: The Future of Working for Yourself," independents' top two choices for obtaining access to Healthcare amount to being dependent: get it through an employed spouse or a former employer. Pink offers some very practical advice about navigating a system that, "doesn't easily accommodate independent workers. So do your research. Run the numbers. And read the fine print."

An alternate approach to employer-based Healthcare, or playing the Market, is associating with an organization that can obtain group rates. As you may or may not know, STC negotiates group medical rates for Members through Mutual of Omaha—but not if you're in California. According to Bill Stolgitis, STC's executive director, "California Insurance regulations do not allow Mutual of Omaha to offer its product in that state because the state of California does not recognize 'association group rates,'" once again because in California, to qualify for group rates, "the members of the group must have an employee-employer relationship [with the group]."

So, although it is a privilege to have the opportunity to pay through the nose for access to Healthcare, there are some mitigating strategies for independents. Pink notes that "free agent health insurance premiums are almost always deductible as a business expense. How much you can deduct, though, depends on a host of factors–including how you've set up your enterprise and when you established your plan. Check with a good tax consultant to ensure that you maximize any savings."

If this sounds inductive of a headache itself, just add it to the list of other issues you need to tackle as an independent: retirement savings and accounting, as well as securing unemployment, disability and liability insurances. In addition, although large corporations account for a large share of opportunities for independent contractors, many corporations refuse to work directly with non-incorporated contractors since they expose the corporation to the threat of IRS reclassification. You can look at this as a disadvantage of being self-employed, or as a reason to start thinking of yourself as a vendor of Technical Communications services rather than as a person.

If this seems strange, just remember that corporations have more rights and fewer responsibilities than people, and there's more than one way to skin yourself as a corporate cat. There is a case to be made for bundling together these aspects of running a business, which are virtually unrelated to the actual work of Technical Communications, as a service. And you may get access to Healthcare out of the arrangement.

Privatizing Your Employer
In today's market, there is no such thing as a permanent employee. Since your labor is viewed by the market as a commodity, there is no economic reason to feign fealty to any particular employer, even though you have a compelling need to maintain a relationship with an employer in order to have indirect access to human needs as basic as healthcare. Since employers derive profit over and above the wages they pay for your labor, employers have no intrinsic interest in your well being, beyond making sure you're kept productive, and have no intrinsic incentive to share the capital perks, obtained on your behalf, with you. Both your labor and benefits are treated as costs to be minimized.

But since corporations act as the gateways to the necessities of modern existence, you have a need for these corporate services. So, if Adam Smith has anything going for him (as posited by gubernatorial front-runner Arnold Schwarzenegger,) then if there were demand for these corporate services, including access to healthcare, the free market would gloriously provide such a supply of privatized employee benefit enterprises, which would be ready to assist independent contractors with these services that are peripheral to their actual skills. What does the market have to say?

In fact, there is a name for this sort of enterprise: an employer of record. employers of record act as intermediaries between independent contractors and their clients. The independent contractor becomes an employee of the employers of record, and each contract is signed by the employer of record and the client (not between the contractor and the client.) This three-way handshake is desired by the client, because it avoids the risk of IRS reclassification, which is a costly endeavor regardless of whether or not the client wins the case.

The employer of record relationship is not necessarily beneficial to the contractor-cum-employee in all cases. For example, many recruiting firms act as employers of record, yet maintain illegal restraint of trade practices that limit the market of clients available to their employee-contractors to those that favor the employer of record. However, pure employers of record view themselves as being in competition with other employers of record for their share of the market that services professional independent contractors. To stay competitive, the theory goes, the employers of records must offer services that benefit their true customers, the independent contractors—rather than the clients for whom contractors ultimately labor. Otherwise, the independents can set up their virtual shop elsewhere.

All in all, employers of record are—beyond your gateway to Healthcare access—a one-stop alternative to incorporating, filing quarterly self-employment taxes, getting audited regularly, and having to hire an accountant and laywer.

An Example: P.A.C.E.
The firm I hire to be my employer views itself as providing top-quality corporate services to independent contractors, and does not engage in anti-competitive behavior. It is called the Professional Association of Contract Employees (P.A.C.E.), and was started by Jim Ziegler, after Ziegler was outraged at the treatment of temps employed by temp agencies—that served the Healthcare industry, no less. As a true employers of record, P.A.C.E. does no marketing on behalf of, or recruiting for, its employees, who are expected to identify and negotiate contracts for themselves.

P.A.C.E.'s cost to the employee is 5% of his or her gross revenue; in addition, the employee's Division of P.A.C.E. is responsible for any other actual costs, like FICA taxes and medical premiums. Although P.A.C.E. refrains from doing any Enron-style cookbooking, it structures all payments, expenses, taxes and so forth to be of maximum benefit to the employee-contractor. This is because P.A.C.E. makes all its profit on the up-front 5% fee, and unlike traditional employers, has no benefit in squeezing nickles out of its employees on benefits administration; rather P.A.C.E. views its program as its main selling point and differentiating factor.

It is worth noting that this type of arrangement is for committed contractors, meaning employers of record are not for folks who are simply taking a contact in between "permanent" jobs, but for professionals who expect to go from contract to contract indefinably. Assuming that's your vocational lifestyle, to qualify for P.A.C.E., you simply need to find and negotiate a three month contract with some client. Once you're on board, you qualify for benefits after a month. Once you have benefits, including group health, they do not go away, unless you choose to leave P.A.C.E., or go for many months without a contract; during inter-contract periods, you as an independent contractor are working full time marketing your services, and this does not affect your benefit status.

That being said, using an employers of record doesn't limit you to their group Healthcare options. You can opt for an individual plan, or if you are eligible for group rates through some other organization, you can still submit your premiums and out-of-pocket medial costs are fully tax-deductible through P.A.C.E. (they are treated as an operating expense which is deducted before even 401(k) or employers' taxes are levied.)