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How freelancers afford to stay healthy

TEXT OF STORY

Bill Radke: Under the new health care law that President Obama will sign today, self-employed people and others who don't get their insurance through work will be able to pool together using insurance exchanges. But those exchanges won't open until 2014. In the meantime, some of the self-employed are finding other ways to get insured. From the Entrepreneurship Desk at Oregon Public Broadcasting, Mitchell Hartman reports.


Mitchell Hartman: By his early 40s, Martin Walker had risen to be IT manager at a big New York law firm. He had a good salary, great benefits:

Martin Walker: And just about two years ago decided to leave, set out by myself, something that I wanted to do for a while.

Walker was planning to launch a company to develop brain-training software for improving attention span and memory.

Walker: One of the big questions that came up almost right away was, "Well, how are you going to get health insurance and how are you going to pay for that?"

Walker has three kids. They've all had health problems. And since solo entrepreneurs can't access group health plans negotiated by employers, he turned to the individual market.

Waler: And we were looking at several thousand dollars per month to cover the family.

Fortunately, Walker found a solution besides simply not starting his business. He joined the 135,000-member Freelancers Union. Founder Sara Horowitz:

Sara Horowitz: We're the only place where freelancers can group together as if we all work for one large company and get health insurance on our own.

Walker got a family plan for $900 a month. But that group health plan isn't available to most solo entrepreneurs. It's only approved in New York State.

Elsewhere in the country, though, newfangled options are cropping up for some of the self-employed.

Gary Swart: We become the employer of record.

That's Gary Swart, CEO of California-based oDesk -- and let me explain what he means. oDesk is an online matchmaker of sorts, hooking up companies that want project work done, with independent contractors, like Web designers and freelance writers. oDesk normally takes a 10-percent cut of the contractor's fee. By paying an additional 10 percent, they can join oDesk's employee benefit plan.

Swart: We're going to take care of the taxes, the 401k plan, health care.

In essence, turning that "self-employed" contractor, into the employee of an outsourcing company. An employee with health insurance, that is.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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