How Do I Get Disability Protection as a Gig Worker?
“Company benefits are great to have, but if you're a contractor, chances are that you're out of luck. If you get injured or are too sick to work, you could quickly find yourself in hot water. However, those self-employment taxes you’re paying, come with a federal benefit ready to act as your safety net.”
The modern gig economy is dependent on contract workers. While it offers flexible jobs to millions of people, there are no benefits, says Kiplinger in the recent article, “If You're a Gig Worker, Here's How You Can Still Get Disability Protection.”
Most part-time employees do have one advantage over freelancers. That’s workers’ compensation benefits, provided that they earn a wage and have taxes deducted from their paychecks. On the other hand, employers typically aren’t required to provide workers’ compensation coverage to independent contractors. If these workers get injured on the job, they are out of luck, and certain small companies are also exempt from this requirement.
The Social Security Disability Insurance (SSDI) program is your disability safety net. It’s designed to help today’s part-timers and gig workers. SSDI is an income replacement insurance for former workers with disabilities, provided through the Social Security Administration. This “insurance” isn’t something you have to sign up for or buy—if you pay FICA or self-employment taxes, you’re already paying into it and are on your way to being covered. Workers who earn at least $1,360 (in 2019) per quarter get credit toward their disability insurance. Typically, to be covered you must have paid FICA payroll or self-employment taxes for five out of the last 10 years. These benefits are portable and available, if you meet eligibility requirements, regardless of the number of places you’ve worked.
When someone experiences a severe disability that prevents them from working for 12 months or more, SSDI also allows access to other important benefits, like Medicare prior to age 65, dependent benefits, and return to work support. SSDI continues until the individual is able to return to work on a regular basis or until retirement age, when old age benefits start. It has the added advantage of protecting future retirement benefit income.
To be eligible, you have to meet the work history requirements and be able to prove that your condition prevents you from working. If you meet the requirements, SSDI is a great resource, if you experience a disability without private long-term disability insurance or workers’ compensation protection.
Giggers: no matter which—or how many—companies you work for, SSDI can be your safety net to catch you.
Reference: Kiplinger (December 11, 2018) “If You're a Gig Worker, Here's How You Can Still Get Disability Protection”