How Should Regulators Shape "Benefits" Regulations for the 1099 Economy?

Today in San Francisco, The Aspen Institute’s Future of Work Initiative is releasing its first Portable Benefits Resource Guide. Stride Health was honored to contribute to this report, which provides guidance for policymakers interested in creating a standardized system of benefits for the budding 1099 economy.

At Stride Health, we believe flexible, portable benefits drive sustainability into the increasingly independent labor force in this country.  We have an opportunity to deliver independent workers the same financial security and protections that full-time workers currently enjoy through health coverage, disability coverage, retirement, accident or worker’s compensation coverage, and even skills-based training— without limiting the flexibility of labor in the New Economy.

We support the Portable Benefits Guide’s guiding principles, in particular portability and prorated benefit funding options for employers. Benefits need not be attached to a specific job. In today’s workforce many people have multiple jobs and switch jobs (and employers) regularly. A worker should maintain their benefits stability throughout these changes and be protected regardless of which marketplace they’re currently acquiring work from. Benefit funding should be opened up to give employers the opportunity to prorate premium contributions based on the amount of work done for each company, or the workers’ respective earnings.

Since 2013, Stride Health has provided a benefits platform for the contingent workforce. Our on-demand economy partners have led the way in delivering our portable benefits platform, starting with health insurance as a leading edge. Stride Health is the first company to build health benefits platforms for the leading labor marketplaces in the on-demand economy, with clients including Uber, TaskRabbit, Postmates and Care.com, as well as capital marketplace companies like Etsy and financial management platforms like Intuit.

Stride Health’s technology ensures workers at these companies have access to the most affordable health coverage and the highest quality care. We are tightly integrated with major labor marketplaces, assessing an individual’s banking data, health data, and work lifestyle to deliver the optimal suite of benefits. In addition to powering health benefits for the 1099 economy, Stride Health delivers financial well-being guidance to ensure independent workers' income security, and has built bespoke ancillary coverages to meet the specific needs of the independent American worker.

In addition to the proposals details in the Aspen Institute’s Guide, we believe the concepts below are critical to implementing a framework for portable benefits:

1. Extension of portable benefits should apply to all workers. Though the Guide focuses on the immediate needs of non-traditional “gig economy” workers, it is imperative that all workers, including full-time and part-time employees, be allowed to participate in portable benefits. This will extend overall workforce income security (regardless of employment status), reduce regulatory overhead of job/employee classification changes, and allow for a more stable, productive overall workforce.

2. Allow pre-tax, prorated contributions from employers to all benefits. Similar to current employer 401(k) contributions, expanding the definition of pre-tax benefit contributions – to include things like healthcare and liability coverage – will not only empower gig economy workers, but will also provide big and small employers with greater choice in their current “all-or-nothing” binary benefits system.

3. Let existing incentives drive the ecosystem ahead. Employers want a benefits solution that isn’t mandatory and doesn’t bankrupt them. At the same time, most labor marketplaces invest heavily in their labor “supply,” and are naturally incentivized to retain those workers, which provides an organic market for flexible, prorated benefit delivery. The Aspen Institute’s “Benefit Innovation Zones” suggestion supports this premise of allowing the regulatory clearance for a market-driven solution to bear fruit. (I recently expanded on this concept in this Newsweek article.)

4. Public-private partnerships to administer benefits can pave the way.  Private companies can move fast to build the technology necessary to deliver a holistic set of benefits, and drive compliance directly into labor marketplaces, without adding a net-new cost to the ecosystem. A 3rd party framework can move the needle, and offers the opportunity for that administrator to be tightly coupled with the labor platform, while limiting the number of intermediaries involved in the ecosystem to keep the costs low for the workers and platforms alike. Coupled with existing marketplace incentives, competition among private administrators of the system will drive greater speed and diversity in solutions.

We are encouraged that the regulatory framework for portable benefits is expanding, just as Stride Health continues to expand our benefits suite to serve the health and financial needs of independent workers. Thank you to the Aspen Institute Future of Work Fellows, Senator Mark Warner, and Bruce Reed for the opportunity to contribute to this Portable Benefits Resource Guide.