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Healthcare Coverage. The Affordable Care Act requires and makes it easy for independent contractors to obtain healthcare insurance coverage on their own. Also, married freelancers can obtain insurance through a traditionally employed spouse’s healthcare plan. Retirement Plans for the Self-Employed. Like their traditionally employed counterparts, freelancers can save for retirement in a variety of ways. They may create their own retirement plan by contributing to a special savings account called an Individual Retirement Account (IRA) . An IRA is basically a savings account with tax breaks similar to the tax benefits employees get for participating in a 401K. If you elect to freelance at any point in your life, it is important to pursue the retirement savings options available to you and contribute as diligently and consistently as you would if you were an employee of an organization.
THE BIG PICTURE
A compensation package includes salary and benefits. Some employee benefits are required by law. Others are not required by law, but are offered because it’s difficult to attract employees without them. The value of benefits include reducing an employee’s income tax rate, lower insurance costs, the ability to build wealth and financial security faster, and an improved quality of life. When you are job searching, make sure to check out a potential employer’s benefits package as carefully as their salary. If you freelance, you do not have the benefits provided by an employer, but have several options available as an independent contractor.
PRODUCT PREVIEW
PONDER AND PREDICT When a new employee receives their first paycheck they’re often shocked at what they see — or don’t see. A lot of money is deducted from a paycheck before it reaches the employee’s hands. What costs are deducted from a paycheck? What benefits do employees pay for? What benefits do employers pay for? ______________________________________________________ ______________________________________________________
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Chapter 4 | Pay. It’s More Than a Salary
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