Bill Description: House Bill 645 would allow (but not require) independent contractors and self-employed individuals to have a “portable benefit plan” for insurance. Those who hire such individuals would be able to contribute to their plans without them being classified as employees and triggering relevant employment laws.
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Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?
Current law makes it difficult for a company or business that uses independent contractors to offer them insurance without them being classified as employees and triggering relevant employment laws.
House Bill 645 would create Chapter 28, Title 44, Idaho Code, titled the “Portable Benefit Plan Act.” It would provide relevant definitions including defining a “Portable Benefit Plan” as “a benefit plan administered by a third party benefit plan provider chosen by an independent contractor and assigned to a beneficiary rather than to a hiring party; and includes but is not limited to: disability insurance; health insurance; income replacement insurance; life insurance; retirement benefits; or unemployment insurance.”
The bill says, “Any person or entity, whether public or private, including an internet-based or application-based company, may voluntarily contribute funds to a portable benefit account for an independent contractor.”
Critically, the bill would state that “contributions by a hiring party to any portable benefit account shall not be treated as evidence that a worker is an employee of the hiring party pursuant to employment security law, worker's compensation law, the Internal Revenue Code, or any state and federal employment or labor laws.”
The bill allows for contributions to a portable benefit account to be made using the funds of the hiring party or through voluntary withholding from compensation agreed to by the independent contractor.
Contributions to a portable benefit account would enjoy similar tax advantages to traditional employee benefits for both the employer and the independent contractor. The hiring party would be allowed to “deduct as a business expense an amount equal to one hundred percent (100%) of any such contributions during the applicable tax year.” The independent contractor would be allowed to “exclude from taxable income an amount equal to one hundred percent (100%) of the amount contributed by a hiring party.”
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