Ask HN: How startups cover health insurance
with health insurance premium is rising, I wonder how startup who raised 500K with 3-10 employee cover health insurance; or in other words, what is the best insurance provider for a small startup
7 comments
If you're in CA, it makes sense to just pay your employees a little more cash and let them get an individual policy. Honestly, that was always the best even before the ACA. And that way you never have to worry about losing it if you change jobs.
My individual policy when I first started was really cheap—$171/month (with a reasonably high deductible, $5k I think). It's now $350—something. So yeah, it's doubled. But it covers more things under the ACA and honestly the price seems fair to me. Just pay employees an extra $5k a year and then they have non-revocable, transferable insurance.
I honestly wish employer health insurance would go away. Like, make it illegal and just have everyone get an individual policy. Yes, companies would have to pay employees an extra $5-10k cash, but I feel like tax incentives could be created on both sides to make this possible and beneficial for everyone.
My individual policy when I first started was really cheap—$171/month (with a reasonably high deductible, $5k I think). It's now $350—something. So yeah, it's doubled. But it covers more things under the ACA and honestly the price seems fair to me. Just pay employees an extra $5k a year and then they have non-revocable, transferable insurance.
I honestly wish employer health insurance would go away. Like, make it illegal and just have everyone get an individual policy. Yes, companies would have to pay employees an extra $5-10k cash, but I feel like tax incentives could be created on both sides to make this possible and beneficial for everyone.
This seems really inefficient - group plans are cheaper than individual plans, and the premiums are tax-deductible, unlike individual plans. I suspect you're also driving away older workers, since the ACA allows insurance companies to charge older customers up to 3 times as much as younger ones. Maybe it would be ideal for everyone to be on the individual market and for group plans not to exist, but that's not the world we live in.
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> Honestly, that was always the best even before the ACA.
Preexisting conditions?
Preexisting conditions?
In California it's very hard for a small company (under 50 at least) to get a decent plan. It's mostly better to just let your emps get ACA coverage (Covered California). Unfortunately the tax system doesn't allow that to be a business reimbursement so you have to just gross it up (to cover taxes) and run through payroll.
At about a dozen you can get insurance that doesn't completely suck, and cover a huge percentage (like 80%) for your staff.
Don't cover 100% -- that way people whose spouses have better coverage won't cost you anything. But it can surprise you: e.g. Stanford faculty have crummy plans these days.
At about a dozen you can get insurance that doesn't completely suck, and cover a huge percentage (like 80%) for your staff.
Don't cover 100% -- that way people whose spouses have better coverage won't cost you anything. But it can surprise you: e.g. Stanford faculty have crummy plans these days.
>Don't cover 100% -- that way people whose spouses have better coverage won't cost you anything.
That's a surprisingly and annoyingly bad incentive. Like, it punishes companies for providing excellent medical coverage by basically making a cash transfer to companies providing shittier coverage to their employees' family members. There's some countering incentives for very high-value employees, where they really really care about medical coverage because their spouse is stuck with shitty coverage, but overall it pretty well sucks.
That's a surprisingly and annoyingly bad incentive. Like, it punishes companies for providing excellent medical coverage by basically making a cash transfer to companies providing shittier coverage to their employees' family members. There's some countering incentives for very high-value employees, where they really really care about medical coverage because their spouse is stuck with shitty coverage, but overall it pretty well sucks.
I don't know a better way to manage this incentive (I mean on a global, society level I mean). Any ideas?
In the case of smaller companies, there really isn't any choice: we don't get the good group plans. If it were free of course everyone would sign up, and then the company would be paying a large premium to the ins co for something the emp wouldn't use -- and for the emp, if they filed a claim they'd have a real problem because each insurance company would claim the other should cover the expense (I know this from experience).
The trick is to make a bigger group. Someone like YC could probably get all their portfolio companies into a single group. Individuals can join IEEE which makes a group, but you can't enroll your company in that.
In the case of smaller companies, there really isn't any choice: we don't get the good group plans. If it were free of course everyone would sign up, and then the company would be paying a large premium to the ins co for something the emp wouldn't use -- and for the emp, if they filed a claim they'd have a real problem because each insurance company would claim the other should cover the expense (I know this from experience).
The trick is to make a bigger group. Someone like YC could probably get all their portfolio companies into a single group. Individuals can join IEEE which makes a group, but you can't enroll your company in that.
It's fairly straightforward to fix - single payer. That's not easy to, like, actually do, since there's established interests in the current system. But it is simple to describe.
We let our employees choose any health plan they want through the marketplace, or whereever, and reimburse them for it.
I used to process accident claims. I have a certificate from a technical college that entitled me to the spiffy title of "Certified life and health insurance specialist."
If you can find a local Direct Primary Care provider, that is a "legal" option under the ACA when combined with a high deductible plan (or possible a health savings account). I have some info here:
http://micheleincalifornia.blogspot.com/2015/12/how-to-fix-a...
From what I have read, DPC reduces costs while improving care. Part of how it brings down costs is a) better maintainance care so health issues don't spiral out of control and b) cutting out the middle man of insurance. Costs are lower in part because you pay the clinic directly.
If you can find a local Direct Primary Care provider, that is a "legal" option under the ACA when combined with a high deductible plan (or possible a health savings account). I have some info here:
http://micheleincalifornia.blogspot.com/2015/12/how-to-fix-a...
From what I have read, DPC reduces costs while improving care. Part of how it brings down costs is a) better maintainance care so health issues don't spiral out of control and b) cutting out the middle man of insurance. Costs are lower in part because you pay the clinic directly.
I'm in California, thanks for the great answers, but should I expect 5-6K per employee per year to cover insurance?
in case I let the employee get their own insurance, how about the mandated law that forces each small business to give coverage to all employee? I get a waiver letter from the employee in that case?
in case I let the employee get their own insurance, how about the mandated law that forces each small business to give coverage to all employee? I get a waiver letter from the employee in that case?
> but should I expect 5-6K per employee per year to cover insurance?
That's about right. I've seen startups cover anywhere between $250-500/month in health insurance premiums, with the rest on the employee.
That's about right. I've seen startups cover anywhere between $250-500/month in health insurance premiums, with the rest on the employee.
If you have solely single employees that might work.
The total cost for "gold" plan for an employee with a family can be easily $1500-$2000+ a month.
The total cost for "gold" plan for an employee with a family can be easily $1500-$2000+ a month.
I have never seen a startup offer gold plans or contribute towards family premiums (just individual). Large enterprises/Fortune 500|50s, but never a startup.
> I have never seen a startup offer gold plans or contribute towards family premiums (just individual). Large enterprises/Fortune 500|50s, but never a startup.
Wouldn't that rule out employing anybody that isn't single?
Wouldn't that rule out employing anybody that isn't single?
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Probably depends on the state you're in, but here in Ohio we have COSE that provides a number of benefits for small businesses, one of which is programs for insurance.
Say hi to my friends over at limelighthealth.com
They are a startup built and started by health insurance brokers. If you are a startup with under 50 employees, go to the founders there. They all still hold their brokerages, and they are startup founders themselves. I can't speak for them, but I am sure they'll know how to help you make the best decisions for insuring your employees.
After-all, they get it.
They are a startup built and started by health insurance brokers. If you are a startup with under 50 employees, go to the founders there. They all still hold their brokerages, and they are startup founders themselves. I can't speak for them, but I am sure they'll know how to help you make the best decisions for insuring your employees.
After-all, they get it.
I use to work there before I started my tech company.