7 ms·

Health insurance options for startups

37 points by brlewis 17y ago

tedshroyer 17y ago
I would recommend getting short term health insurance. I had a 1 year policy from Assurant health which cost me about $50 a month. Alternately, you could get insurance policies against the sort of things you are hugely expensive/unexpected (Cancer insurance, heart attack insurance, accidental injury, etc) and put a reasonable amount of money into a health savings account for typical expenses.
- sitmaster 17y ago
  Short term insurance is a bad idea. If you get an illness that requires ongoing care or treatment then they're going to stop paying when the contract is up and not let you sign up for a new one.
  - tedshroyer 17y ago
    It's definitely riskier than having a permanent policy, but when I made the decision I felt like I would give the startup thing a year then find a regular position again.
jsdalton 17y ago
My employer uses Trinet: http://www.trinet.com/ http://www.trinet.com/. Essentially, we outsource all of our HR functions like payroll and health insurance to them. Though we've grown quite a bit over the last 10 years, we've used Trinet since back when we had as few as two full time employees. I can't speak to the cost side since that's not my domain, but as an employee I think they've been pretty great. It's also a huge benefit to our company not having to hassle over HR-related management issues.
- a4agarwal 17y ago
  I looked into Trinet. Their cost shocked me. It wasn't something I could justify spending money on, especially since setting up health care and most other HR tasks are one time costs.
anamax 17y ago
If you like your current coverage, call the provider and ask. Example: I like Kaiser. I paid less than $400/month for great coverage when I was over 50 and single. (I could have paid less.) If you're under 40, you'll pay a lot less.
- smokey_the_bear 17y ago
  I'm 27 single and healthy. I signed up with Kaiser a year and half ago and my rate was $90/month, for a 2700 deductable HSA. It seemed like a good deal, but they've raised my rates twice in 18 months, and now it's 140/month. I've never used the insurance.
  - anamax 17y ago
    > now it's 140/month. And your rent is? My point is that for the vast majority of people, healthcare isn't a huge obstacle. It's comparable to transportation and food, and behind shelter. I don't see folks complaining that they can't do a startup because rent is too high.
    - smokey_the_bear 17y ago
      My boyfriend and I pay 1000 rent, and he has the same insurance plan as me. So insurance is 25% of our rent. And that doesn't cover anything until we've each paid 2700. We're doing a startup, and it's a big part of our monthly expenses. And actually, we moved out of SF to buckle down on our startup, because rent was too high. Also, people have to pay rent whether they have a startup or a regular job, and they get a lot of special discounts to their healthcare via the regular job that you don't get with individual plans.
      - anamax 17y ago
        > So insurance is 25% of our rent. And your transportation and food costs how much? > And that doesn't cover anything until we've each paid 2700. And your car insurance has a deductible too. If it included maintenance, as you seem to want from health insurance, it would be far more expensive. > We're doing a startup, and it's a big part of our monthly expenses. Umm, your personal expenses are shelter (including energy), food, transportation, healthcare, and entertainment. Do you really think that any other than the latter can be small? Look - I want to be subsidized too, but changing payers can't make things cheaper. Before you say "govt health care" or "single player", I'll remind you that the US govt already spends 8% of US GDP on healthcare and only covers a fraction of the population. The UK, Canada, France, et al also spend 8% of their GDP and yet manage to cover the vast majority of their population, and their GDP/person is significantly less. In other words, the US govt spends far more per person than other countries on healthcare. If you're going to argue that the US govt can provide healthcare for less, I'm going to point out that it doesn't. When you fix govt healthcare, then we'll talk. (And no, you don't need universal to fix things. Those other countries have private systems that co-exist so accounting isn't an excuse.) Yes, I know that the "overhead" category for Medicare is a smaller fraction of the total than the "overhead" category for private, but much of what we'd call overhead isn't counted in that category wrt medicare. For example, fraud.
mrkurt 17y ago
I found this sort of interesting, mostly because it's written from a different angle than I usually think about health care. For instance: > I'd rather optimize for the common case (random doctor visits) than for the edge case (major medical emergency). In my case, I'd prefer to let health insurance work as insurance and have another tool to pay for routine medical care. The plan they opted out of is meant to be paired with an HSA, which is a pretax fund that pays for medical services. It also goes with you when you leave a company/insurance provider. I don't know what the cost difference was between the HSA compatible plan and the one they went with, but I'd like to! My ideal employer would pay for a high deductible health plan and and fund as much of an HSA as they could each year. This is a better deal for me (and I suspect many people here). It allows me to make more nuanced decisions about how my benefits are allocated. If I have a cold, but it's not quite bad enough that it's worth the $80 or whatever out of my "retirement account" to pay for it, I'd rather have the $80. Similarly, if I injure my knee, rather than paying the $800 for an MRI I might choose to put it off and try other things (that one I've done, it worked out well!). Health is one of those things that a health care plan isn't very good at maximizing, which is why it seems odd that companies/employees treat plans this way. The best possible things people can do for their health are: eat healthy and maintain an active lifestyle. Besides that, early detection of giant problems is a huge deal. Standard health plans don't really do any of that, unfortunately. Companies that want more healthy employees should address those things specifically, I think. Sadly, they're some of the first benefits to go (as I sit here sobbing about a 50% cut in my health club allowance for 2010).
- jrockway 17y ago
  I'd rather pay a fixed price and never have to worry about medical care again. And I do this, and it's great. $300/month and everything is covered - doctor's visits, medication, surgery (if necessary), etc.
  - mrkurt 17y ago
    I think that's weird! :) The scope of medical care is really pretty insane, though. I don't really understand why I have a plan that covers both seasonal allergies and life ending testicular cancer. Those seem like services you'd "shop" for separately if they were, say, care related (oil change vs wreck), I don't really understand why people would do it differently. That said, there's no reason you couldn't have what you wanted and me still get what I want, other than the fact that the market's so perverse no one's offering it. If you could use those HSA funds to buy into a "health maintenance plan", would you opt to do that instead? I'd rather have them be discretionary so I can pay for things like laser eye surgery or pec implants.
xal 17y ago
This entire class of problem obviously doesn't exist in Canada. Never had to even think about this in the 5 years we build our company. How much mental bandwidth of creating a startup goes into these things?
- run4yourlives 17y ago
  Of course it exists. If it didn't, I wouldn't have a job. It's just a hell of a lot cheaper a problem to deal with up here.
- brlewis 17y ago
  Probably a lot. It also adds to the reasons why people with kids don't start startups, unless they can get health insurance through a spouse.
- mrkurt 17y ago
  It's a one time bit of mental bandwidth. The amount of bandwidth is less important than the disincentive for starting a company/going it alone. Health care expense are a big deal, they fall between mortgage and food for my family. It's just another thing I get to worry about when I think about employment.
  - abstractbill 17y ago
    It's a one time bit of mental bandwidth. Actually in my experience it's been more like once per year, since health insurance companies tend to change their plans that often. The amount of bandwidth is less important than the disincentive for starting a company/going it alone. Yes, I couldn't agree more.
    - mrkurt 17y ago
      Yeah, the yearly plan changes are true enough. I bet your overall "strategy" doesn't change that often, though, unless that sort of plan gets expensive enough to be untenable. It's still a pain in the ass, though.
- 17y ago
awolf 17y ago
Does anyone have advice for startup founders with pre-existing conditions? I am very close to taking the startup plunge but my Type I Diabetes makes it really hard to give up my current (awesome) healthcare.
- eru 17y ago
  Have you thought about moving to Britain? The National Health Service may cover you.
  - awolf 17y ago
    I have considered this as well as moving to Canada (I'm a dual US and Canadian citizen). In both cases this would be a lapse in my US coverage so there would be no going back to the way things were before moving.
    - eru 17y ago
      Seems to be a lock-in.
- MichaelSalib 17y ago
  Move to Massachusetts. I'm serious. MA has a regulated health insurance exchange. You can compare plans on the exchange website; plans as well as premium increases have to be approved by the exchange administrator. So if an insurance company decides to raise premiums by 80%, they'll be kicked off the exchange. Plus, in MA it is illegal to refuse coverage for pre-existing conditions. They can't even vary the price based on factors other than age/gender/location and maybe smoking. Check out https://www.mahealthconnector.org/portal/site/connector/menuitem.0c5d8e0f63bf313ea6c05667d6468a0c/?fiShown=default https://www.mahealthconnector.org/portal/site/connector/menu... to see for yourself. On the down side, you have to have insurance or pay a big fine every year. And healthcare, just like everything else in MA is expensive. But probably cheaper than CA.
  - sitmaster 17y ago
    Uhh MA is going bankrupt and hemorrhaging money on its healthcare system. Who knows how long it will last.
yummyfajitas 17y ago
As of 2014, there will be a perfect solution. Don't buy insurance and pay the penalty, which will be a small fraction of your income. Since you are an early stage startup, you won't have much income, so the penalty will be low. In the unlikely event you get sick, the insurance companies will be forced to give you coverage.
- jquery 17y ago
  Why was this getting downvoted?
- kgrin 17y ago
  Over time the penalties are likely to rise, precisely to make this sort of behavior economically disadvantageous.
- eli 17y ago
  So if you get hit by a car or your appendix ruptures, you're going to hold off going to the hospital for a few weeks until you can enroll in insurance? And how does the address the points raised in this post -- that people will avoid going to the doctor and allow a slow problem to become a big one? Not exactly a perfect solution.
  - yummyfajitas 17y ago
    If you have a medical emergency, go to the ER. They can't turn you away now and this is not scheduled to change in 2014. You may eventually have to pay for the first few days of treatment out of pocket, but that's just a moderate financial risk which is much smaller than the financial risk of doing a startup. Continuing care will be paid for by the insurance which you buy after your accident. Lastly, if you believe going to the doctor will be useful, either enroll in insurance or pay for the doctor out of pocket, whichever is cheaper. Up until you find yourself in that situation, you will be saving $(cost of insurance - cost of penalty).
    - benatkin 17y ago
      > that's just a moderate financial risk which is much smaller than the financial risk of doing a startup If you do it the wrong way, a startup is a big financial risk. But a lot of brilliant startups get started without their founders ever putting their lives on the line. Case in point: this article. I think there's a tendency for people whose lives are unstable for other reasons to chalk it up to being brilliant. http://gapingvoid.com/2004/08/14/dying-young-is-overrated/ http://gapingvoid.com/2004/08/14/dying-young-is-overrated/
icey 17y ago
Call a broker. They can tell you the best choice for insurance given your circumstances and preferences. It's their job to know the ins and outs of various plans; it's a lot of work to figure all this stuff out. The added bonus is that they'll be up to speed with all of their plans all the time, and if your company takes off they can help you with group policies as well. Using a broker won't cost you anything more than going directly to the carrier, and as an added bonus you have someone to call if things go wrong.
- a4agarwal 17y ago
  I didn't have a good experience with a broker. They were typical sleazy salesmen type. They pushed way too many options on me, instead of really trying to figure out the best plan for us. Ultimately what it boiled down to is there were so many plans, with so many options, that I did ultimately have to understand it thoroughly to make a good decision.
  - icey 17y ago
    It's too bad you didn't give him or another broker a chance, because you spent a lot of money you didn't need to spend. He could have told you how COBRA works, saving you at least 2 months of premium (you have 60 days to sign up for COBRA, you can sign up at any time during this period and make payments retroactively - payment is due 45 days after you elect to use it). While I'm sure you spent the time to really research the plan you selected in depth, not everyone may be able to do this. Plans that look the same can sometimes have subtle but important differences, especially with regards to coverage caps and qualified coverages.
minouye 17y ago
I'd stick with this advice (in addition to the post): http://news.ycombinator.com/item?id=144905 http://news.ycombinator.com/item?id=144905
thaumaturgy 17y ago
I'm curious now ... how many people reading this haven't had some form of health insurance or regular health care for an appreciable period of time? (A year or more.) I've been without for -- hmm, wow, around 10 years now. :-/
gyardley 17y ago
For companies with more than a couple of employees, try a professional employer organization (PEO). Administaff is probably the best known; we used Ambrose at our startup.
thibaut_barrere 17y ago
Here in France the mandatory health regime (what we call "sécurité sociale") is covered by taxes, and I added around 1500€ per year in what we call a "complémentaire" (which complements the mandatory coverage). This covers my wife, my kid and I, including a good dental protection. People here often shout about how much taxes they pay, but I do know why :)
hanskuder 17y ago
The startup I work for, http://www.gobloomhealth.com http://www.gobloomhealth.com, is working to solve this exact problem. Employers outsource all their health benefits administration to Bloom Health, and we match employees to the health plans best suited to them. Two of our early customers are small software dev shops.

37 points by brlewis 17y ago

I would recommend getting short term health insurance. I had a 1 year policy from Assurant health which cost me about $50 a month. Alternately, you could get insurance policies against the sort of things you are hugely expensive/unexpected (Cancer insurance, heart attack insurance, accidental injury, etc) and put a reasonable amount of money into a health savings account for typical expenses.

sitmaster 17y ago
Short term insurance is a bad idea. If you get an illness that requires ongoing care or treatment then they're going to stop paying when the contract is up and not let you sign up for a new one.
- tedshroyer 17y ago
  It's definitely riskier than having a permanent policy, but when I made the decision I felt like I would give the startup thing a year then find a regular position again.

jsdalton 17y ago

My employer uses Trinet: http://www.trinet.com/ http://www.trinet.com/. Essentially, we outsource all of our HR functions like payroll and health insurance to them. Though we've grown quite a bit over the last 10 years, we've used Trinet since back when we had as few as two full time employees. I can't speak to the cost side since that's not my domain, but as an employee I think they've been pretty great. It's also a huge benefit to our company not having to hassle over HR-related management issues.

a4agarwal 17y ago
I looked into Trinet. Their cost shocked me. It wasn't something I could justify spending money on, especially since setting up health care and most other HR tasks are one time costs.

anamax 17y ago

If you like your current coverage, call the provider and ask. Example: I like Kaiser. I paid less than $400/month for great coverage when I was over 50 and single. (I could have paid less.) If you're under 40, you'll pay a lot less.

smokey_the_bear 17y ago
I'm 27 single and healthy. I signed up with Kaiser a year and half ago and my rate was $90/month, for a 2700 deductable HSA. It seemed like a good deal, but they've raised my rates twice in 18 months, and now it's 140/month. I've never used the insurance.
- anamax 17y ago
  > now it's 140/month. And your rent is? My point is that for the vast majority of people, healthcare isn't a huge obstacle. It's comparable to transportation and food, and behind shelter. I don't see folks complaining that they can't do a startup because rent is too high.
  - smokey_the_bear 17y ago
    My boyfriend and I pay 1000 rent, and he has the same insurance plan as me. So insurance is 25% of our rent. And that doesn't cover anything until we've each paid 2700. We're doing a startup, and it's a big part of our monthly expenses. And actually, we moved out of SF to buckle down on our startup, because rent was too high. Also, people have to pay rent whether they have a startup or a regular job, and they get a lot of special discounts to their healthcare via the regular job that you don't get with individual plans.
    - anamax 17y ago
      > So insurance is 25% of our rent. And your transportation and food costs how much? > And that doesn't cover anything until we've each paid 2700. And your car insurance has a deductible too. If it included maintenance, as you seem to want from health insurance, it would be far more expensive. > We're doing a startup, and it's a big part of our monthly expenses. Umm, your personal expenses are shelter (including energy), food, transportation, healthcare, and entertainment. Do you really think that any other than the latter can be small? Look - I want to be subsidized too, but changing payers can't make things cheaper. Before you say "govt health care" or "single player", I'll remind you that the US govt already spends 8% of US GDP on healthcare and only covers a fraction of the population. The UK, Canada, France, et al also spend 8% of their GDP and yet manage to cover the vast majority of their population, and their GDP/person is significantly less. In other words, the US govt spends far more per person than other countries on healthcare. If you're going to argue that the US govt can provide healthcare for less, I'm going to point out that it doesn't. When you fix govt healthcare, then we'll talk. (And no, you don't need universal to fix things. Those other countries have private systems that co-exist so accounting isn't an excuse.) Yes, I know that the "overhead" category for Medicare is a smaller fraction of the total than the "overhead" category for private, but much of what we'd call overhead isn't counted in that category wrt medicare. For example, fraud.

mrkurt 17y ago

I found this sort of interesting, mostly because it's written from a different angle than I usually think about health care. For instance: > I'd rather optimize for the common case (random doctor visits) than for the edge case (major medical emergency). In my case, I'd prefer to let health insurance work as insurance and have another tool to pay for routine medical care. The plan they opted out of is meant to be paired with an HSA, which is a pretax fund that pays for medical services. It also goes with you when you leave a company/insurance provider. I don't know what the cost difference was between the HSA compatible plan and the one they went with, but I'd like to! My ideal employer would pay for a high deductible health plan and and fund as much of an HSA as they could each year. This is a better deal for me (and I suspect many people here). It allows me to make more nuanced decisions about how my benefits are allocated. If I have a cold, but it's not quite bad enough that it's worth the $80 or whatever out of my "retirement account" to pay for it, I'd rather have the $80. Similarly, if I injure my knee, rather than paying the $800 for an MRI I might choose to put it off and try other things (that one I've done, it worked out well!). Health is one of those things that a health care plan isn't very good at maximizing, which is why it seems odd that companies/employees treat plans this way. The best possible things people can do for their health are: eat healthy and maintain an active lifestyle. Besides that, early detection of giant problems is a huge deal. Standard health plans don't really do any of that, unfortunately. Companies that want more healthy employees should address those things specifically, I think. Sadly, they're some of the first benefits to go (as I sit here sobbing about a 50% cut in my health club allowance for 2010).

jrockway 17y ago
I'd rather pay a fixed price and never have to worry about medical care again. And I do this, and it's great. $300/month and everything is covered - doctor's visits, medication, surgery (if necessary), etc.
- mrkurt 17y ago
  I think that's weird! :) The scope of medical care is really pretty insane, though. I don't really understand why I have a plan that covers both seasonal allergies and life ending testicular cancer. Those seem like services you'd "shop" for separately if they were, say, care related (oil change vs wreck), I don't really understand why people would do it differently. That said, there's no reason you couldn't have what you wanted and me still get what I want, other than the fact that the market's so perverse no one's offering it. If you could use those HSA funds to buy into a "health maintenance plan", would you opt to do that instead? I'd rather have them be discretionary so I can pay for things like laser eye surgery or pec implants.

xal 17y ago

This entire class of problem obviously doesn't exist in Canada. Never had to even think about this in the 5 years we build our company. How much mental bandwidth of creating a startup goes into these things?

run4yourlives 17y ago
Of course it exists. If it didn't, I wouldn't have a job. It's just a hell of a lot cheaper a problem to deal with up here.
brlewis 17y ago
Probably a lot. It also adds to the reasons why people with kids don't start startups, unless they can get health insurance through a spouse.
mrkurt 17y ago
It's a one time bit of mental bandwidth. The amount of bandwidth is less important than the disincentive for starting a company/going it alone. Health care expense are a big deal, they fall between mortgage and food for my family. It's just another thing I get to worry about when I think about employment.
- abstractbill 17y ago
  It's a one time bit of mental bandwidth. Actually in my experience it's been more like once per year, since health insurance companies tend to change their plans that often. The amount of bandwidth is less important than the disincentive for starting a company/going it alone. Yes, I couldn't agree more.
  - mrkurt 17y ago
    Yeah, the yearly plan changes are true enough. I bet your overall "strategy" doesn't change that often, though, unless that sort of plan gets expensive enough to be untenable. It's still a pain in the ass, though.
17y ago

awolf 17y ago

Does anyone have advice for startup founders with pre-existing conditions? I am very close to taking the startup plunge but my Type I Diabetes makes it really hard to give up my current (awesome) healthcare.

eru 17y ago
Have you thought about moving to Britain? The National Health Service may cover you.
- awolf 17y ago
  I have considered this as well as moving to Canada (I'm a dual US and Canadian citizen). In both cases this would be a lapse in my US coverage so there would be no going back to the way things were before moving.
  - eru 17y ago
    Seems to be a lock-in.
MichaelSalib 17y ago
Move to Massachusetts. I'm serious. MA has a regulated health insurance exchange. You can compare plans on the exchange website; plans as well as premium increases have to be approved by the exchange administrator. So if an insurance company decides to raise premiums by 80%, they'll be kicked off the exchange. Plus, in MA it is illegal to refuse coverage for pre-existing conditions. They can't even vary the price based on factors other than age/gender/location and maybe smoking. Check out https://www.mahealthconnector.org/portal/site/connector/menuitem.0c5d8e0f63bf313ea6c05667d6468a0c/?fiShown=default https://www.mahealthconnector.org/portal/site/connector/menu... to see for yourself. On the down side, you have to have insurance or pay a big fine every year. And healthcare, just like everything else in MA is expensive. But probably cheaper than CA.
- sitmaster 17y ago
  Uhh MA is going bankrupt and hemorrhaging money on its healthcare system. Who knows how long it will last.

yummyfajitas 17y ago

As of 2014, there will be a perfect solution. Don't buy insurance and pay the penalty, which will be a small fraction of your income. Since you are an early stage startup, you won't have much income, so the penalty will be low. In the unlikely event you get sick, the insurance companies will be forced to give you coverage.

jquery 17y ago
Why was this getting downvoted?
kgrin 17y ago
Over time the penalties are likely to rise, precisely to make this sort of behavior economically disadvantageous.
eli 17y ago
So if you get hit by a car or your appendix ruptures, you're going to hold off going to the hospital for a few weeks until you can enroll in insurance? And how does the address the points raised in this post -- that people will avoid going to the doctor and allow a slow problem to become a big one? Not exactly a perfect solution.
- yummyfajitas 17y ago
  If you have a medical emergency, go to the ER. They can't turn you away now and this is not scheduled to change in 2014. You may eventually have to pay for the first few days of treatment out of pocket, but that's just a moderate financial risk which is much smaller than the financial risk of doing a startup. Continuing care will be paid for by the insurance which you buy after your accident. Lastly, if you believe going to the doctor will be useful, either enroll in insurance or pay for the doctor out of pocket, whichever is cheaper. Up until you find yourself in that situation, you will be saving $(cost of insurance - cost of penalty).
  - benatkin 17y ago
    > that's just a moderate financial risk which is much smaller than the financial risk of doing a startup If you do it the wrong way, a startup is a big financial risk. But a lot of brilliant startups get started without their founders ever putting their lives on the line. Case in point: this article. I think there's a tendency for people whose lives are unstable for other reasons to chalk it up to being brilliant. http://gapingvoid.com/2004/08/14/dying-young-is-overrated/ http://gapingvoid.com/2004/08/14/dying-young-is-overrated/

icey 17y ago

Call a broker. They can tell you the best choice for insurance given your circumstances and preferences. It's their job to know the ins and outs of various plans; it's a lot of work to figure all this stuff out. The added bonus is that they'll be up to speed with all of their plans all the time, and if your company takes off they can help you with group policies as well. Using a broker won't cost you anything more than going directly to the carrier, and as an added bonus you have someone to call if things go wrong.

a4agarwal 17y ago
I didn't have a good experience with a broker. They were typical sleazy salesmen type. They pushed way too many options on me, instead of really trying to figure out the best plan for us. Ultimately what it boiled down to is there were so many plans, with so many options, that I did ultimately have to understand it thoroughly to make a good decision.
- icey 17y ago
  It's too bad you didn't give him or another broker a chance, because you spent a lot of money you didn't need to spend. He could have told you how COBRA works, saving you at least 2 months of premium (you have 60 days to sign up for COBRA, you can sign up at any time during this period and make payments retroactively - payment is due 45 days after you elect to use it). While I'm sure you spent the time to really research the plan you selected in depth, not everyone may be able to do this. Plans that look the same can sometimes have subtle but important differences, especially with regards to coverage caps and qualified coverages.

minouye 17y ago

I'd stick with this advice (in addition to the post): http://news.ycombinator.com/item?id=144905 http://news.ycombinator.com/item?id=144905

thaumaturgy 17y ago

I'm curious now ... how many people reading this haven't had some form of health insurance or regular health care for an appreciable period of time? (A year or more.) I've been without for -- hmm, wow, around 10 years now. :-/

gyardley 17y ago

For companies with more than a couple of employees, try a professional employer organization (PEO). Administaff is probably the best known; we used Ambrose at our startup.

thibaut_barrere 17y ago

Here in France the mandatory health regime (what we call "sécurité sociale") is covered by taxes, and I added around 1500€ per year in what we call a "complémentaire" (which complements the mandatory coverage). This covers my wife, my kid and I, including a good dental protection. People here often shout about how much taxes they pay, but I do know why :)

hanskuder 17y ago

The startup I work for, http://www.gobloomhealth.com http://www.gobloomhealth.com, is working to solve this exact problem. Employers outsource all their health benefits administration to Bloom Health, and we match employees to the health plans best suited to them. Two of our early customers are small software dev shops.