
How to Choose Health Insurance – Startup Edition - g_h
http://blog.getsimplyinsured.com/how-to-choose-health-insurance-startup-edition/
======
DennisP
COBRA is not necessarily more expensive than individual insurance, if you're
older.

COBRA charges the same premium as the group insurance you had with your
employer, perhaps with a small surcharge tacked on. It's more out of your
pocket simply because your employer isn't pitching in anymore.

If you're young and healthy, COBRA may cost more, since it's a rate for a
group that probably includes older and sicker people. You're healthier than
the average person in the group so individual insurance is cheaper.

But if you're older or sicker yourself, going with individual insurance means
you no longer have those healthy young people propping up your insurer's
profits, so you'll pay more with individual insurance. A friend of mine was
charged quite a bit more, and wasn't even especially unhealthy.

Of course all this will change at the beginning of 2014.

~~~
mapgrep
COBRA coverage ends after 18 months, which makes it risky even when it's
cheaper -- if you come down with a chronic illness (cancer, diabetes) in the
meantime it will be much harder to find follow on coverage because now you
have a precondition.

Or at least that's my understanding from my CPA who was trying to talk me out
of using COBRA coverage. That conversation was before AHCA ("Obamacare")
passed.

If the ban on precondition screening starts in 2014, perhaps it's safe to
start COBRA this coming June.

~~~
DennisP
Exactly but the ban starts on January 1, 2014. You can safely start COBRA now,
since with the recent election there's no chance the law will be overturned
before then, and little chance within the next four years. After that it'll be
pretty well entrenched.

Here's a timeline of Affordable Care Act provisions:
<http://www.healthcare.gov/law/timeline/>

Note that the law not only ensures you can get insurance, it prohibits
insurers from charging higher premiums for people with preexisting conditions.

~~~
tptacek
It's interesting to consider that at this point, people are going to start
planning things like COBRA coverage on the assumption that they'll be able to
automatically obtain private coverage in 2014; this bolsters the case against
any partial repeal of guaranteed issue, as it'll screw lots of people over if
they do it.

------
awolf
This post gives terrible advice for those in the Ongoing Medical Conditions
category. For most pre-existing conditions there's very little chance of
getting approved for any of the plans they recommend. A bit surprising coming
from a company that should apparently know what they're talking about.

As an independent software developer with Type 1 Diabetes, COBRA from my
previous employer is my only option. Fortunately, California extends the
national 18 month maximum duration to 36 months. Unfortunately, my COBRA will
run out 4 months before 2014, so I'll need to figure something out before
then.

~~~
Stratoscope
Under current California law, when your COBRA runs out, you are entitled to a
HIPAA guaranteed issue plan. Insurers can't turn you down for this plan as
long as you've had insurance for 18 months and have exhausted your COBRA
options.

For example, when you apply for a Blue Shield individual plan, you have three
options:

1) Answer all the medical questions and apply for underwritten coverage.

2) Skip all the medical questions and apply for a guaranteed issue plan only
(if you meet the 18 month and COBRA requirements).

3) Apply for both simultaneously: answer the medical questions and hope to get
underwritten coverage, but also request automatic guaranteed issue if they
decline the underwritten plan. This is the option I'd recommend of course.
(Even with a pre-existing condition, it's possible that they may still offer
an underwritten plan in a higher rate tier, which would still be less than the
guaranteed issue plan.)

More information from the California Department of Managed Health Care:

<http://www.hmohelp.ca.gov/dmhc_consumer/hp/hp_cobra.aspx>

<http://www.hmohelp.ca.gov/dmhc_consumer/hp/hp_hipaacp.aspx>

------
swohns
NYC has some great options: 1\. Freelancers Union 2\. The City has sponsored
plans as well: <https://www.ehealthinsurance.com>

~~~
carterschonwald
Indeed. Were I not under my parents plan I'd totally be getting the
freelancers one

~~~
swohns
Freelancer is a solid choice for individuals, but if you're company is paying
for it, the New York plans are surprisingly comprehensive. Nice to see the
city supporting entrepreneurs like this!

------
MrFoof
Massachusetts has the "Massachusetts Health Connector" for MA residents which
lets you choose from a large number of providers and dozens of plans:
<https://www.mahealthconnector.org/portal/site/connector>

I wouldn't of struck out on my own if it didn't exist.

------
rdl
I'm pretty sure this is an incomplete way to pick insurance.

Obviously under 26 is different, or over 65. Or military or veteran. Exploit
spousal insurance if that works for you too.

Otherwise, I care about being able to see my current doctor or choice of great
doctors, which is where Kaiser totally fails, and where HealthNet also is
inferior to the better plans (blue shield or anthem).

High deductible plans (for HSA) come out pretty well; I paid $90-118/mo for
mine at 31-33 (big increases the last 2y due to 100% preventive coverage and
no lifetime limits, so it was easy to cost the insurer $300/y on a
catastrophic plan....)

------
daguar
These folks don't appear to understand the health insurance market: if you
have ongoing medical conditions, basically none of these options will be
available to you at these premium levels.

Insurers underwrite applicants in the individual market, meaning that for
someone with preexisting medical conditions, these options will either:

1\. Simply not be offered (they will deny you coverage)

2\. Offer coverage, but exclude coverage of any preexisting conditions
(usually for at least 6 months)

3\. Charge a much higher premium rate than those shown here

Not to be harsh, but this analysis is dangerously misleading. Do they have
domain knowledge of this area?

~~~
samspot
I read this article as being targeted toward founders picking a provider for
their company. Did I misunderstand the target audience?

~~~
daguar
Based on the description, it sounds like they're purchasing for themselves
(founders purchasing individually, not pooling into a small group plan for a
company).

The premiums bear this out.

------
helmut_hed
I'm curious to know, for the "Ongoing Medical Conditions" case, whether they
verified if you could actually get insured in the first place on the plans
they recommended. This seems to be the biggest issue with private insurance -
they don't have to take you, and generally won't, if you have a "preexisting
condition" of any sort.

~~~
jpdoctor
This.

Also: Going with some mickey mouse plan is essentially a bet that you'll never
be diagnosed with anything that is chronic during coverage. My wife manage to
strike it rich with an autoimmune disease, and now we essentially cannot move
nor change plans in any way.

(ACA will help a lot, but I still wouldn't put it past the assholes in DC to
repeal it before it helps us.)

~~~
khuey
Now that Barack Obama has been reelected there's no way the ACA is getting
repealed before January 2017 (he's not going to let his signature
accomplishment get repealed, and there's no way Republicans will amass a veto-
proof majority in the legislature). After that, it likely will be too
entrenched to repeal wholesale.

------
protomyth
added info: flexible spending arrangements (health FSAs) are capped at $2,500
for 2013. This is a rather large drop and might require you to do some
additional budgeting this year.

~~~
uptown
Are HSA's the kind of thing you need to opt-into during the enrollment window,
or you've missed the opportunity till next year? Never used one before, but it
might make sense this year.

~~~
alaithea
HSA != FSA. The former is a savings/investment account that lets you keep your
money year over year, to be used for medical expenses. FSA's are use-it-or-
lose it. HSA's are typically paired with a particular type of high-deductible
insurance, while FSA's tend to go along with any type of plan.

------
rwmj
I think I'll stick with the universal coverage provided by my government,
thanks.

~~~
jeffreylo
This article's clearly written for the state of California. Did you read the
article?

~~~
thezoid
It's nice to not have to worry about these things though. It would be pretty
awesome to one day see the US have a public health care.

~~~
twoodfin
The U.S. has public education, and people still worry an awful lot about
whether their kids' schools are any good, to the point of some spending a
premium of literally hundreds of thousands of dollars on housing in the
"right" districts, or on private education. The poor are still underserved,
racially-measured outcome disparities are substantial, etc.

None of this is directly an argument against public health care, since
obviously there's a benefit to universal availability in both education and
health, but certainly it wouldn't be a panacea.

~~~
rayiner
When you adjust for demographics, American education is as good as any system
in western Europe, and by and large middle of the spectrum families can be
assured that their local public school will at least not be a complete
disaster.

The same isn't true for healthcare. This bizarre system of tying your
healthcare to your job means even middle and high income families don't have
any peace of mind when it comes to healthcare. Heck, my wife and I are a high
income couple and have expensive health insurance, and we are still completely
paranoid about all the ways the insurers could find to screw us over,
especially now that we're about to have a baby. Every time my wife goes to a
pre-natal visit, she ends up fighting with the insurer about how something was
coded, etc.

~~~
twoodfin
If you don't mind my asking, what's your health plan? I'm on a Blue Cross Blue
Shield of MA PPO and couldn't be happier. It's indeed very expensive, but
considering what my family has gotten out of it with essentially 0 hassles, I
have no grounds for complaint. Essentially everything's covered, even out to
some wacky stuff like acupuncture. I can walk into a specialist's office at a
world class hospital with no referral for a $20 copay. During at least two
health crises, they've reached out to make sure care was being coordinated
properly.

Sorry that this sounds like an ad, but we don't all live in fear of our health
plans. (I dislike the term "insurer", since what they sell stopped behaving
like insurance a long time ago.)

~~~
astrodust
What does "very expensive" mean in this context?

~~~
twoodfin
Don't quote me, but something like $1000/month for employee +1 coverage. Of
that, ~30% comes out of my paycheck and is tax deductible. Not to put too fine
a point on it: $300/mo pretax is a steal. Even assuming the full cost would,
IMHO, be reasonable. $12,000 sounds like a lot but I suspect that BCBS is
doing more for me in real terms right now than the Federal government to which
I hand over the equivalent of a mid-range Mercedes in income tax every year.

~~~
astrodust
It doesn't just sound like a lot. It is a lot.

Even with the "high income" surcharge here for health-care, it's less than
$1000 _a year_ for an individual. Since it's deducted from your income along
with regular payroll taxes, you don't even have to pay for dependents. They're
covered under their own plan which is basically free until they start earning
and paying deductions of their own.

In a start-up environment, $12,000 a year is not a lease on a Mercedes, it's
the difference between your business floundering in obscurity and affording a
few key networking trips, or the difference between living in a bedbug
infested hellhole or having a decent apartment.

~~~
twoodfin
Where's "here"?

~~~
astrodust
Here meaning Ontario:
<http://en.wikipedia.org/wiki/Ontario_Health_Insurance_Plan>

There are private insurance plans for exceptional circumstances, but these
often over-lap with other policies to such a degree they're basically a luxury
offered by companies to entice workers. The only real perk to them is the
dental and optical coverage that isn't covered by the standard health-care
system.

~~~
tptacek
Are you comparing out-of-pocket costs for a single-payer health care system in
Canada with the premiums for private health insurance in the US? Canada does
spend less than the US on health care, but not _ten times less_ ; your taxes
are making up a good chunk of that gap.

~~~
astrodust
You're presuming 100% of what you pay to the insurance company gets passed
through, which it does not.

There's also regulated costs, which makes it cheaper across the board. Per-
capita spending is actually only about 50% what it is in the USA
([http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...](http://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_\(PPP\)_per_capita)).

Factoring in that, the net cost might be subsidized by other taxes by at most
~$2000 more a year. Part of this is paid by the employer on behalf of the
employee and isn't listed as a deduction. The rest is subsidies from the
federal level of government.

The thing that makes this more affordable for people on limited incomes is how
it's tiered, not a fixed price for everyone. If you're an entrepreneur barely
making an income, you don't pay much.

------
kochbeck
Umm... that was a pile of mediocre advice. They compared a bunch of plans to
costs in San Francisco, but they overlooked the #1 most important thing: for
persons with fairly low to zero income, San Francisco already has universal
healthcare. For founders, the care is actually pretty good, and the premiums
are very low for end-to-end primary, emergency, hospital and prescription
coverage. I've used it. No major complaints.

The program is called Healthy SF. If you're presently living in SF and not
covered, check the enrollment site and get registered right away.

------
green_dye_00
As a part-time member of the National Guard, I pay $54 (fifty-four) a month
for private health insurance. The family rate is $192. It's subsidized by the
taxpayer (thank you).

The Guard is not for everyone, but it has been great for me, on so many
different levels. It has never substantially interfered with the three start-
ups I've been in.

The inexpensive health insurance is a huge comfort for the periods where I
work independently or before we get funding: it's like a massive drop in burn
rate!

There are cyber opportunities (variable by geography), so talk to your local
recruiter.

~~~
Kroem3r
It must get tedious listening to Canadians go on about it, but this is about
what we pay in British Columbia for people with full incomes. The coverage is
pretty good, including 'out there' stuff like acupuncture. We top it up with
private coverage for full dental; that costs the company about $100 to $200
per month per family. The service levels are good to excellent. This is all
pretty consistent across the country, so talk to your travel agent.

------
Stratoscope
Here's a bit of info about HSAs (Health Savings Accounts) since there are a
few questions about them. In particular I'll contrast them with FSAs:

Like an FSA, pre-tax money goes into an HSA, and you can withdraw from it tax-
free for qualifying medical expenses. You can also make taxable withdrawals
with no penalty for non-medical purposes after age 65.

Unlike an FSA, an HSA is a real savings account and not a use-it-or-lose-it
account. You own the money in it; it doesn't vanish at the end of the year.

You don't have to get an HSA from the same provider as your medical plan. You
simply need to get an HSA-compatible medical plan like the ones mentioned in
the article, and then you can open an HSA anywhere they are offered.

Once you have that plan, you can open the HSA any time you want. There is no
"enrollment period" for an HSA when you open it separately from your medical
plan.

You don't have to get an HSA that is "managed" in the way that most FSAs are.
Instead, you can get an HSA that works like a checking account: You have your
own checkbook and an ATM card that works at medical providers. Rather than
submitting claim forms and getting reimbursed, you simply write checks or use
the ATM card to pay your medical bills. Or if you use other funds (checking,
credit card, whatever) to pay a medical bill, you can write a check to
yourself from your HSA to reimburse yourself.

With this type of HSA, you don't have to decide ahead of time how much you
will be putting into it. You get deposit slips or a way to make online
deposits, and it's up to you to decide how much and how often to contribute,
subject to the maximum contribution limits.

If you're maxing out your other retirement account options, you can contribute
to your HSA but pay your medical expenses out-of-pocket, so your HSA balance
grows like another IRA.

This kind of HSA is also portable: if you change insurance companies or plans,
you can keep the same HSA instead of having to transfer it to your new
provider. As long as your new medical plan is still HSA-compatible, you can
keep contributing to the HSA.

If you change to a medical plan that is no longer HSA-compatible, you can keep
your HSA and continue to use it for medical expenses, or let the money sit in
it as long as you want. You just can't make additional contributions to the
HSA.

I use HSA Bank for my HSA: <http://www.hsabank.com/> At the time I opened my
HSA many years ago, they were one of the few options for the type of self-
managed HSA I wanted. I looked at other banks as well, but they were offering
traditional managed HSAs where I'd have to deal with reimbursement forms. I
would hope there are a number of other options for self-managed HSAs these
days, but at least this is one place to look at. (I have no affiliation with
them other than as long-time customer.)

I recently talked with the COO of a mid-size software company who was looking
into HSAs and their payroll/insurance provider was pushing combined plans that
included the medical and HSA into one managed plan. When I recommended he look
into these self-managed HSAs and described them to him, he asked, "Is that
legal?" I assured them that it is and that I've had one for many years. :-)

~~~
rdl
The annoying trick once you have an HSA is that you basically need to put $3k
balance into it to keep from paying recurring fees on a decent savings account
(HSA or Sterling, I think), or you have to have over a certain amount to then
be allowed to use it to either buy funds (often overpriced) or do self-
directed trading (also usually on subpar terms).

It's essentially a Roth IRA; it actually makes sense, due to compounding, to
pay cash for anything your insurance doesn't cover, and max out your HSA every
year, keeping it in there, and reinvesting. Well, it makes sense if 1) you
have enough income or assets to want to shift an extra $3k/yr into Roth IRA
equivalent and 2) you don't fear the law will change before you retire or need
lots of uninsured health care money.

~~~
secabeen
Another thing that can be annoying about HSAs is that they also have account
closure fees. If you're going to shut down your HSA, make sure you drain it to
$0 before you call to close it out. I lost $15 that way.

------
dot
These premiums actually look pretty good. I was under the impression that non-
employer based plans were much more expensive... Is there a catch? Do they
have to cover pre-existing conditions in CA already? Are there coverage caps?
Thanks for putting together the article, very helpful!

~~~
vivekajayshah
Starting in 2014 - it will be illegal to have lifetime caps on health
insurance. Also limits on "essential services" will be illegal. They are
loosely defined as:

\- Emergency services \- Prescription drugs \- Mental and behavioral health,
and substance abuse treatment \- Preventive, wellness, and chronic disease
management \- Pediatric services \- Maternity and newborn care

Excluding based on pre-existing conditions will also be illegal starting in
2014. Until then - California has a health plan for pre-existing conditions
here: <http://www.pcip.ca.gov/Home/default.aspx> and you can find information
for all state here: <https://www.pcip.gov/>

~~~
daguar
PCIP is only an option if you've been uninsured for more than 6 months and
have been denied insurance (or been offered a very high premium rate).

------
wavesounds
Thank you so much for posting this, I have been overpaying for my cobra health
insurance for months now just because changing seemed so daunting and
confusing.

------
andrewcooke
how do they calculate the "worst case" numbers for chronic illnesses? are
those for indefinite support?

(i'm curious because i have recently run into this. here in chile, private
health insurance is unlikely to cover long term medication but, thankfully,
there is a government scheme for many major illnesses. so, for example, a
month's supply of interferon-beta is $250 instead of $2000.)

~~~
vivekajayshah
Worst Case is calculated using a simulated "catastrophic illness" - a
combination of surgery, expensive drugs, emergency care, and hospitalization.

The costs we calculated are yearly estimates - assuming you stay with the same
plan, and they don't/can't raise your rates or cancel your plan - this
estimate should hold for chronic illness.

We can estimate costs for specific chronic illnesses - click the "Personalize"
button on the left side of the result page. You can select the specific
chronic condition you're worried about, and it will provide a customized
estimate.

My contact info is my profile - feel free to call/email if you have further
questions.

~~~
andrewcooke
oh, i completely missed the link to the actual tool, sorry.

thanks for the reply - i was just curious from a "foreign spectator"
viewpoint.

i was going to ask what protection there was against cancelling plans, but a
little googling seems to show that was made illegal as part of obamacare!

------
greenwalls
Do you have a section on your website for families? I couldn't find it.

~~~
vivekajayshah
Thanks for catching that. Our website currently doesn't have a section for
families - but we plan on launching this soon.

If you send me your email (mine is in my profile), I'd be happy to notify you
when it launches.

------
eshilts
This is a great idea. How do you plan to generate revenue?

