
Ask HN: What do founders do for health insurance? - lionheart
The health insurance issue has been plaguing me for a while and I wanted to see if maybe some other founders on HN have the solution.<p>Health insurance is one of the most important "benefits" that is included in having a corporate job.<p>So what do you do when you quit your job to start your own company?<p>Everything I've seen so far costs in the neighborhood of $1,500 a month for a family of four. That's a huge payment when you're just starting and have no income.<p>Is there a better solution? What do you use?
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mrkurt
The best solution was (for me anyway) to treat insurance as insurance instead
of a health care plan, and take advantage of all the tax breaks I could for
doing so. I put my family on a $10k deductible plan, primarily to cover
catastrophes. This gave me two things: negotiated rates for health services
(typically a 40-60% discount) and eligibility for an HSA. The plan ran us
$190/mo.

Now, $10k is kind of a scary number for something like that, but I felt
comfortable with it given that we'd never have to write a $10k check. At the
very worst we'd rack up a $10k debt to a hospital or something, which (given
the current state of healthcare) we could reasonably expect to pay off over
like 15 - 20years. It seemed reasonable to me, for what we needed.

The HSA is helpful because it's effectively another IRA you can use for pretty
much any medical expense. So for normal health care, we ended up paying about
40% of the "list" costs for things, and pre-tax.

Doing this requires that you be a little aggressive about getting good deals
on care, though. My daughter broke her arm about three months in to this, so
we took her to a minor emergency clinic. I told them what was up and they
"coded" the visit at a much lower rate than it would have been. The next day,
we actually called around to find out what people were going to charge us for
a real cast to replace the splint the clinic put on. It worked out to be about
$600 total, including the minor emergency clinic visit.

So in summary: get coverage for catastrophic health events with a "cheap"
plan, abuse the negotiated rates that plan gets you, get an HSA, and be an
intelligent consumer of health care. Oh, and minor emergency clinics are your
friend.

------
tptacek
Been there.

$1,500/mo is a typical quote for "normal"-deductable health insurance. If
you're a young family, that's not what you want; you want high-deductable
health insurance, which has a low monthly payment but effectively means you're
paying for all your doctors visits and medications out of pocket.

The real goal of insurance is to keep you from going bankrupt over
appendectomies and broken bones. You can afford to pay your pediatrician
yourself.

If you have a qualifying high-deductable plan, you can also create an HSA
account and fund it to pay for routine health expenses; those costs are then
tax-advantaged.

I agree with the other posters that recommend brokers. Especially for a
family, you can wind up in a rats nest of preexisting coverage denials if
anyone has ever been to the hospital before. I got the sense that insurers
simply don't like covering women who might have children. Brokers will not
resolve this problem for you, but they'll make most of the paperwork go away.

Couple more thoughts.

First, there may be an engineering union style group you can join to get
health insurance from. Jeremy, one of my NYC partners, had a group like this
he got coverage through. So look around for things like that.

Second, beware of temporary/month-to-month insurance, which reputable insurers
offer very cheaply. It doesn't take a lot of thought to see why this is a bad
deal: they're under no obligation to pick you up once the term ends. If you
get sick April 29th and your plan runs out April 30th, you're completely
fucked.

Matasano got group coverage (through United, and I'm not a fan) a couple years
ago. It made hiring _much_ easier; health insurance was often the first
question candidates asked, before base comp. Be aware that group coverage
isn't a magic bullet either. What it does is make preexisting condition issues
go away. But it isn't cheaper than what you can get on your own.

~~~
yummyfajitas
_I got the sense that insurers simply don't like covering women who might have
children._

This is probably because of an adverse selection problem: childbirth is
usually planned (unlike serious illness). This means families planning to give
birth are more likely to purchase insurance.

Is it possible to avoid the adverse selection problem by purchasing health
insurance which does not pay for childbirth or childbirth related health
problems?

~~~
ams6110
Yes it is, in fact the last time I bought an "individual" plan for my family
maternity was explicitly NOT covered; adding it would have made the premium
much higher. I paid about $400/month for spouse and kids; I had my own
coverage at work but they did not provide family coverage.

If you KNOW you don't need maternity coverage that saves you a lot of money,
but don't have any "accidents" as childbirth will cost you many thousands, up
to hundreds of thousands if there are complications.

------
icey
I don't know what part of the country you're in, but you should contact a
broker. They can give you a bunch of options and tell you what all of the
options mean.

Personally, I'd prefer an independent broker than someone who worked for a big
firm like State Farm or the like.

As an additional note, you don't pay anything extra for using a broker; the
carrier pays them additional money directly. All the carriers will have
similar override agreements with a broker, so you don't have to worry about
the broker being shady. They only get paid for as long as you have the policy,
so it is in their interest to match you with a policy that you will actually
keep.

If you're concerned about costs, ask about an HSA. Make sure you understand
what an HSA actually is before you decide to go with one, though.

[Edit: I forgot to mention that I'm in the the brokerage portion of the health
insurance industry; before I worked here though I used a broker and he saved
me about 500 bucks a year.]

~~~
lionheart
That sounds like a good idea. Any tips on finding a broker in my area?

~~~
icey
What state are you in?

~~~
lionheart
Arizona

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run4yourlives
I'm in the employee benefits field up here in Canada. While we're different, I
support small businesses and they have the same concerns regarding costs as
you would, albeit at a much smaller scale.

Take this knowledge with a grain of salt, given the systems, but one way you
could control costs is by looking into a Healthcare Spending Account (HSA) - I
believe the US equivalent would be a Health Reimbursement Account (HRA).

This allows you to set a max contribution limit, but it automatically caps
your claims to the money in the account. If you paired that with high
deductible catastrophic insurance, you may come out ahead. Wiki has a good set
of info:
[http://en.wikipedia.org/wiki/Health_Reimbursement_Arrangemen...](http://en.wikipedia.org/wiki/Health_Reimbursement_Arrangement)

Other than that, I think you are SOL in terms of paying the big bucks. Health
Coverage is one area where the US is simply lacking in my opinion, compared to
the rest of the world.

Good luck to you. You should definitely contact a local broker or two and have
them walk you through the different options. There is a lot of stuff out there
that is simply too crazy to understand and is best handled by a pro.

------
redrobot5050
I can't help with the family situation, but have you considered "catastrophic"
insurance through a professional group like the IEEE or ACM?

They have plans as low as $90/quarter that have a $5k deductible. Not good if
you come down with frequent colds, coughs, flu, etc. It is good if you're in a
car accident and fracture your leg in 2-3 places. Or slip on ice and hit your
head, etc.

~~~
white
I thought that professional groups don't have such plans anymore.

~~~
redrobot5050
Its entirely possible. My first company did not offer health insurance. The
president just made sure to pay himself enough so that he could secure health
insurance for the rest of his family.

He advised us to take our (start up wages) and buy catastrophic disaster
insurance. Or relax, because our car insurance also covers medical bills, so
if we're in a car accident (most likely scenario) we're covered.

[He then also told us (off the clock, and again this was 2004) that if we
voted for John Kerry, the health care reform would put our company out of
business. ]

But yes, in the past 5 years they could've gone away.

------
vaksel
Cross my fingers and hope I don't get sick. I do try to stay in shape(workout
every day 1-1.5 hours) and eat healthy. But I just can't justify paying for
health insurance at this point.

~~~
tptacek
Which is why any sane health care reform will likely include a mandate
requiring people like you to carry coverage; insurance works best with a large
pool of risk, where coverage isn't biased towards those at most risk of making
claims.

That's not a dig at you. You might be right that there's economic rationale
for you to carry coverage; the risk is remote and the cost is high. That's a
problem the system needs to fix.

~~~
tjic
> Which is why any sane health care reform will likely include a mandate
> requiring people like you to carry coverage; insurance works best with a
> large pool of risk, where coverage isn't biased towards those at most risk
> of making claims.

The point you make is technically true, but seems a bit bizarre.

It's like saying "if we had an financial instrument that paid for people's
airline tickets, we wouldn't want to allow people to choose to join or not
join - if we did that, we'd just have all the people who like to travel a lot
join, and it would cost a lot! So what we really need to do is force EVERYONE
to contribute, so that there are a lot of people who get no benefits who can
subsidize those people who draw a lot of benefits".

Yes, you're right - unless we do that, people who draw a lot of benefits will
have to pay for a lot of benefits.

...but it seems a bit morally autistic to me.

~~~
akeefer
Depends if you're a believer in the "genetic lottery" (to use John Rawls's
term) or not. If you believe that things like catastrophic accidents or health
conditions have a large amount of "luck" involved in them, then morally
speaking it's more fair to spread the cost of them out over the whole
population rather than concentrating it in whoever happens to get unlucky
enough to develop leukemia or get hit by a bus.

Of course, health is something that people have some amount of control over,
but exactly how much is obviously a big open question. Unsurprisingly, people
who are on the "winning" side of the lottery (be it health, talent, or success
in things like sports and business) tend to under-estimate how much luck has
to do with it, over-estimate their own contribution, and thus also over-
estimate how much someone else's actions have to do with their "loss" in that
lottery.

------
mechanical_fish
Living in Massachusetts, where you can buy group health insurance through the
state, really helps.

~~~
kgrin
I'd second that, and add that pricing is particularly competitive if you're 26
or under (which I realize the OP probably isn't if s/he has a family of 4, but
it might apply to others).

This is one of the more startup-friendly features of living in MA as opposed
to the Valley.

~~~
sachinag
Yeah, I'm a bit surprised that startups that haven't been able to get recent
angel funding in CA haven't moved to MA just for this reason. (Again, all else
being equal, no family restrictions, etc.)

~~~
ams6110
All else is not equal, they don't call it "Taxachussets" for nothing.

~~~
kgrin
Actually, I think they do... at least, comparing personal income tax rates
(the factor most likely to matter to a new startup), MA does reasonably well:
a flat 5.3%, as compared to CA's 1-9% (with the highest rate kicking in around
$50K or so).

Obviously personal income tax isn't the only one in town, but it's not
significantly worse in MA than elsewhere.

Source: <http://www.taxadmin.org/fta/rate/ind_inc.html>

------
mixmax
Move to a country that takes public healthcare seriously.

I'm only half joking after reading the other comments here. The US. system is
seriously broken.

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eventhough
I use Tonik. It may not be right for a family of four but for a young single
guy it works well enough.

<https://www.tonikhealth.com/>

~~~
sr3d
Nice! I'm considering moving to CA to work on my Startup. Tonik seems decent
for health and dental, at least it will fit in my budget even though with a
big deductible number. Thanks for sharing.

------
jws
When I sold my company I had to break my family apart for health insurance. My
children are in the state subsidized high risk pool and I was able to find one
company that would take my wife and myself without the children.

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philwelch
For some reason the health insurance industry has settled on a model of "pay
your health insurance company scads of money and pay relatively little for the
rationed routine care you get". Since health insurance is a heavily regulated
market, I doubt this is the most market-efficient solution. Maybe if you shop
around for routine care and offer to pay with cash (or HSA) it won't end up
costing as much, and I've seen informal studies done by friends that show, for
instance, that certain prescription drugs cost hundreds of dollars less at
different pharmacies (once you can coax the pharmacies to actually tell you
the price, since they're so used to working within the insurance cartels).

It all depends on your health, too. If you have sleep apnea and want to get it
treated, that's hundreds of thousands of dollars if you don't have insurance.
Probably better to get a full time job for a few years until your apnea is
treated. If you have hypothyroidism, you can take remarkably inexpensive
prescription drugs and get an annual checkup for cash cheaper than you can get
insurance to cover the thing.

My working hypothesis is that high-deductible catastrophic insurance is the
best solution for broke, comparatively healthy adults. In this model, you're
using health insurance as insurance qua insurance, to make sure you don't go
bankrupt if a medical emergency costing more than $10,000 happens to you.
(This of course requires you to be able to raise $10,000 if something DOES
happen to you.) This does nothing for drugs or routine care, and needless to
say there is no dental plan. I pay $40 a month for this. I don't get anything
out of my $40 a month, but on the same token, insurance qua insurance is
something you pay for but you hope you never have to use. An HSA is not a bad
feature if you're going with this model.

Depending upon state law, you can leave out things like maternity coverage, or
get further discounts if you're in good health. A good female friend of mine
doesn't have maternity coverage but she is very aggressive about birth control
and has no qualms about abortion, though, so I would carefully consider
whether this also applies to you or your spouse. I would also hasten to add
that if there's a possibility of having more children, the expense of health
insurance is not your biggest problem here.

In fact, I don't know how well this model works if you have kids. Or how
founding a startup works if you have kids, for that matter.

------
mdakin
Wow, it's much cheaper if you're a single male (no maternity benefits
included) in Calif. at least (and Wyoming and Mass. from experience). I have a
Blue Cross PPO right now for $85/month. They are upping the rate to $140. I
will be leaving on principle.

I plan on getting a high-deductible/HSA plan. If the deductible is $X I will
put $X into an HSA. Thus any care I might need over the next year will "feel"
free. If I'm lucky and my current health trend continues I will not need to
take any money out of the HSA. And it will simply be a tax benefit. In future
years I'd replenish the HSA up to or over the deductible level of whatever my
present plan is.

I would look at the high-deductible/HSA options. Assuming you have the cash
around to buy the policy and stock the HSA with cash you'll not have to worry
about health bills until next year. Psychologically, this could be comforting.
Whether it makes sense probably depends on how much you and your family
actually use insurance. And the specific costs of the plans available to you.

------
smokey_the_bear
We got a Kaiser HSA. If you live near a Kaiser hospital they're a pretty good
deal. I don't have any kids, but they seem like they're much more family
friendly than some of the other low cost HSAs. They cover full maternity, and
cover a few well checkups a year for kids, and one for adults without hitting
your deductible.

~~~
coopr
Kaiser tends to get ranked FAR ahead of all other health insurance / health
provider companies in the consumer surveys I've seen - and their rates tend to
be very competitive. Your broker may not quote Kaiser rates, though - you
might have to inquire directly.

~~~
smokey_the_bear
I especially liked how clear their pricing was. There's a place on their
website where you can look up exactly how much each procedure costs. I'd never
seen anything like that before. It made it easy to weigh the HSA vs
traditional plans.

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marc092
It is worth finding out what your state's family services covers, especially
if you are low income (about $45k/year). Depending on your income your kids
and even you might qualify for medicaid. There are also dozens of other
programs around. I live in Ohio and there are programs for pregnant women,
disabled, blind and aged. There are programs for emergency care for aliens and
the hospitals usually will give discounts for low income. If that is not
enough there are lots of cheaper and even free clinics for health and dental
care, around here they generally work on a sliding-scale based on your income.

------
utefan001
I have a two year old that has 2 heart abnormalities. We thought she would
need heart surgery, but the cardiologists don't feel this is necessary. The
"leaks" in her heart are getting smaller each month. She looks like any
healthy 2 year old. I have family members that are health insurance experts
and they tell me I basically have to be a part of a group policy. The last 2
companies I have worked for have had minor increases to their 100+ employee
group policy. The health company cited my daughter as one of the reasons for
the increase. Luckily my coworkers don't know this.

------
green
You always can find something cheaper than that! You may want something more
expensive for the kids, but for healthy adults you can pretty easy get away
with like $300-350 for both -- use sites like ehealthinsurance and others --
they can do comparison for you. Of course, if you have some medical
conditions/etc. - that can be an issue, as then the cost of insurance will be
sky high.

After all, yes, health insurance IS expensive, but you can find the cheaper
options. But well, the same way you can think about your rent, groceries, etc.
You have to have them, and you have to pay for that.

------
wastedbrains
We both were health young guys with no families that needed to be covered and
just ended up getting Tonik health insurance.

During hiring we mentioned that we would cover up to X amount of personal
health insurance. Since our hire had a family though we are now looking at
getting a group plan even though the company only has 3 people, the man reason
was getting family plans is much harder to get cheap personal plans while the
group plans have better benefits for families.

------
thinkcomp
There is no good solution. The American health care system is unfortunately
presently designed to work against entrepreneurs and small business owners. In
most states including California, you must have at least two full-time
employees to qualify for group health benefits.

<http://www.aarongreenspan.com/essays/index.html?id=11>

~~~
run4yourlives
There are a lot of ways around these laws - a broker should be able to help
out here.

------
josh_nyc
In New York State, try the Freelancers Union.
<http://www.freelancersunion.org/insurance/index.html>

I used this a few years ago while working for a startup and I got a full plan
(comparable to the average full-time job's plan) for half price (at that time,
around $250 a month).

Worth a look. They are always expanding and trying to provide more and more
benefits for the W2-challenged.

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gills
My wife is an engineer at a large corporation, I'm covered as a spouse.

...but that won't cut it if/when I get to the point of needing to hire other
people.

------
tirrellp
When I paid for private health insurance, My premiums were around $450/month
for a family of 3. This was (if I recall correctly) and 80/20 plan with a
$1000 deductible. I then dumped $1000 into my HSA and I was set.

------
PStamatiou
Before I graduated college I got a year of health insurance under a student
plan that keeps working after I graduated. I graduated in December and it runs
out in ~August. So I'll be in the same boat soon enough..

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SoftwareGuy
When I started my own company I bought health insurance. If you can't afford
it, you can't afford to start your own company. No different really from other
expenses like equipment and such.

------
dustineichler
To follow up on this thread, what health insurance do contracts get? I'm
looking for something for myself. Thanks.

~~~
_-TIMMY-_
I joined the National Guard and am now eligible for Tricare Reserve Select.
Approximately $180/month for the whole family [wife,kids,self] with a low
catastrophic cap.

------
biohacker42
This is one of the few big pluses Europe has over America for startups.
Unfortunately it's not nearly enough.

