
Practical startup question: Do you founders pay for health insurance out of pocket while working full-time on your projects? - jaed

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zach
Great question. Short answer, yes.

First, the way things are structured tax-wise, C corporations get to deduct
founder health insurance 100%, so that's the most tax-advantaged scenario. If
you pay for your own personal health insurance or do it as a sole
proprietorship, etc. you're basically getting a raw deal from Congress.

I'm in California, where basically any 2+ person small business that's been
around about like 3-6 months is guaranteed group health insurance for its
employees at no more than 10% over an index that represents what bigger
companies pay. It's a sweet deal. So if you're in California and are going to
go this route, you may want to incorporate ahead of time to start that clock
ticking.

So basically the company pays for the insurance for the founders, even though
they're not drawing a salary. And you get much more flexible options than
through COBRA (naturally) or personal insurance.

~~~
juwo
Be clear about this: a tax deduction is not dollar for dollar. i.e. is NOT
free. You are simply getting a discount based on your tax bracket. (this is
for the posters from the U.K.)

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tinkertim
I moved from Baltimore to Manila so that I could afford to pay my medical
expenses in cash. By coming here, I've amplified my purchasing power ^2 and
live more comfortably paying less. The birth of my daughter with complications
and a c-section was just under $5000.00 USD, in a state of the art facility
that rivals Hopkins itself (Google, "The Medical City Pasig City" to see it).
A pediatric appointment costs me $10, medicine even less. I know my move was a
little drastic, but it opened many doors. :)

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JPSC
Are you kidding? Who has time to be sick?

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Leonidas
Actually, health insurance is an important factor. If you catch pneumonia or
the flu, you're looking at getting knocked out for 2 months (pneumonia
resulting from a "cold" that was not properly handled), 2 weeks (flu) without
medical intervention. Personally, I'd rather take some meds and be back on my
feet in 3-5 days than not be able to afford to see a doc or take some
meds....putting my startup behind which would kill me more than an illness.
Without insurance you're looking at least $110 for per doctor visit and about
$90 bucks and up depending on what meds you need (PER prescription). Or let's
say you broke your arm or leg because you tripped on your shoe laces while
walking down the stairs of the Y Combinator building. Without insurance you're
looking at about $2500 and up to get it fixed and that doesn't include the
cost of seeing a doctor added into it.

Paying $120 bucks a month to cover potential injuries or finding affordable
medical insurance and covering yourself for potential injuries is a definitely
an important factor not only for yourself, your company, but also to prevent
you from getting your co-founders sick.

It is true that if you're younger you are less likely to get sick. However, if
you are under a substantial amount of stress, your immune defense will drop
and your chances of getting sick increases. That's why you see a lot of people
get sick during mid terms and exams.

So for all of you who are in a startup, I suggest you get at least 1000-2000mg
of Vitamin C. Clinical trials have shown that taking 1000-2000mg (usually an
8oz glass of OJ, depending on type of OJ) of Vitamin C a day provides
prophylactic use (prevents the occurrence) against acute stress induced
illnesses.

~~~
jadams
You have to _pay_ to visit a doctor? That's insane!

 _I mean, prescriptions, elective treatment I can understand. But are you
saying that you actually need to pay just to walk into an examination room?

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Leonidas
For doctor office visits - they make sure you can pay before you see him. If
you list that you do not have insurance, the nurse or secretary to will tell
you how much it will be without insurance to verify that you can pay the cost.
If you go to a "doctor's office" he has the right to deny you services if you
can't pay (only for non-emergency incidences). However, if you are in an
extreme emergency such as a heart attack or you're dying, he cannot refuse you
his services due to the hippocratic oath.

However, doctors in hospitals are different. If you go to the ER (hospital
related) the hospital doctor is REQUIRED to see you by US law...without
verification of ability to pay. For doctors in hospitals, this is a big
problem because we cater to a lot of homeless patients who walk out and do not
pay...and of course one can't do anything about it since they're homeless.

Anywhoo, if you get treated in a HOSPITAL, always request an ITEMIZED list of
charges. Anything that says "misc fees" you need to be weary off. Check for
overcharges and outrageous charges. For instance, do you want to pay $170 for
a "mucous recovery system" (BOX OF KLEENEX). Sometimes it's a "mistake" but
sometimes there are unethical hospitals. Save yourself and your startup some
money.

Cheerios.

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e1ven
Massachusetts has a law that (may) be going into effect on June 1- It requires
that all citizens of Ma have health insurance.

They have two programs to deal with this- The first is Commonhealth, which
provides free or subsidized health care to those who, in the last year, have
made less than 300% of the federal poverty line. Many people who are currently
students may be able to use this, and have their coverage be at no or very low
cost.

For those people who don't qualify, As on May 1st there's a new program,
Common Choice, which will be a private-public partnership, to try to bring 4
or 5 low-cost health care plans to everyone. Given that everyone in the state
now needs health care, essentially the state is negotiating it's own group
rates.

It's not a bad system, but it's still new. The Poor are covered for free.
Employers with over 12 people are required to offer Health Insurance. People
who work alone, or in a small startup, can get a plan for ~ $120/month.

[http://www.mass.gov/?pageID=hichomepage&L;=1&L0;=Home&sid;=Qhic](http://www.mass.gov/?pageID=hichomepage&L=1&L0=Home&sid=Qhic)
-Colin

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jaed
Wow...thanks for the heads up. My co-founder will be moving up to Mass. which
is where we'll be based out of, so this is good info. Thanks again.

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yaacovtp
Group health insurance is one of the perks of having at least 2 founders.
According to my insurance broker, we just need to people on payroll working at
least 25 hours a week to qualify for a group plan. Healthy people in their
20's get better rates than the elderly. (Zuckerberg's real reason for only
wanting to hire young people)

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felipe
I'm under my wife's health insurance, but otherwise I would be paying out of
pocket. Here are a few suggestions:

1) Individual health insurance. Try <http://www.ehealthinsurance.com> or
<http://www.integra-insurance.com>

2) Group insurance via a professional association. For example, IEEE:
<http://www.personal-plans.com/product/ieeeinsurance/> It's quite expensive,
but the coverage is excellent

3) If you're incorporated or LLC, you might be able to get a small-business
plan through Costco or some other provider

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mdakin
I do. And so will all other founders who are Massachusetts residents as of
July 1, 2007. (A new law requires all residents of the commonwealth to have
health insurance by that date in order to avoid fines.)

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immad
lol, as someone who gets free healthcare in the UK thats really amusing. Why
not just make it a tax for the minimum requirement? (you could even make it
dependent on income although possibly thats too shocking)

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mdakin
It is very politically difficult to raise taxes or introduce new taxes
anywhere in the USA, even Massachusetts. Also many people in the USA are
skeptical about socialized health care. The USA's system is definitely broken
in some ways but it is not clear at all that the systems of other counties are
not also broken in different ways.

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vinit
Health Insurance?

Next you'll be asking for a paycheck ...

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joshwa
This is actually one of the biggest strikes against YC in my pro/con table...
I will likely have to take some F/F/F money in addition to the YC seed to make
sure I will stay insured...

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rms
F/F/F?

Friends, family, and ?

~~~
joshwa
Fools.

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asdf333
I did a startup and recently got acquired. Here's what I did.

I say get disaster health insurance (30 bucks a month) screw cobra. its too
expensive.

if you're in MA, i hear you can get universal health care and suck on the teat
of the taxpayer. If you're in CA, Blue shield is cheap. If you want bang for
the buck, I suggest Kaiser.

Also helped that my girlfriend is about to become a surgeon so she and her
friends had me pretty much covered for normal stuff.

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tcg
Seems to me that if you're in the target demographic of a YC founder (mid 20s,
no family obligations), then health insurance is not too much of an issue cost
wise. In the states I've lived in FL and WI, my insurance has run around 100
to 130 per month.

Call an agent, fill out the forms... its all of a few hours of legwork.
Welcome to running a business =).

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mukund
I would rather lock myself up in a room with healthy food and finish the
project than staying out of action due to sickness. I would rather cross my
finger and possible request the germs to attack me later :D

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inklesspen
This is another question I've been interested in, so thanks for asking.

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drop19
I pay it out of pocket along with some life and disability insurance; I think
it's worth the peace of mind to enhance creativity and not worry about "what
ifs".

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ereldon
i do. i use tonik.com because it's cheap. might be worth checking out.

(only available in CA and a few other states)

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mattculbreth
Yes, I pay for COBRA to continue insurance from my previous employer.
Expensive but it's good insurance.

