

Health insurance options for startups - brlewis
http://sachin.posterous.com/health-insurance-options-for-startups

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mrkurt
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
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
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
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?

~~~
chaosmachine
_"This entire class of problem obviously doesn't exist in Canada."_

Unless you need to go to a dentist.

~~~
jrockway
Same problem in the US -- small group and individual insurance just doesn't
cover dental work. But dental work isn't really that expensive, at least not
compared to medical work.

Budget $300/yr for your two checkups, and you will be fine. (Even a root canal
is not that expensive. I think it was $1200 for a specialist to do it.)

~~~
chaosmachine
It's about $1800 here in Canada.

I found out the hard way there are many things you still have to pay for
yourself. For example, a doctor prescribed me Advair for asthma-like symptoms
I was experiencing. It costs $200 per unit, and as someone who recently quit
their day job to start my own business, it wasn't in the budget. So I just
went without.

~~~
mrkurt
Good doctors respond pretty well to your budget constraints. There's likely
another option for you, you should ask. It may not be quite as effective, but
I bet it's much, much cheaper.

Or, you could buy from an evil Canadian pharmacy that sources generics from
some place like India. We spent two years doing that for my wife's Singulair,
it saved us a fortune.

~~~
yummyfajitas
_Good doctors respond pretty well to your budget constraints. There's likely
another option for you, you should ask. It may not be quite as effective, but
I bet it's much, much cheaper._

Tangentially related fact: in the US, doctors don't do this since it poses a
significant risk of lawsuits.

~~~
mrkurt
My doctors all have. "I can't afford that medication, is there something
that's available as a generic that I might be able to use instead?" has worked
really well for me.

I've also had their front offices recode stuff at lower rates when I explained
my high deductible health plan.

------
icey
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
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
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.

------
awolf
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.

~~~
MichaelSalib
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/menu...](https://www.mahealthconnector.org/portal/site/connector/menuitem.0c5d8e0f63bf313ea6c05667d6468a0c/?fiShown=default)
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
Uhh MA is going bankrupt and hemorrhaging money on its healthcare system. Who
knows how long it will last.

~~~
MichaelSalib
Do you have a cite? I ask because I believe the growth of health care costs in
MA over the last year has been lower than in other comparable states.

I believe the consensus amongst health care economists is that MA made the
right choice in pushing for universality first and tackling cost growth later.
And that's exactly what they're doing: MA has now started some very aggressive
cost control plans, plans that are much easier to enact because of the
regulated exchange and mandates that MA created.

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jsdalton
My employer uses Trinet: <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
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.

------
yummyfajitas
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.

~~~
eli
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
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
> 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/>

------
minouye
I'd stick with this advice (in addition to the post):

<http://news.ycombinator.com/item?id=144905>

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tedshroyer
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
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
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.

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thibaut_barrere
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 :)

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hanskuder
The startup I work for, <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.

------
anamax
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
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
> 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
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
> 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.

~~~
smokey_the_bear
I'm really not sure why you're being so argumentative with me. I didn't
mention anything political or about who pays. Just that the tax situation is
different if you get health insurance via an employer vs an individual plan. I
spend 10% of my income on health insurance. I'm okay with that, but I also
have just about the cheapest possible health insurance that isn't major
medical and is from a reputable company.

Your original argument was about it being an issue in starting a startup. If I
had preexisting conditions, the plan I'm on now would not be available. It's
also difficult to find plans that cover pregnancy. I'm healthy, so it's true
that it's not much of a concern for me. But if the situation were different my
insurance could easily be 30-50% of expenses. Or if I got pregnant, I could
afford to cover the 10,000-20,000 cost of a normal pregnancy, but if anything
went wrong it would cost hundreds of thousands. I'm not saying someone else
should pay for my pregnancy, but women shouldn't have to roll the bankruptcy
dice when they get pregnant. This is what risk pools are for.

The problem is also that it take lot of time to deal with. The plan we're on
is an HMO. We've moved a little bit away, so now I'd have to drive 85 miles to
see the doctor. I could change plans, but then I'd have to do a lot of
research again.

I don't want health insurance to cover maintenance, people need to be aware of
how much things cost and make economic decisions with respect to health care.
Which is why I purchased the plan I did. But the plan is really difficult
because price comparison shopping for health care is an unreasonable process.
I got a blood test last year. I asked the doctor how much it would cost. He
was very surprised by the question and said about 100. I got a bill for 500
for the test, plus all the doctor's fees.

I don't have dental insurance and I need a filling. The first quote I got was
363 dollars. Which according to some internet research is far too high. So now
I have to spend the afternoon calling around dentists. Some of them won't even
give quotes without a visit to look at the cavity. It's hard to price shop and
the prices are inflated due to insurance.

~~~
anamax
> I'm really not sure why you're being so argumentative with me.

I'm arguing with the claim that healthcare is an especially big deal. In
almost all cases, it's smaller than rent and comparable to transportation and
food. It takes less time than transportation and food. (Seriously - compare
the amount of time you spend on each.)

As far as pre-existing conditions go, they're only an obstacle for folks who
go bare for a while. In other words, the reality doesn't match the fears,
again.

> Just that the tax situation is different if you get health insurance via an
> employer vs an individual plan.

That is a problem (albeit one that isn't as bad as it was - insurance is now
deductible in more cases) but if you don't have an income, deductibility isn't
worth much.

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thaumaturgy
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
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.

