Health insurance options for startups
sachin.posterous.com
sachin.posterous.com
> 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).
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.
How much mental bandwidth of creating a startup goes into these things?
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.
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.
Unless you need to go to a dentist.
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.)
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.
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.
Tangentially related fact: in the US, doctors don't do this since it poses a significant risk of lawsuits.
I've also had their front offices recode stuff at lower rates when I explained my high deductible health plan.
Once your startup is incorporated, you can get a PHSP-HSA (in Canada, different than the HSA idea in the US).
You can then pay these expenses using pre-tax funds (your corp reimburses it to you as a benefit, via the HSA provider which checks it for CRA compliance).
You can also get one of the personal Blue Cross-type plans -- at around $100/month this will give you some insured coverage for some dental etc.
You can then claim back BOTH the premiums you pay to Blue Cross, as well as most of the expenses that they either don't cover or won't pay fully, from the HSA.
http://pretaxhealth.com is a pretty good Canadian PHSP-HSA.
They have the incentive to find a plan for you that you'll keep for a long time since they get paid commission only for the months that you keep insurance. They'd much rather you get a plan you're happy with than try to screw you over by getting you to buy a plan that's too large.
It's just a hell of a lot cheaper a problem to deal with up here.
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.
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.
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.
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.
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.
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.
I applied for and managed a two-employee policy from Blue Cross for our company and it all worked fine, apart from the murderous 30%-a-year increases, of course. You still have to apply with medical history and so on, but it's a formality since you will always be accepted and charged the maximum rate.
One of us also had dental; its premiums ran 10%-20% of the health insurance.
I got it through a local broker because we knew someone who recommended them, but I think you can do it all online too.
If you want to compare plans, there are broker sites that will quote small-group rates online but I can't remember which of those I used.
Call your current provider and ask them what they'd charge you if you quit work and wanted to pay on your own.
Pre-existing conditions are not an obstacle to getting coverage IF you don't have a break in coverage.
Note that you probably want to know how this works even if you don't take the startup plunge - quitting isn't the only way to become unemployed.
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.
As long as you jump from group plan to group plan, the pre-existing stuff won't matter. I would never, ever go to an individual plan if I were you.
How much does it cost to treat Type 1 Diabetes anyway?
$60 /mo for co-pays $15 /mo for doctor visits $40 /mo ~ for misc (lab tests, new equipment)
But as I'm still pretty young it only gets more expensive from here...
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.
In the unlikely event you get sick, the insurance companies will be forced to give you coverage.
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).
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.
Most people don't have that problem. When/if someone thinks that they do, they can enroll at that point.
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.
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 :)
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.
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.
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.
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.
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.
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.
I've been without for -- hmm, wow, around 10 years now. :-/