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Ask HN: small startups, what do you use for health insurance?

80 points| javahava | 14 years ago | reply

Do you use an HSA, or pay pricey premiums? I live in NYC, and (for me and my wife, who may try to start a family next year) am looking at plans of about $1.5-2K a month (assuming a child/children). As a couple only, it's about $1,300 a month. =/ What would you guys recommend in a situation like mine?

37 comments

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[+] elangoc|14 years ago|reply
This is an important question, it's the kind of thing that needs to be on an FAQ somewhere. Here is the info that I've collected in the last couple of months (US-centric, sorry):

relevant YC posts/articles:

http://news.ycombinator.com/item?id=2247560

http://news.ycombinator.com/item?id=2851224

links from the comments, or elsewhere:

https://be.freelancersunion.org/benefits/ (you probably want to look this up, since they provide discounted health insurance plans for people in and around NYC)

http://www.nase.org/Membership/OptionalBenefits.aspx (smaller benefits, not full covereage, for people across the US)

http://www.anthem.com (For people in California - a sufficiently high deductible introduces risk but can drop your deductible to around $150-200 or less; mine is $108)

If you have a pre-existing condition, then you might find a plan through your state: http://www.healthcare.gov/law/features/choices/pre-existing-... (is this an outcome of Obama's Affordable Care Act?)

deciding whether/how to claim this on taxes (I haven't quite fully understood this, though):

http://www.irs.gov/newsroom/article/0,,id=220839,00.html

http://www.irs.gov/newsroom/article/0,,id=223666,00.html

http://www.usatoday.com/money/perfi/columnist/block/2011-04-...

advice via Reuters, FWIW: http://blogs.reuters.com/small-business/2010/12/06/health-in...

[+] dashr|14 years ago|reply
In CA, pre-Obama, an Insurer cannot deny an employee based on a pre-existing condition. I believe, The Health Care Act made that standard across the U.S. Some people with pre-existing conditions in CA used to form husband-wife companies to employ themselves and get Insurance.
[+] javahava|14 years ago|reply
great info thanks - you're right, there really needs to be an FAQ on this.
[+] ryanwaggoner|14 years ago|reply
For reasons unbeknownst to me, NY is one of the most expensive locations in the US for health insurance. My wife and I are both healthy and have been able to buy good insurance with reasonable deductions for around $250 / month total in CA, CO, and OR. But I can't find anything in NY for less than 4x-6x that much. I find it hard to believe that the cost of care in NY is that much higher than in CA, so I'm assuming that some kind of moronic government meddling designed to keep insurance affordable has once again resulted in screwing over the people it was supposed to help.

EDIT: While not an unbiased source, this article indicates that my assumption above is exactly right: http://reason.com/blog/2011/06/01/new-york-states-highly-reg...

[+] duncanj|14 years ago|reply
Unfortunately, the article doesn't answer the question of why NY had starkly higher insurance premiums before those two rules were implemented in 2009. I was purchasing insurance in NY in 2002-2005 and premiums were 3-4 times what they are in other states. This was before 2009, and partially before Timothy's law, and all that.

I think, perhaps, the fact that NY has such comprehensive support at the low end of the income distribution, through medicaid, family health plus, healthy NY, etc., causes all of those young, healthy but lower-income people to drop out of the market for insurance. This leaves higher-income and older people in the self-insured and employer-sponsored pools, driving up the base rates.

In any event, a study by the Manhattan Institute, as referenced by the article, isn't very trustworthy. It would be very hard for them to release a study that said anything different, which to me means that there is inherent bias.

[+] TruffleLabs|14 years ago|reply
There is no cut dried answer in USA. Parameters to review: * what is your (you/wife/family history) current health? * what is your current list of medications and will they even be covered by an insurance plan you like? * how much risk do you want to carry (less premium, higher deductible) vs the insurance plan (higher premium, lower deductible )? * where you live. Certain regions will have higher premiums. * family vs single. * how close can you predict your health expenses into the future year?

Options to consider * alumni associations, affinity groups, clubs etc. may offer health plans * talk with an insurance broker. Yes, a real live person, as they will be knowledgeable about the current market and any issues with specific carriers and plans. They usually are free to talk with and obtain quotes from.

If you can do it, get a high deductible insurance plan with an HSA for the years in which you are not having a baby. HSA contributions get some tax deduction status and those unspent HSA dollars can be carried in to the future. My CPA says HSA contusions are a good way to save for long term future medical expenses.

For the plan year you get pregnant, aim to understand the total costs and can an HSA / high deductible plan fit your finances. Will you be comfortable taking on the out of pocket expenses (the high deductible part) and continue making contributions to the HSA?

Will/can your wife work for a company that can offer health insurance?

Getting a plan in place is something that will take 2 to 6 weeks to get ini place so don't wait too long.

Now for the bigger question: do you have disability insurance and life insurance also in place?

Fyi, COBRA will most likely be more expensive than any plan you can get at the family level.

Hope this helps:)

[+] javahava|14 years ago|reply
thanks! i have talked to a broker, and he pointed out several different options - all somewhat pricey unfortunately. as i expected, he viewed HSA's as a generally inferior option, thought that was a bit unclear why (i recall perhaps something to do about ease of reimbursement/coverage). not sure if that's actually true.

> If you can do it, get a high deductible insurance plan with an HSA for the years in which you are not having a baby.

this seems like a good strategy. why not just use an HSA exclusively? is it due to risk of complications/cost during pregnancy? or do pregnancy costs likely come close or exceed premiums of a traditional plan anyhow?

> Fyi, COBRA will most likely be more expensive than any plan you can get at the family level.

why is that? my wife is looking to quit soon, and is coming from a fairly large organization. and it seems like the cobra, group-negotiated rates are slightly better than the family rates i'm trying to negotiate on my own. just my own experience.

[+] thejteam|14 years ago|reply
Not sure about NYC, but I have been looking at starting my own business in Maryland and have been researching the situation. Here is what I found:

I can purchase my own high deductible plan at about 300 per month. This would be for me, my wife, and three children. Family deductible would be 10000. We are all healthy and I have the cash in the bank to cover a 10000 emergency. If I wanted no deductible it would cost about 1200 per month.

When purchasing insurance yourself, you may need to purchase separate maternity coverage, and you may need to wait several months after starting maternity coverage to get pregnant. Otherwise prenatal care and delivery would not be covered, although the hospital stay and baby care would be.

Not sure if New York has this, but Maryland has a special small business insurance pool. It allows small businesses to buy employee coverage cheap. If there are a few people involved this could be the way to go. Going this route would require talking to an insurance broker.

Good luck. Wish you the best of luck with the new family if you go that route. I have three children and it was the best decision ever.

[+] mixmax|14 years ago|reply
The Danish state.

Glad to see that I get something for my high taxrate.

[+] itmag|14 years ago|reply
I tend to think that socialized medicine is a great cost hedge for the individual citizen (ie even in Scandinavia we do pay for health care, so it's not 100% free like some people believe, but the cost is predictable and it can't ever get sky-high like in the US).

I think one downside to it is that it's hard to do anything out of the ordinary (ie some new drug or method or whatever) because health care is seen as a standardized gov't service. For customization, you still need privatized medicine.

Or am I wrong on this? I don't have a lot of insight into the health care system, honestly.

[+] reuven|14 years ago|reply
We don't have to worry about health insurance in Israel, either. You pay 5% of your salary (up to a cap), and get (from my family's extensive experience) very good care.

The fact that Americans have to think or worry about health insurance -- and that they can and do go bankrupt when they cannot afford to pay for care -- is bad enough. The fact that many Americans then claim that their system is the best in the world, and needs only superficial change, is shocking on several fronts.

I was fortunate enough to have good health insurance several years ago, when my family was living in the US, when I did my PhD coursework. (We only got this good insurance when the university wanted to charge me more in insurance premiums than they paid me for a stipend.) When my wife got sick with something that's very expensive to treat (but was treated and cured, I'm happy to say), we were especially lucky.

Remember, all of you young entrepreneurs out there, that the odds of getting something might be small, but they do exist. You don't want to be without health insurance if that happens. Again, the fact that this is even possible is a uniquely American phenomenon, and a sad one at that.

[+] scotty79|14 years ago|reply
The Poland state. About 100$ per month. Almost in whole deductible from directly from income tax.

Coverage? My life partner had CT, MRI, fMRI, little more than a week of hospitalization, and a brain tumor removed within a month by one of the top neurosurgeons (by Yelp-like recommendations) in Poland. Additional cost? None.

[+] joelhaasnoot|14 years ago|reply
Dutch, but similar deal. 100 euro/month premium for coverage.

Can't imagine being a US citizen, working for a startup and that being an issue, especially if you have a family.

[+] code177|14 years ago|reply
Similarly here in British Columbia, Canada.
[+] phallstrom|14 years ago|reply
$2k/mo seems expensive even for comprehensive plans imho unless you have some conditions that bump it up. We're relatively healthy, two small boys, and opted for catastrophic/HSA option. Then we put the savings from the premiums into the HSA. I've found even with the routine visits for the kids and whatnot we still pay less than we would going with comprehensive. And worse comes to worse our total out of pocket is the same regardless. Point being, if you don't see the doc much, HSA makes sense. One nice thing is that our provider pays 100% of flu shots and routine health checkups which is all I use it for anyway.

That said... if you're starting a family... pregnancy (and RX) are usually (ever?) covered. So you might not have a choice.

As a small business, if it's just you and your wife (and your dependents) you can deduct the premiums though...

[+] javahava|14 years ago|reply
Thanks for the info - that's helpful.

> That said... if you're starting a family... pregnancy (and RX) are usually (ever?) covered. So you might not have a choice.

HSA's do seem to make sense, but the pregnancy and any potential complications were my main concern. It seemed from initial research that for this scenario, and regular plan seemed like the best option, unless you had a different experience? Perhaps use a typical plan initially, then switch to HSA's later assuming health is ok?

[+] TruffleLabs|14 years ago|reply
One last item: you will have to shop each year. Was on Anthem for several years and then they raised their rates 30%, so shopped for a new plan. That worked well for two years and then that insurance company ran into financial trouble (in to receivership) so went back to Anthem at about the same price (ironic).
[+] dashr|14 years ago|reply
We are in California. Over the years of our business we have gone from Blue Cross/Anthem to now being with Kaiser- at one point we had a carve out plan where we had both. However, it always makes sense to go through a Broker who knows all the ins and outs each Insurer and its plan. The broker commission is paid by the Insurer not you directly. I believe the broker receives more when you add more employees to the plan - so they are invested in your growth. For our Company, the Company pays the first $200 of the plans monthly premium, the rest comes out of the employee paycheck, pre-tax. For employees 20-29, the premium plans range from $150-400. For 30-39 and Employee+Spouse or Family they go up to $300-1000. The employee can pick any plan that is offered (HSA, HMO, PPO, hybrids).
[+] dashr|14 years ago|reply
The monthly contribution amount is determined by company policy. It can be a $ amount or %. It just needs to be stated in policy and applied consistently to all employees.
[+] RudySF|14 years ago|reply
We're a small team of three (25, 28, 28) and the company pays for each person's individual plan with Anthem Blue Cross rather than a group plan which was more expensive for essentially the same coverage. It's about $200 per person per month.
[+] mrkurt|14 years ago|reply
Be careful with that, since individual insurance can and will drop you when things go south. A group plan protects employees from that although rates will go way up if someone has a major health issue of some kind.
[+] cullenking|14 years ago|reply
My understanding was this is not possible from a tax perspective? I thought you had to buy a group plan if you wanted the business to cover, except for HSA contributions. Relevant links would be appreciated, since this is the route I wanted to go down for my business partner and I (young, healthy no need for the safer group plan).
[+] javahava|14 years ago|reply
wow that's incredible. what does the company chip-in/cover per month for each person? or is that included in the $200 cost per person per month that you mentioned? how much would it cost to cover a spouse/child? i've seen some plans from empire blue cross (i don't think anthem covers NYC), and it's nowhere near that low.
[+] amorphid|14 years ago|reply
I just went through this process. For my team of four, we went with an Anthem Blue Cross PPO,.allowed us to provide health coverage for a remote worker in a different state. My recommendation is to find a good insurance agent who can help you choose. We went with Brad @ http://www.allpointe-is.com in San Francisco. He was really helpful. In case you are wondering, using an insurance agent does not cost any extra.
[+] reagan83|14 years ago|reply
Back in 2009-10 my small firm used to pay about $1300 for a family (spouses + kids) in CA. This was for an HSA plan with United HealthCare and we did a considerable amount of research before deciding on this plan (not the cheapest, not the most expensive). I'm not sure if this is the same in NY, but I would max out your HSA account before getting pregnant for an efficient tax use of that type of account.
[+] dylanhassinger|14 years ago|reply
Sounds to me like this is an area ripe for disruption. Next YC semester should include a startup that sells health insurance to its peers...
[+] _delirium|14 years ago|reply
Unless you have some way to get around the adverse-selection issue, I don't see how opt-in insurance for small companies is a problem a startup can solve.