Health insurance options for startups

I wouldn’t go a single day without good health insurance, and I wouldn’t let any of my family be without this protection. Annual physicals and random checkups are one thing, but having insurance in case of a major emergency is absolutely essential.

I never had to think about health insurance while I was at Apple, but once I quit, I was on my own. Since our country doesn’t give us health care, we have to do all the research on plans and rates.

Here are my findings, thoughts, and recommendations after setting up health care for Posterous. This isn’t meant to be definitive in any way. I would love feedback and suggestions.

When I left Apple, I elected to go on Cobra so I wouldn’t have to spend time researching

When we Posterous in June, 2008, I elected to continue my Apple health care through COBRA. I was paying over $400 per month, so it wasn’t cheap, but it meant I didn’t have to think about health care for a while.

When you are starting a company, you want to spend every waking moment coding and building. Trying to figure out which health plan to sign up for was not good use of my time. Instead, I paid the premium and knew I had great coverage.

If you can get it, Anthem Blue Cross Tonik is a great option for cheap health care

The requirements are strict, but Anthem Tonik plans are great if you can get one. These are meant for young, healthy people. You get a few doctor visits a year, a dental checkup, prescriptions, all the basics included. Anything after that falls into a high deductible.

Most startups go with high deductible plans, but these incentivize you to skip going to the doctor when you are sick

The most common health insurance plan I see people signing up for is Anthem Lumenos. This plan is designed for companies who want to keep costs low. It covers preventative care, but everything else falls under a high deductible.

What I didn’t like about this plan is it disincentivizes you from seeing a doctor when you are sick. Do you have a cold? Do you need a prescription? If you know you’ll be paying out of pocket for this, you might choose to skip it. I wouldn’t want someone at Posterous to skip medical care they want.

For Posterous, I chose a high deductible plan that still gives you office visits and prescriptions

After doing a lot of research, I chose to go with the Anthem Solution plan. It’s similar to Anthem Lumenos in that it’s a high deductible PPO. But the main difference is normal office visits and prescriptions are covered, even before you satisfy the deductible.

The max out of pocket is higher for Solution than it is for Lumenos, but I think that’s a fair tradeoff. I’d rather optimize for the common case (random doctor visits) than for the edge case (major medical emergency).

It’s actually really unfortunate that we have to think about these issues at all. We shouldn’t have to make sacrifices when it comes to health care.

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48 comments

  1. This blog post would have been much shorter had it been posted from Canada.Title: Health insurance options for startupsBody: I went with the free one that everyone already has.

  2. Posterous health insurance policy: we’ll buy you a bus ticket to Vancouver when you need something done

  3. On the topic of dental insurance: my research showed it’s NOT worth getting.1. The premiums are higher than the cost of preventative care (2 checkups per year)2. If you need other work done (cavities, etc) there are large copays3. If something catastrophic happens, there is a maximum amount the insurance company will pay out4. Cheap policies severely limit which dentist you can see. These dentists consistently were rated 1-2 stars on yelpMy recommendation is to pay out of pocket for standard dental care

  4. $400 a month for CORBA is cheap. Even for relatively good insurance, it’s typical to pay that much with the company chipping in. Then CORBA or a decent self-insurance will run about $800 a month (for a family). On top of that, existing laws allow them to not cover tons of things, billed as existing conditions, allow them to require you to pay out of pocket and then get reimbursed, and allow them to drop you if you get certain conditions that are out of scope. I’m not sure if the proposed/recently passed health insurance reform will help, but my god, the system is so horrendously unfair and expensive that it really can’t get worse.Right now my husband and I are both poised to start out own businesses in the upcoming year and it’s a big problem. We are relatively young and don’t have major medical issues, but I recently had gallbladder surgery and my husband has bad family history, so we might actually get denied for self-coverage. Even if they accept us I’m expecting premiums upwards of $1000 a month. Don’t even get me started on having a baby if you’re not insured, or have self-insurance.

  5. Out of curiosity, why not the higher deductible plan and then funds into employee HSAs? It seems like that would make it easier to see the doctor when you needed to, but still give the employees who care a way to get more value out of their benefits (by saving the money).

  6. Kurt, that’s definitely a great option and something I might consider later. But I still think it disincentivizes people from going to see the doctor.What you call "getting more value", I might call "being cheap." It’s just not the right way to do it. If you need medical care, you should get it without thinking twice.

  7. "It’s actually really unfortunate that we have to think about these issues at all. We shouldn’t have to make sacrifices when it comes to health care."So you’d rather have someone else make the sacrifices for you (their sacrifices), without your consent, so you have no choice in the matter? Because it’s easier?

  8. Sachin: I think it’s perfectly ok to shop around and "be cheap" when it comes to medical care. As a matter of fact, I think it’s desirable. I also think you’d be better off doing that and providing incentives for people to eat healthy and exercise, at least from an overall health and productivity standpoint. Going to the doctor is way down the list of things that make you more healthy. 😉

  9. "Since our country doesn’t give us health care, we have to do all the research on plans and rates."excuse me but what does this mean? There is NO SUCH thing as free health care! I’m bewildered at how is it possible for smart people like yourself, who can figure such complex issues as programming code, not to be able to realize there is SUCH THING AS FREE HEALTH CARE! Your "country" doesn’t give you free lunch, does it? Oh wait, it does! That is if you are a bum who’s lazy enough to never want to develop themselves and take responsibity in this world and instead chooses to live on gov. handouts, for which the gov. pays for with money they took from industrious individuals like yourself!Medical care is a commercial service which costs money. The idea that the gov. owes us "free health care" is absurd! They need to plunder the haves and redestribute to the have nots in order for "free health care" to be paid for. Which is called socialism and it never works!!!!I’m self employed, I cover my family of 5 with a plan from Assurant and yes it hurts to cough up those $375 each month, but I’ll tell you want, I have lived in socialist countries and I know what gov. run health care does and I want NONE OF IT!

  10. Oops, I mean to say THERE IS NO SUCH THING AS FREE HEALTH CARE 🙂 in the beginnning of my comment earlier

  11. Good post Sachin. I was doing some research recently as well. I finally ended up with Kaiser Permanente. I looked into providence and anthem. KP ended up having much lower yearly deductible. Mainly because you have to use KP facilities to get care. KP is only located in California, Arizona, Oregon and Washington. So that works out really well for me. They cover emergency care anywhere in the country. I was a little bit hesitant at first, but was surprised to see them reach out to me multiple times during the first few months. Another nice feature was that I could manage all my appointments, healthcare records and communication with my doctors online. They also sent me a book and regular magazines to tell me how to live health. I ended up paying $190/month with a $500 deductible and includes $25 doctor visits. Overall pretty happy so far. I used http://www.ehealthinsurance.com to research my options.

  12. <html><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; ">George, I don’t expect free health care from our country.<div><br></div><div>But our current health care system is completely broken, and I dont think it will get much better while it’s private. Plenty of people simply can’t get health care right now due to pre-existing conditions. How is that ok?</div><div><br></div><div>The US should offer health care plans that anyone can elect. These can be subsidized by the government by those who can’t afford it, but otherwise are paid for by individuals or companies.</div><div><br></div><div>I never said health care should be free. But I do think it’s something the government should regulate, to ensure everyone has access to it.</div><div><br></div><div><br><div><div></div></div></div></body></html>

  13. I never had to think about something like this nor do I ever want to but it’s good to know I guessGeorge: Canada, Britain, and Australia (just to name a few) have free healthcare and last time I checked they’re not socialist countries

  14. <html><body bgcolor="#FFFFFF"><div>Fadi, get this — there is NO SUCH THING AS ‘FREE HEALTH CARE’!!!&nbsp;</div><div><br></div><div>Repeating: government takes from some people (through taxation or forced participation into their ‘exchanges’) to give to others! That’s not ‘free’, hello!&nbsp;</div><div><br></div><div>Canada, the UK and Australia, as well as the EU are QUASI-capitalist societies.</div><div>The US has been on this path as well since the time of FDR and Obama seems to be on a mission to drive the last few nails into the coffin of whatever is left of America’s free market, i.e. capitalism.&nbsp;</div><div><br></div><div>I have LIVED in Europe vs. some people who only visit for a week and think they know everything about their way of life. I go back and forth all the time as well and can talk to you for hours about why socialism, be it Fabian or of other variants is NEVER a good idea!&nbsp;<span class="Apple-style-span" style="-webkit-tap-highlight-color: rgba(26, 26, 26, 0.28125); -webkit-composition-fill-color: rgba(175, 192, 227, 0.214844); -webkit-composition-frame-color: rgba(77, 128, 180, 0.214844); "></span></div><div><span class="Apple-style-span" style="-webkit-tap-highlight-color: rgba(26, 26, 26, 0.277344); -webkit-composition-fill-color: rgba(175, 192, 227, 0.210938); -webkit-composition-frame-color: rgba(77, 128, 180, 0.210938);"><br></span></div><div><span class="Apple-style-span" style="-webkit-tap-highlight-color: rgba(26, 26, 26, 0.28125); -webkit-composition-fill-color: rgba(175, 192, 227, 0.214844); -webkit-composition-frame-color: rgba(77, 128, 180, 0.214844); ">&nbsp;</span></div><div><br></div></body></html>

  15. yes you’re right there is no such thing as free health care but there is such a thing as UNIVERSAL healthcare. UNIVERSAL and EQUAL healthcare for the rich and for those who can’t pay $375×5 per month. Healthcare for the people who have to sell their homes to pay for chemo and live out of their cars, healthcare for people who go to emergency rooms with REAL EMERGENCIES only to get turned away because they don’t have insurance, healthcare regardless of "pre-existing conditions", and so on and on and on.people’s lives are not commodities, however this great "free market" has managed to find a way, the same free market that put thousands out of their homes (but that’s another discussion for another day)i’ve lived in 4 different countries on 4 different continents, and 3 of them have universal healthcare…..socialism was nowhere to be found in 3 of themBoggles my mind how most of the world’s 1st world countries have managed to provide equal access healthcare for all, regardless of status, but the U.S. has somehow managed to have found a "flaw" and therefore has refused to do it for so long. there is no "flaw", the greed-filled "free market" is the flawgo Obama go

  16. <html><head></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; ">Fadi, I have lived in 3 different countries (US, Western Europe and Eastern Europe) and have done business in more than 30. So please keep in mind you are not talking to someone whose farthest point of travel is Florida!&nbsp;<div><br></div><div>Your Universal and Equal healthcare spin is only a spin of the same idea of government mandated health care. the countries who provide such "free" or whatever you want to call it care, TAKE from people’s paychecks to pay for these "universal" plans.&nbsp;</div><div><br></div><div>America is America namely because it is NOT like these other countries. May be you ought to read how and why this nation was established. I suggest you being with the Mayflower.&nbsp;</div><div><br></div><div>Your anti-free market rants are pathetic and you’re obviously just another Obama zombie who belongs in a Marxist "paradise" such as Cuba since you love gov. run societies so much! There hasn’t been free market in health care in the US for a long time. The reform we need is the gov. to get out completely from the HC industry, to remove barriers to insurance providers across state lines and # of other steps that will ensure competition and price drop.&nbsp;</div><div><br></div><div>People’s health is NOT a commodity! Pills, beds, hospital buildings and labs ARE!!!!!</div><div><br></div><div>HC is not a right, it’s a privilege, just like MANY OTHER privileges in a free society.&nbsp;</div><div><br></div><div><br></div><div><br></div><div><br><div><div></div></div></div></body></html>

  17. Healthcare is a privilege not a right? HA! that’s a new oneyou’re justification for a system that clearly doesn’t work is pathetic……the same finger pointing rant that you would here from Bill O’reilly, and you call me a zombie you pay taxes for everything else. why not to help your fellow man?"Give me your tired, your poor, Your huddled masses yearning to breathe free…….Send these, the homeless, tempest-tossed to me"why? to be left in the gutter? according to you it seems soI’m done with this discussionthanks for the great post Sachin

  18. <html><head></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; ">Fadi, is this the best you can do? Talk about Bill O’Reilly? Can you discuss issues, or you can only wave your arms around?&nbsp;<div><br></div><div>I don’t have much respect for people who ASSUME who I am and what I do to help those who suffer and need help. It only makes you sound like a fool, because if you knew, you’d be ashamed of yourself. I don’t assume you are a Muslim terrorist based on your name, why do you assume ANYTHING about me based on my ideas? Double-standard? &nbsp;</div><div><br></div><div>So far you have proven you are just another liberal/Obama zombie who thinks paying taxes is a way to care for my fellow man. What a joke! Do your homework and find out from history what is the purpose of government in a democracy. The current role of government as a re-distributor of income is a 100% socialist notion that has NOTHING TO DO with what this nation was founded on. Sometime between moving from continent to continent, you should probably take the time and learn what America is about. It’s called FREEDOM and that includes also economic freedom, including from corrupt government practices and confiscation of private property through excess taxation.&nbsp;</div><div><div><br></div><div>And yes, you better be done with this discussion b/c you’re not saying anything coherent!&nbsp;</div><div><br></div><div><div><div><div><div><br><div><div></div></div></div></div></div></div></div></div></body></html>

  19. THE TOP CAUSES OF DEATH (heart disease, malignant neoplasms/cancer, diabetes etc.) that face the western world today are PREVENTABLE by being a little more thoughtful and disciplined with their lifestyle.The problem is – and one of the main reasons that healthcare insurance costs are so high (minus what Nixon did) – is that so few of us are willing to take responsibility for our lifestyle choices.It’s time to wake up and realize that in order to overcome this unnecessary loss of life (and excessive monthly premiums) we have to go back to the root of it all – our daily choices – and get educated on what is going to promote our health rather than degrade it.P.S. Is it quite shocking to you that "accidents" or phrased another way – "medical blunders" are ranked higher in the top 10 list of causes of death in the United States than diabetes? I don’t know about you guys, but having "professional" medical care suddenly doesn’t sound so good.

  20. <html><body bgcolor="#FFFFFF"><div>Clement, I couldn’t agree more! However, it’s sad how many people have no concept what "personal responsibility" is about, whether it has to do with health or finance.&nbsp;</div><div><span class="Apple-style-span" style="-webkit-tap-highlight-color: rgba(26, 26, 26, 0.292969); -webkit-composition-fill-color: rgba(175, 192, 227, 0.226562); -webkit-composition-frame-color: rgba(77, 128, 180, 0.226562);"><br></span></div><div><span class="Apple-style-span" style="-webkit-tap-highlight-color: rgba(26, 26, 26, 0.296875); -webkit-composition-fill-color: rgba(175, 192, 227, 0.230469); -webkit-composition-frame-color: rgba(77, 128, 180, 0.230469); ">&nbsp;</span><br></div><div><br></div></body></html>

  21. Electing to not cover prescriptions has a rather sexist affect, so it’s unfortunate that most start-ups elect to do so. As contraception costs are usually paid by the woman in a relationship, you’re asking pretty much every woman you hire to pay an extra 1k / year.

  22. Lynne, that is absolutely true. Since most small startups are male dominated, they don’t realize this is happening.And this is why I *didn’t* want to do this.

  23. Sachin– there is a new tax credit for small business that provide healthcare (courtesy of the new bill). Might help you guys. I think Posterous will benefit a lot from the new exchanges that will be set up… but thats a few years away.

  24. The problem is – and one of the main reasons that healthcare insurance costs are so high (minus what Nixon did) – is that so few of us are willing to take responsibility for our lifestyle choices.It’s time to wake up and realize that in order to overcome this unnecessary loss of life (and excessive monthly premiums) we have to go back to the root of it all – our daily choices – and get educated on what is going to promote our health rather than degrade it.

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