Startup Health Insurance: How to Get Started

July 22, 2008 - Get free updates of new posts here

This is not a sexy post about marketing or product. But it is something I was hoping to share with anyone starting or looking to start a start-up (read here about Zero to Startup. We are a small team of 3 working on our new project and my mom kept bugging me to get health insurance for riding my motorcycle. I frankly never thought it was that important but if anything happens it makes sense to have some coverage. So without further ado, here are some tips on startup health insurance (or if you prefer small business health insurance).

Where do you start to begin or even understand health insurance for a start-up?

Good question? I emailed some friends and was recommended a “broker.” I don’t know about you but when I hear the word broker I automatically don’t like them cause they are a middleman adding more cost to something I want. However, in the health insurance field they don’t mark-up the plans at all. Sweet, so try to find a broker or if you need a recommendation please let me know.

Background on health insurance options:

HMO: This is Kaiser. More affordable but you have to wait. My brother is a resident there, say hi to Seth if you see him:)
PPO: Basically, you can go to any doctor in a network. A bit more pricey but you have more flexibility in who you get to see.
Vision: If you don’t have glasses/contacts I would recommend against this. As well, you can buy affordable contacts online for cheaper and just pay out of pocket for your check-up. The overall insurance cost for the year is greater than just out of pocket.
Dental: It is cheaper to NOT get this option and just pay for a cleanup when you need it. Unless you have bad teeth and need major surgery I would recommend against this. I would recommend brushing your teeth twice a day and using my fav, Tom’s Toothpaste:)
Catastrophic: A good option if you are Iron Man and/or in perfect health and just want to be covered if some crazy stuff goes down.

We ended up paying about $150 a month per person for health insurance. We have the company cover 50% (it is a tax write-off) and we each cover the rest.

Some of the other ways to find health insurance are to have your parents cover you if possible, go to the Blue Shield / Blue Cross websites or some entrepreneur should create a simple site for finding health insurance for individuals and/or small companies. If we were in Canada this would be so much more simple.

This is part of a Series on Startups:

Startup Tips: Accounting Help

Startup Advertising Spend Calculator

Death of a Startup: Online Video Sharing Website

Startup questions for choosing your lawyer

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10 responses to “Startup Health Insurance: How to Get Started

  1. Jason Reply

    Until we launch and have some money coming in (hopefully), I am going to go the Catastrophic route. I am never sick and never go to the doctor. I just want to be covered in case of an emergency like a car accident.

    My wife has an interview Monday in Austin and she is flying out there. If she gets the job, we will have good health insurance! Fingers crossed!

    Oh yeah, I’m moving to Austin….. adios San Diego. I’ll see you at SXSW I am sure.

  2. Kevin Reply

    I’m on Tonik:

    It’s basically an Anthem/Blue Cross PPO. It’s pretty ghetto though because the deductible is huge and the coverage is crap. Individual plans are never as good as group plans.

    The biggest thing I miss about having a day job was knowing I was covered by a great health insurance plan.

  3. sri Reply

    i bought my coverage from (a broker for all the major insurance companies)

    If I opted for low deductible, it would be $700 a month for my family, but with a $7,500 deductible, it is only $170 a month. I went with the $170 a month because I am able to cover anything up to $7500. As Jason said, I am only covering for major things.

    Think about it, just in 12 months, I am already savings $6360 by opting for the high deductible.

    The plan does not cover preventive check-ups but who cares…i took my son for his bi-yearly check up and I paid $145 out of my pocket.

  4. sri Reply

    if i had a startup, I would tell my employees to sign up at where individual coverages start from $50 a month, and then reimburse them for the cost. Give them a guideline of what type of insurance they can or cannot select.

  5. Toilet Paper Entrepreneur Reply

    You are right on with the dental insurance. I have considered it (and had it for a while) for the employees at all three companies I have owned. I have found that as an employer it is actually cheaper to give each person $75 twice a year to get a cleaning. Plus… you can negotiate a deal with your local dentist. I did, and sent him 25 people every 6 months, and got the cleaning costs down to about $45 a person.

    – Mike Michalowicz

  6. Nicole Price Reply

    I know what you mean when you express your misgivings about brokers. I also feel that brokers and middlemen should be avoided if at all possible, but of course sometimes it may be impossible to do so.

  7. Paul Stamatiou Reply

    holy mind blow. I am just now dealing with this issue. great timing. I am covered under my parents until I graduate so I am considering getting student health insurance for the remainder of the semester and then hopefully that will make me eligible for something called “Cobra” health insurance for another 18 months.