Health insurance is expensive. There is no way to get around that fact and anyone who tells you different is trying to sell you something you don’t need. Unfortunately for a young business, the burden of health insurance is even more important than that of a larger or more mature business, (in development, not demeanor).
A Case for Health Insurance
For an entrepreneur skimping on insurance, especially health insurance, is playing Russian Roulette with your future. At no time in your business’s growth will the health and wellness of employees be more important than the start-up years. Think about the set-back in growth if the founder of a 2nd year business became ill and had to miss a month. A terrifying scenario for most young businesses. Now think about that same situation coupled with the stress of the same business founder coming straight out of pocket for all medical expenses. I’ve seen this situation where money earmarked for business growth is diverted towards medical costs and it’s not pretty.
Don’t buy into the misconception that health insurance is a luxury just because the price tag makes you sweat. Do not think in terms of price, think in terms of cost.
Don’t Get Too Big For Your Britches
Take the term HMO and throw it out of your vocabulary. If you can afford an HMO you probably don’t need to be reading this article (though I appreciate that you are). For bootstrapping businesses concerned about the health of their employees as well as red numbers in their bank account think about High Deductible Plans, or EPO Hybrid Plans which provide less upfront benefit but also have a less stressful price tag.
Providing a Proper Health Plan Takes Work
Purchasing a health insurance policy is not rocket science. However, it does take a decent amount of planning and decision making. Use the following advice as it applies to your business and hopefully the health insurance purchasing process will run a little smoother.
1. Take an inventory of your employees
Get a feel for who your employees are. How many 20-somethings, 30-somethings, 40-somethings, etc? How many singles, married, single-parents and families? Each group is going to have unique needs to address through health insurance.
ADVICE: The health plan you offer should match employee need, not owner need or industry standard.
2. Determine how much you plan to contribute to employee expens
What can your business afford to pay towards the company health plan? A common idea is for the employer to pay the full single premium including vision and dental. Have employees cover additional cost.
ADVICE: Being equitable in the workplace is important. By covering only the single premium, the business has an easily budgeted fixed expense. Employees with additional need are expected to pay additional premium.
3. Consider offering multiple health plan options
Do all your employees fit into one need basket? Every carrier has their own set of rules, but for most, if your company has a certain number of employees eligible for health insurance you can offer multiple plan options.
ADVICE: If eligible, give your employees at minimum two plan options. One option can be a more cost effective High Deductible Plan and the other a more benefit rich EPO Plan.
4, Review your health plan every year
Do not marry your health insurance carrier. Do not fall in love with a particular carrier because of an ad you saw, because the medical billing is supposedly flawless, because of a recommendation from an incubator colleague, or because last year they had the most competitive premium. Each year carriers release new health plan offerings, with new rates. There is no discount in health insurance for being loyal. Your current carrier may only raise rates 8% this year and hit you with a 30% increase next year.
ADVICE: Find a health insurance broker you are comfortable with and be prepared to shop your health plan to every carrier every year.
Each state has different rules and regulations that govern health insurance. I encourage you to work with a professional that can help you navigate your particular state’s regulatory idiosyncrasies. Good luck.
Ryan Hanley is a Commercial Account Executive for the Guilderland Agency, Inc.