You have a million dollar idea and a whole lot of work ahead of you. So how do you recruit the best talent to grow your business from startup mode to successful? I’ll give you a hint: it has nothing to do with trendy perks like beer carts, massages or ping pong tables. Millennial employees consistently rate health benefits as one of the benefits they value most. Health insurance for startups is no different - and there are ways to do this without breaking the bank. Here are a few things to keep in mind.
Most millennials are relatively young and healthy (i.e., infrequent healthcare users), so you do not need an extravagant plan with all the bells and whistles. A simple bronze or silver level plan will be sufficient, with monthly premiums averaging $300-$400. Stick to an EPO or HMO plan which requires patients to utilize a doctor network to help minimize costs. The Affordable Care Act (ACA), while it remains the law of the land, requires all plans to cover the same essential health benefits, the only difference between plan levels (bronze, silver) is the percentage that is covered by the plan versus out of pocket from the employee.
→ Read this startup's QSEHRA review for more info about their experience with Take Command!
It would be great to tell new hires that their health plan covers 80% of medical expenses, but for a startup that coverage is not realistic. Start with what you can afford, say 60% coverage. As your business grows, you can increase your coverage to 70%. You will be the hero when you announce the new coverage. Don’t be the guy that says “we used to cover 80% but now we can only cover 70%”- your employees will get really disgruntled really fast.
You may qualify for the Small Business Tax Care Credit if you have fewer than 25 full-time employees who make on average less than $50,000 a year. You must pay for at least 50% of your employees premium costs. The tax credit is up to 50% of the costs you pay for your employees premiums.
You have several options when it comes to startup health insurance. As a small company, you aren't legally required to offer benefits, so you could just do nothing. A traditional group health plan is another option. Or there are new models of health reimbursement arrangements that are optimized for startup benefits.
Two tools have come onto the market in the last few years that help startups offer health benefits to their employees. The first is QSEHRA (Qualified Small Employer Health Reimbursement Arrangement). QSEHRA allows business owners to reimburse employees tax-free for individual health insurance premiums and medical expenses. This is a big deal because small businesses can now get the same favorable tax treatment as big company group health plans but with a lot less hassle.
The second HRA model is called ICHRA (Individual Coverage Health Reimbursement Arrangement). It's available to startups of any size and does not have any annual limits.
HRAs allow employers to adopt a strategy called "defined contribution" which is much simpler than hassling with a one-size-fits all group plan and is proven to be much more efficient, affordable, and predictable. Employers can now give their employees a fixed dollar amount each month, say $200, and each employee can then shop for the plan that fits his or her needs the best.
Startups are uniquely positioned to benefit from offering HRAs as opposed to traditional group health insurance for many reasons, including:
HRAs are the perfect solution for startups looking to offer flexible and affordable health benefits to their employees.
By allowing individuals to choose their own plans, HRAs provide a personalized healthcare experience that promotes satisfaction and wellness. And with the support and streamlined administration provided by Take Command, implementing HRAs is an accessible and efficient choice for any startup seeking to prioritize the health and well-being of their team.
Startup benefits can range from beer carts and nap pods to equity and ownership. It really depends on the company, its financing, and its size and location. Other common startup benefits might include:
Great question! The price of startup health insurance costs will depend on a few factors. First of all, the biggest determinant would be whether or not a startup offers benefits to their employees at all. If it has less than 50 employees, it doesn't have to offer anything according to the Employer Mandate in the ACA.
Secondly, it would be the type of health benefits that a startup would offer (think traditional plan vs insurance stipend vs a health reimbursement arrangement).
And third, if offering a traditional group plan, the costs would depend on the local group health insurance market or in the case of a health reimbursement arrangement, it would be reasonable to allocate more dollars to employees who live in areas with more expensive insurance premiums.
Next, in the event of a traditional group plan, startup health insurance costs would take a wide range given that you can choose between what metal tier and deductible level. The higher the metal tier and the lower the deductible, the higher the health insurance cost.
And finally, the size of the company will have a major impact on the startup health insurance cost. Two people are obviously less expensive to insure than a team of 100.
Another great question. Getting started is the hardest part, as most startups know firsthand. For startups to get health insurance, it's most common for startup owners to enlist the ideas of their peers, turn to Google, or partner with a health insurance broker, who could help them evaluate all of their options.
The beauty of a platform like Take Command is that startup owners can truly sign up in five minutes and then the rest of the work is done by the Take Command team. We would generate the documents, enroll your employees, send monthly reporting, and help with ongoing support and compliance.
Take Command started in 2014 and knows a thing or two about startup pain points and what it takes to succeed. Take Command provides a complete HRA administration software and service that simplifies the process of offering health benefits to startups and their employees.
With a focus on flexibility, customization, and efficiency, Take Command enables startups to provide personalized healthcare solutions that meet the needs and preferences of their employees.
The user-friendly software and responsive support team ensure a seamless experience for both employers and employees. Startups can efficiently manage their health benefits program, while employees can easily navigate their options. Take Command's platform also offers educational resources and guidance, helping employees make informed decisions about their healthcare and reducing confusion.
This post was originally published in 2017 and has been updated in 2024 to reflect all of the exciting changes in the HRA world.