New Startup? How to Insure Yourself
Guest Commentary by Devin Partida
If you have a startup, health insurance may not be one of your first concerns. However, keep in mind that many potential or current employees may view that perk as something that influences whether they apply for jobs at your company or stay once hired.
Plus, in the United States, the Affordable Care Act (ACA) mandates that companies with at least 50 full-time employees provide health coverage for workers. Rules for 2021 also state that no more than 9.83% of an employee’s household income can go toward paying for that insurance during the plan year.
A 2020 survey also confirmed that you’d be in the minority by not providing health insurance. The results indicated that 56% of employers offer coverage to their workers. Here are some things to do as you navigate the world of insurance as a startup owner or entrepreneur.
1. Review Health Insurance Recommendations
It may seem tempting to type search terms into Google and look at some of the ads that appear after you do. However, it’s often difficult to figure out your best options without getting too swayed by promotional language.
A useful alternative is to review roundups of top health insurance picks by reputable publishers. Those typically include breakdowns of which features make certain options better than others.
For example, one source deemed Blue Cross Blue Shield as the best overall option. It received that rank due to a large provider network and reliable customer service. Kaiser Permanente also made the list, and the author highlighted how its members often have high cancer screening rates. Thus, affected parties can start treating the disease sooner.
If you know any startup owners who have health insurance and are happy with it, consider asking them for feedback. Explain that you’re trying to find the best option and would love their honest opinions about the providers they chose.
2. Consider Self-Insurance
When most people think of insurance, they envision paying a set fee per month for particular coverage. That’s the case for individuals who opt for a fully insured plan. In essence, they pay premiums to cover the cost of any potential claims made later.
However, one of the downsides is you have no opportunities to save due to a year with few or no claims. During a low-claims year, the costs paid are often higher than those incurred. Self-insured options involve paying for claims as they arise, which lowers fixed expenses.
There’s also captive insurance, which is when a business owner forms a company and uses it to fund losses by setting aside money to cover them. Some analysts also believe self-insurance spurs health innovation by giving companies more freedom to pursue types of care that full insurance may not cover.
3. Evaluate the Small Business Health Options Program (SHOP)
The Small Business Health Options Program (SHOP) is a possibility for most employers with no more than 50 employees. Thus, it may fit your startup. You can either avail of SHOP through an insurance company or a broker/agent registered to assist with queries.
When offering coverage through SHOP, you control the amount and type provided. For example, you can decide only to give workers medical insurance or include dental. You may also choose to extend the coverage to an employee’s dependents.
Another advantage is that you can start coverage at any time. However, some small-business owners may not qualify for SHOP. That’s because some states require that 70% of employees accept it.
Increasing the likelihood of that happening may be easier if you hold a meeting beforehand to explain coverage to workers. Make yourself available to answer any questions they have or commit to finding out for them if you don’t know the correct response right away.
Give Yourself Plenty of Time to Explore the Possibilities
Choosing adequate health insurance coverage is a vital part of helping your startup succeed. When you and your employees have access to appropriate medical care, you’ll likely notice a productivity increase. That’s because people can get treatment sooner and may not need as much time off work to recover.
No health insurance is automatically best for every entrepreneur and their circumstances. Stay mindful of that as you research the options to see which one is the best match for your current and future needs.