October 9, 2013

Startups Getting Health insurance. A few questions I’ve heard.

One thing that startups wring their hands over at some point is the issue of getting health insurance for the company. Rightly so, it’s expensive, it’s time consuming….it’s a pain in the butt….it’s also going to become a necessity as you want to start hiring people, maybe earlier than that. With that,

What are the best ways for a startup to provide health insurance for the founding team and early hires?

I’m going to make an assumption here and say that early hires means hires that were brought on board very soon after the founders started the company and have the same blank slate. Most people in this niche will likely have coverage through some other means, parents, spouse, individual plan, something. If not (especially if a founder doesn’t) something has to give and timelines move up.

First thing is find a broker, someone the company already knows, or perhaps a trusted referral. You can go looking for coverage yourself, but with the different companies, plans and now regulatory changes with the Affordable Care Act, let someone else do the homework and distill things down for you.

Second, get ahead of things by answering a few questions. Do we need to accommodate out-of-state employees now or with future hires? What percentage of my employees live or work in the state my company is domiciled in? How rich of a plan do I want to get, and how much of a percentage am I looking to contribute to my employees plan (this last question will require some quotes, but employers should have an idea of what they would like to do in a perfect world)? These are some key points that will determine how things play out.

How is the ACA (Affordable Care Act, aka ObamaCare) going to affect my company?

If you are a startup, the assumption is you are starting with only a few employees. With that in mind, the regulatory impact of the ACA on startups is minimal. The ACA’s primary impact will be on companies with more than 50 employees nationally. How insurance rates will be affected by the new laws will play out over time. Changes to plans in order to become ACA compliant will be rolling out in 2014. That said, most of the changes to become compliant are already baked into most plans that companies in MA would choose to implement already.

Do I have to offer health insurance?

Short answer is no, by and large, small companies are not forced by law to offer health insurance.  In MA, there was a state provision mandating that if a company had 11 or more full time equivalent employees, and a company did not offer coverage, then a ‘free rider’ surcharge would be imposed. This provision was lifted by Governor Patrick in the most recent MA budget in July ’13 in order to avoid overlap with the new federal laws.

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Nathan Therrien
Business Insurance & Benefit Services of MA
978-400-7014 p
978-400-7015 f
[email protected]

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