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Small Business Employee Benefits and HR Blog

You Have a Startup? You Can Still Offer Healthcare

yes_you_canHealthcare benefits administration is the last thing a new business owner worries about when starting and growing a business. The catch is that startups know that not offering health benefits is hindering them from recruiting top talent. Since startups have limited capital, the cost of traditional group health insurance is a significant challenge for many startups. While many startups are tempted to forgo health insurance, this leaves them and their employees at risk. One trip to the emergency room or an expensive surgery without insurance could lead to major financial trouble.

This is one of the main reasons many startups are sending their employees to the individual health insurance market. The good news for startups is that they can help their employees with their individual health insurance costs. Here’s why employer-funded individual health insurance is an ideal solution for startups.

Why Individual Health Insurance is Ideal for Startups

Employer-funded individual health insurance is popular for startups because the solution allows them to offer healthcare benefits for employee recruiting and retention, while still controlling their benefits costs. The solution is affordable, 100 percent paperless, and flexible enough to fit the needs of a growing company. Here are the benefits of individual health insurance and why they fit well with startup employers:

1. Controllable Costs: Being able to set, control, and predict all health benefits costs is revolutionary for many startups. Reimbursing employees’ individual health insurance gives startups controllable costs by:

  • Defining their budget by setting any contribution amount to employees’ healthcare.

  • Giving employees access to monthly healthcare allowances.

  • Allowing employees to select their own individual health insurance policies.

  • Reimbursing employees only for eligible health insurance premiums up to the amount in their healthcare allowance.

2. More Time for Growing the Business: With a credible reimbursement software provider, the reimbursements take less than 5 minutes per month to administer online. Some startups consider reimbursing their employees’ health insurance without a formal plan or compliant software. However, remaining in compliance with federal regulations and health reform can be costly, time-consuming, and an administrative hassle.

A credible reimbursement software provider eliminates the time, costs, and administrative hassle of offering health benefits. Startups who select a premium reimbursement software provider can expect to:

  • Spend less than five minutes per month administering their reimbursement plan

  • Have access to their reimbursement plan online 24/7

  • Incorporate reimbursements with their existing payroll system and HR process

Why Individual Health Insurance Is Ideal for Startup Employees

1. Employee Choice: Individual health insurance offers more choice and control to employees by allowing them to choose a plan that fits their own needs, including coverage level and network. Employees can choose their own plans to work with their budget. These plans can be customized to individual circumstances and age.

For example, if a young employee is relatively healthy and on a tight budget, a plan with a lower premium and higher deductible may be the right choice. On the other hand, for employees with more healthcare needs, a plan with a higher premium and lower deductible may be the better plan.

2. Lower Costs: Individual health insurance costs up to 60% less than group health insurance coverage. Additionally, employees may qualify for premium tax credits, depending upon their income level, household size, and eligibility for other government subsidized programs.

3. Portability: Since individual health insurance is selected and purchased by the employee, just like car insurance, employees get keep their health insurance if they leave the startup. As a result, there is no more need for expensive, short-term insurance options.

How does your start up offer healthcare benefits?

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