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We're a small business (still a good start-up feel, but pretty solid) and I'm curious as to what our health insurance options are? Currently I'd want to insure myself and my other full time employee. We're in Texas, and we were quoted a plan from eHealthInsurance.com for less than $500/month for the both of us including medical and dental. I started to read through the plan details and realized there was quite a bit I don't understand. I'll be contacting my broker early next week to go over the questions, but I was curious what others experience had been. How they acquired it, what "gotchas" to look out for in coverage, and how much I should expect to pay for a decent policy.

Thanks! - Ken

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You realize this is a HIGHLY location specific question? Especially - in some countries (underdeveloped like 3rd world, or in the US) you HAVE to take something private, others have a good overnment run or hybrid system? – NetTecture Nov 21 '10 at 17:36
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Actually this a a very good and common question for startups. Ken mentioned he's in Texas so that provides great context for what his health insurance options may be. See my answer below... – Keith DeLong Nov 21 '10 at 18:32

3 Answers

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Do a search on this as we've discussed the topic of health insurance.

As always, I recommend looking into HSA compatible health plans. HSA's are basically an affordable high deductible major medical plan with a tax free Health Savings Account (HSA) that you and your employee can contribute to. We've used them for years at our software business and stuck with them as we've grown. Everyone in the office really likes the coverage and having control over their own health care costs and spending.

We use and really like HSA Bank. They have a really nice introduction to HSA insurance coverage on their web site.

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At the same time, consider setting up a medial reimbursement plan (sometimes called a Section 105 plan named after the US/IRS tax code).

As an LLC (taxed on my schedule C), I thought I was getting the maximum tax benefit by writing off my insurance premiums as self-employed. Turns out I was missing out on options to also avoid paying social security, medicare, and state income taxes on the insurance premiums.

These plans also enable employees to pay for other medical expenses not-covered by insurance with PRE-TAX dollars. And as employees do this, they also save the business the cost of social security and medicare payments, too.

Many companies offer these plans. TASC (www.tasconline.com) is one of the biggest. I just came across them a couple weeks ago and will likey go for it to get some of the tax benefits for 2010.

Craig

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My state (NY) has a special plan for founders of businesses and small companies whose employees make little salary. (The NY plan is called "Healthy NY") Your state may have a similar plan. Once we start making living wages we won't be eligible, but until then it is the health insurance for one of our founders.

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