What Are My Health Insurance Options When Hiring First Employee(s)?

Look into HSA compatible health plans. It's basically a very affordable high deductible major medical plan with a tax free Health Savings Account (HSA) that you or 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 dollars. For some great info check out HSA Bank. The info is free and their services (if you should use them) are outstanding.

Any answer that you get here, you will probably learn a lot from that. However, your best bet will be to talk to an experienced health insurance broker. They will know about all the available options in the marketplace, can give you a quote, will know about the laws in your state as well. The best part is, they dont charge you anything - they get paid through commissions by "selling" the insurance policies. We work with a insurance broker here in MA and I can send you their info, but I am not sure if they work in FL.

I could be wrong or it could be based on the state, but I think you have to provide the same health benefits to all employees, i.e. you can't have one plan that you get through the company and one that other people get. So if you want to keep your plan, you may have to offer it to the others but only pay a portion of it through the company.

Like Keith, my company did a high-deductible HSA plan originally. Unlike Keith, everyone hated it. Maybe it was bad luck, but everyone seemed to have costs that were high, but still lower than the deductible. It could just be a matter of setting expectations. If you go that route, make sure everyone understands that they are essentially paying for their own healthcare and the plan is just true catastrophic insurance. The company can chip in to the HSA up to I think $1500/employee which helps, but it still leaves you a hole between $1500 and the deductible. And when you do that, it ends up costing the company about the same amount as a traditional plan. I like the concept, but it's not what people coming from a traditional plan are accustomed to.

I agree with Puneet that you don't want to spend your own time dealing with this.

Health insurance is state based. The rules for every state are different. You need to find a broker or service that identifies what is available in your state. A word of warning, group health insurance plans used to be available for companies with only 2 employees. That type of policy appears to be disappearing. You may find it very difficult to get any kind of group insurance plan without a minimum of 5 or more employees.

Premiums for Health Savings Account (HSA) plans are generally less expensive than for plans with essentially the same deductible.

If you can not get a group plan you will have to get individual plans for each employee. That can be a major problem in hiring, since insurance companies can deny anyone individual coverage for any reason. So you can end up hiring someone who can't get insurance individually.

Bob, I have to absolutely agree with Puneet. I would also like to add (as a business operations guy) you should spend as much effort and due diligence on your vendors as you spend on prospective employees. If you dealt with a "lazy broker", it is only your fault you chose him/her. Once you find the right broker, you will have a great business partner who will be there to save your bacon when needed. Awesome vendor is as valuable as an awesome employee.

Now re. choice of health insurance plans, here is what I have learned: 1. Demographics of your employees will determine which plans you should offer and how much you need to contribute 2. Good insurance plan is worth the money, because it is one of the top 10 tools for employee retention

Good luck! And congratulations on growing out of the lifestyle business stage.