And Questions to Ask your Insurance Company (or Insurance Broker) When Deciding on a Health Plan
Texas is home to many startups, from B2B software, FinTech, gaming, media, transportation, and so much more. Why is it important for startups to offer great health insurance? While a startup may appear to be much like a small business at the beginning, the goals of a startup set it apart. And offering employer-sponsored health benefits remains an excellent and important incentive for a startup just as for a small business.
Startups vs. Small Businesses
The unique difference between a small business and a startup are its goal: the number one and two for a startup, are typically rapid growth and attracting investors, and crucial to achieving these aims is finding top talent quickly and retaining it.
Group health insurance is one of the top benefits potential employees look for. No, you don’t have to provide healthcare when you have 50 or fewer full-time equivalent employees. But, not doing so can hurt you. Offering health insurance for your small business or startup appeals to the best and brightest workers out there in a super competitive job market. Existing employees with health insurance benefits tend to look more favorably on their companies as well.
Fostering an environment that values employees and can add to their overall health and well-being is an investment that pays off in both employee morale and a solid ROI. Additionally, with the forecast and intended rapid growth that defines a startup, the likelihood of expanding beyond 50 employees quickly is high—and at that point, you’ll need a healthcare plan in place STAT. Better to start out with a health insurance plan that can support the small, starting lineup of employees and grow as your startup grows.
How do you find the best health insurance for startup companies?
Like any business, a startup will want to shop around for the best health insurance plans for their employee. You may want to look around yourself or speak to an insurance broker who specializes in small business health insurance plans. No matter how your startup conducts the search, some of the most important questions you need to ask (the health insurance company or broker) will be around healthcare costs:
- How much is the health insurance plan?
- How much will the employee out-of-pocket costs be with the plan options? (What are the co-pays, co-insurance, and deductible?)
Here are four more important questions you should ask when looking.
Part of the process will be to consider what type of plan you’ll offer (EPO, HMO, or PPO plan). Wondering what all these acronyms means? We’ve got you covered here: Making Sense of Health Insurance Terms.
You should also look at various features of the health insurance options and discuss with employees what they’d prefer: high-deductible health plans (which tend to have low monthly premiums and options for health savings accounts or HSAs) or a low deductible or no deductible health plans which may have higher premiums but more transparency when it comes to healthcare costs. And then other aspects: are referrals required to see a specialist? what about prescription drug copays? and can dependents be added?
You need to also consider what percentage your company will pay. The Affordable Care Act (ACA) requires at least a 50% contribution by the employer, though most startups and small business owners pay a larger percentage, up to 80% of the cost of insurance. Why? The more the employer pays, the less the employee pays, and lower costs can be a huge draw for today’s business-savvy employees.
The Best Options for Health Insurance for Texas Startups
We’ll start by sharing information from two lists, Investopedia and Forbes. While there is some overlap in their recommendations, each one used slightly different criteria to come up with their lists. Both publications consider size, extent of network, and plan variety for their lists. Investopedia shares pros and cons for each and identifies each insurance company by category. Forbes rates health insurance providers by some of following criteria (per Forbes):
- Provider and hospital network size
- Benefit options and details
- How easy it is to enroll in their plans
Limitations of the “Best Health Insurance” Lists
Different from services like website developers or payroll providers, health care is regional. We get care from primary care physicians, specialists and hospitals in our neighborhoods and the cost of care varies (often significantly) within the city you live in as well as among different cities. “Best of” lists for health insurance can’t quite give that full picture, and that matters because healthcare services are so regional the cost of those services are too. So, the same health plan in Austin may be priced differently than in San Antonio or Houston.
The “Best of” lists also don’t consider employee utilization or employee satisfaction. What we know is that the average net promoter score for health insurance companies is -20. That means they are about as well-liked as internet-cable companies. How well your employees like the health plan makes a difference in figuring how much value it offers your employees (from an employee health and retention standpoint). Finding reviews of the health plan or NPS score may help give an employee satisfaction picture.
These lists usually only compare major health insurance providers, leaving out regional players which often have more affordable options.
Top Recommendations From Online Sources and Suggestions to Consider
Blue Cross Blue Shield (BCBS): With a huge healthcare provider network and the ability to offer multiple types of insurance plans, this one is on several lists. Forbes ranks it as their #2 option, with 4.5/5 stars overall, and Investopedia ranks it #1 Best Overall choice. A con for BCBS noted by Investopedia is needing to use a sales representative to navigate their plans, as they only have limited plan coverage information on their website.
Looking under the hood: BCBS plans in Texas are some of the most expensive plans around. If affordability is a concern, concern shopping around.
United Healthcare: The #1 pick for Forbes is United Healthcare a good bet they say for much the same reasons BCBS — size of network and variety of plans. Investopedia ranks them #1 for Best Network. However, Investopedia also notes a past issue with mental health coverage that United needs to improve upon.
Looking under the hood: United Healthcare has scaled back Texas small group health insurance. Another reason why “best of” lists aren’t quite relevant on a regional level.
Aetna: Aetna is #3 on the Forbes list, and is ranked the Best for Health Fund Expense Options by Investopedia. In Texas, Aetna plans are self-funded, meaning the company—not the insurance carrier—sponsors and takes on the risk and costs of employee healthcare. Some of the pros and cons of self-funded plans include:
- Pro: The company only pays for the healthcare your employees use, so you may end up saving money. Small employers may get up to 50% of the surplus paid in at the end of the year on unused care, pay less monthly based on health trends of your company’s workforce, and may be able to get additional protection with a stop-loss policy that protects your company when your employees claims reach your agreed upon cap and the provider will help cover the costs after that.
- Cons: A self-funded plan, and particularly with Texas Aetna, will only cover expenses their medical experts deem medically necessary. Therefore, your doctor may need to send in additional forms, scans or X-rays, or other proof that the prescribed treatment is medically necessary. Some meds just aren’t covered at all, and in other cases, the plan will only cover a less expensive alternative medicine instead.
Looking Outside the Box: PEOs for Startups
Decent offers some of the lowest-cost health plans for startups and small businesses in Texas. But you wouldn’t find us on a “Best health insurance” list since we’re a Professional Employer Organization (PEO), which means companies partner with us for many services, including our exclusive health plans.
What’s a PEO? Small business owners and startups don’t often have time or resources to hire an internal team of experts to work on employee-related office tasks that they legally they’re required to perform (payroll, tax filing, benefits management, etc.). That’s where PEOs can help. They use co-employment to band together businesses to share HR and benefits resources, and to offload some employer-based risk. For Decent customers, that also includes accessing our exclusive health plans. Using a PEO helps put time back into the clients’ day — time they can use to come up with the next big, scalable, replicable idea to attract investors or to amp up sales and marketplace visibility.
Sound too good to be true? It's not. Reach out and we'll tell you Decent's secret sauce: support@decent.com.
Happy health insurance hunting!
