You have a million dollar idea and a whole lot of work ahead of you. So how do you recruit the best talent to grow your business from startup mode to successful? I’ll give you a hint: it has nothing to do with trendy perks like beer carts, massages or ping pong tables. Millenial employees consistently rate health benefits as one of the benefits they value most. Health benefits for startups are no different - and there are ways to do this without breaking the bank. Here are a few things to keep in mind.
Health benefits for startups
Focus on the basics
Most millennials are relatively young and healthy (i.e., infrequent healthcare users), so you do not need an extravagant plan with all the bells and whistles. A simple bronze or silver level plan will be sufficient, with monthly premiums averaging $300-$400. Stick to an EPO or HMO plan which requires patients to utilize a doctor network to help minimize costs. The Affordable Care Act (ACA), while it remains the law of the land, requires all plans to cover the same essential health benefits, the only difference between plan levels (bronze, silver) is the percentage that is covered by the plan versus out of pocket from the employee.
→ Read this startup's QSEHRA review for more info about their experience with Take Command!
→ Read more about health insurance for startups
Increase coverage as your business grows
It would be great to tell new hires that their health plan covers 80% of medical expenses, but for a startup that coverage is not realistic. Start with what you can afford, say 60% coverage. As your business grows, you can increase your coverage to 70%. You will be the hero when you announce the new coverage. Don’t be the guy that says “we used to cover 80% but now we can only cover 70%”- your employees will get really disgruntled really fast.
Utilize Tax Incentives
You may qualify for the Small Business Tax Care Credit if you have fewer than 25 full-time employees who make on average less than $50,000 a year. You must pay for at least 50% of your employees premium costs. The tax credit is up to 50% of the costs you pay for your employees premiums.
Consider a Health Reimbursement Arrangement (HRA)
A new law passed in December called the 21st Century Cures Act prompted Congress to create a special kind of HRA for small businesses called QSEHRA (Qualified Small Employer Health Reimbursement Arrangement). QSEHRA allows business owners to reimburse employees tax-free for individual health insurance premiums and medical expenses. This is a big deal because small businesses can now get the same favorable tax treatment as big company group health plans but with a lot less hassle.
HRAs allow employers to adopt a strategy called "defined contribution" which is much simpler than hassling with a one-size-fits all group plan and is proven to be much more efficient, affordable, and predictable. Employers can now give their employees a fixed dollar amount each month, say $200, and each employee can then shop for the plan that fits his or her needs the best.
Getting Help
If all these options on health benefits for startups have your head spinning and you are not sure where to start- don’t worry, we can help. Take Command Health now offers a Small Business Platform! Our team can discuss your options and help you choose the best health insurance strategy for your business. Once enrolled we will help your employees navigate their healthcare options. Take Command Health will focus on your employee benefits so you can focus on running your business. `
Hungry for more? Check out the benefits chapter in our handy new QSEHRA Guide!
This post was originally published in 2017 and has been updated in 2023 to reflect all of the exciting changes in the HRA world.
