First, the way things are structured tax-wise, C corporations get to deduct founder health insurance 100%, so that's the most tax-advantaged scenario. If you pay for your own personal health insurance or do it as a sole proprietorship, etc. you're basically getting a raw deal from Congress.
I'm in California, where basically any 2+ person small business that's been around about like 3-6 months is guaranteed group health insurance for its employees at no more than 10% over an index that represents what bigger companies pay. It's a sweet deal. So if you're in California and are going to go this route, you may want to incorporate ahead of time to start that clock ticking.
So basically the company pays for the insurance for the founders, even though they're not drawing a salary. And you get much more flexible options than through COBRA (naturally) or personal insurance.
Be clear about this: a tax deduction is not dollar for dollar. i.e. is NOT free. You are simply getting a discount based on your tax bracket. (this is for the posters from the U.K.)
I moved from Baltimore to Manila so that I could afford to pay my medical expenses in cash. By coming here, I've amplified my purchasing power ^2 and live more comfortably paying less. The birth of my daughter with complications and a c-section was just under $5000.00 USD, in a state of the art facility that rivals Hopkins itself (Google, "The Medical City Pasig City" to see it). A pediatric appointment costs me $10, medicine even less. I know my move was a little drastic, but it opened many doors. :)
Actually, health insurance is an important factor. If you catch pneumonia or the flu, you're looking at getting knocked out for 2 months (pneumonia resulting from a "cold" that was not properly handled), 2 weeks (flu) without medical intervention. Personally, I'd rather take some meds and be back on my feet in 3-5 days than not be able to afford to see a doc or take some meds....putting my startup behind which would kill me more than an illness. Without insurance you're looking at least $110 for per doctor visit and about $90 bucks and up depending on what meds you need (PER prescription). Or let's say you broke your arm or leg because you tripped on your shoe laces while walking down the stairs of the Y Combinator building. Without insurance you're looking at about $2500 and up to get it fixed and that doesn't include the cost of seeing a doctor added into it.
Paying $120 bucks a month to cover potential injuries or finding affordable medical insurance and covering yourself for potential injuries is a definitely an important factor not only for yourself, your company, but also to prevent you from getting your co-founders sick.
It is true that if you're younger you are less likely to get sick. However, if you are under a substantial amount of stress, your immune defense will drop and your chances of getting sick increases. That's why you see a lot of people get sick during mid terms and exams.
So for all of you who are in a startup, I suggest you get at least 1000-2000mg of Vitamin C. Clinical trials have shown that taking 1000-2000mg (usually an 8oz glass of OJ, depending on type of OJ) of Vitamin C a day provides prophylactic use (prevents the occurrence) against acute stress induced illnesses.
For doctor office visits - they make sure you can pay before you see him. If you list that you do not have insurance, the
nurse or secretary to will tell you how much it will be without insurance to verify that you can pay the cost.
If you go to a "doctor's office" he has the right to deny you services if you can't pay (only for non-emergency incidences). However, if you are in an extreme emergency such as a heart attack or you're dying, he cannot refuse you his services due to the hippocratic oath.
However, doctors in hospitals are different. If you go to the ER (hospital related) the hospital doctor is REQUIRED to see you by US law...without verification of ability to pay. For doctors in hospitals, this is a big problem because we cater to a lot of homeless patients who walk out and do not pay...and of course one can't do anything about it since they're homeless.
Anywhoo, if you get treated in a HOSPITAL, always request an ITEMIZED list of charges. Anything that says "misc fees" you need to be weary off. Check for overcharges and outrageous charges. For instance, do you want to pay $170 for a "mucous recovery system" (BOX OF KLEENEX). Sometimes it's a "mistake" but sometimes there are unethical hospitals. Save yourself and your startup some money.
Massachusetts has a law that (may) be going into effect on June 1- It requires that all citizens of Ma have health insurance.
They have two programs to deal with this- The first is Commonhealth, which provides free or subsidized health care to those who, in the last year, have made less than 300% of the federal poverty line. Many people who are currently students may be able to use this, and have their coverage be at no or very low cost.
For those people who don't qualify, As on May 1st there's a new program, Common Choice, which will be a private-public partnership, to try to bring 4 or 5 low-cost health care plans to everyone. Given that everyone in the state now needs health care, essentially the state is negotiating it's own group rates.
It's not a bad system, but it's still new. The Poor are covered for free. Employers with over 12 people are required to offer Health Insurance. People who work alone, or in a small startup, can get a plan for ~ $120/month.
Group health insurance is one of the perks of having at least 2 founders. According to my insurance broker, we just need to people on payroll working at least 25 hours a week to qualify for a group plan. Healthy people in their 20's get better rates than the elderly. (Zuckerberg's real reason for only wanting to hire young people)
I do. And so will all other founders who are Massachusetts residents as of July 1, 2007. (A new law requires all residents of the commonwealth to have health insurance by that date in order to avoid fines.)
lol, as someone who gets free healthcare in the UK thats really amusing. Why not just make it a tax for the minimum requirement? (you could even make it dependent on income although possibly thats too shocking)
It is very politically difficult to raise taxes or introduce new taxes anywhere in the USA, even Massachusetts. Also many people in the USA are skeptical about socialized health care. The USA's system is definitely broken in some ways but it is not clear at all that the systems of other counties are not also broken in different ways.
This is actually one of the biggest strikes against YC in my pro/con table... I will likely have to take some F/F/F money in addition to the YC seed to make sure I will stay insured...
I did a startup and recently got acquired. Here's what I did.
I say get disaster health insurance (30 bucks a month) screw cobra. its too expensive.
if you're in MA, i hear you can get universal health care and suck on the teat of the taxpayer. If you're in CA, Blue shield is cheap. If you want bang for the buck, I suggest Kaiser.
Also helped that my girlfriend is about to become a surgeon so she and her friends had me pretty much covered for normal stuff.
Seems to me that if you're in the target demographic of a YC founder (mid 20s, no family obligations), then health insurance is not too much of an issue cost wise. In the states I've lived in FL and WI, my insurance has run around 100 to 130 per month.
Call an agent, fill out the forms... its all of a few hours of legwork. Welcome to running a business =).
I would rather lock myself up in a room with healthy food and finish the project than staying out of action due to sickness. I would rather cross my finger and possible request the germs to attack me later :D
I pay it out of pocket along with some life and disability insurance; I think it's worth the peace of mind to enhance creativity and not worry about "what ifs".
First, the way things are structured tax-wise, C corporations get to deduct founder health insurance 100%, so that's the most tax-advantaged scenario. If you pay for your own personal health insurance or do it as a sole proprietorship, etc. you're basically getting a raw deal from Congress.
I'm in California, where basically any 2+ person small business that's been around about like 3-6 months is guaranteed group health insurance for its employees at no more than 10% over an index that represents what bigger companies pay. It's a sweet deal. So if you're in California and are going to go this route, you may want to incorporate ahead of time to start that clock ticking.
So basically the company pays for the insurance for the founders, even though they're not drawing a salary. And you get much more flexible options than through COBRA (naturally) or personal insurance.