{"id":1002,"date":"2016-11-18T22:46:25","date_gmt":"2016-11-18T22:46:25","guid":{"rendered":"http:\/\/blog.simplyinsured.com\/?page_id=1002"},"modified":"2017-11-14T23:33:32","modified_gmt":"2017-11-14T23:33:32","slug":"how-to-choose-health-insurance-startup-edition","status":"publish","type":"post","link":"https:\/\/www.simplyinsured.com\/advice\/2016\/11\/18\/how-to-choose-health-insurance-startup-edition","title":{"rendered":"How to Choose Health Insurance \u2013 Startup Edition"},"content":{"rendered":"

So you\u2019ve taken the plunge and started your own company, or joined a startup as an early employee. In addition to the amazing perks of bottomless Red Bull and Top Ramen \u2013 you realize you don\u2019t have health insurance anymore. Given the likelihood of vitamin B12 deficiency and\/or MSG-poisoning, you need coverage, and soon.<\/p>\n

But how do you find the right plan? Don\u2019t fret!<\/p>\n

We recently looked at buying insurance for ourselves. There are dozens of plans available in most areas, and it turns out that many are just bad choices \u2013 for a given healthcare scenario, some plans are strictly better than others. To understand the whole picture, we built a health insurance cost tool<\/a> and used it to analyze all plans available to women and men in California in their 20s.<\/p>\n

Here\u2019s what we found. (Read on for the gory details \u2013 if you\u2019re itching to get back to coding, skip to our summary of results).<\/em><\/p>\n

\u25c6 Key Insights We Learned<\/h2>\n

While scrutinizing these plans, we picked up a few useful tips that can make a big difference as you choose health insurance. Our recommendations:<\/p>\n

DO:<\/strong><\/h3>\n
    \n
  1. If you\u2019re under 26 years of age, get on your parent\u2019s insurance.\u00a0<\/strong>
    \nIndividuals under 26 can be added to their parents medical coverage. Your parents can enroll you once a year during open-enrollment, and you are required to stay on the plan for an entire year \u2013 but the incremental cost is typically less than $50.<\/li>\n
  2. Put money into an HSA.\u00a0<\/strong>
    \nWe were surprised how few people know that putting money in an HSA can save you 20-30% on healthcare costs (tax deductible, tax-free growth like an IRA). There\u2019s enough to write on this for another article, but one common myth is that if you don\u2019t use the money each year, you lose the funds \u2013 this is not true.<\/strong>\u00a0You can only withdraw funds from the account for health expenses, but the money is always yours.<\/li>\n
  3. Get help from Medicaid (starting in 2014).<\/strong>
    \nThanks to health care reform, starting in 2014, individuals with a yearly income of <$15K are eligible for Medicaid subsidies for health insurance. This means if you\u2019re a founder of a company, you could be eligible for free health insurance. There will also be subsidies available to individuals who earn less than $43K a year.<\/li>\n<\/ol>\n

    DON\u2019T:<\/strong><\/h3>\n
      \n
    1. Sign up for COBRA coverage.<\/strong>
      \nCOBRA coverage costs on average $500\/month for individuals. While it usually offers great coverage, there are much most cost-effective plans available directly from the provider. The average insurance premium for an individual in their 20s in San Francisco is $198\/month \u2013 a full $300\/month of savings below COBRA.<\/li>\n
    2. Go without coverage.<\/strong>
      \nThe cost of even minor medical issues can be extremely expensive. For the uninsured, the average cost of an emergency room visit in San Francisco is $1015 and the average treatment cost for breaking your leg is $1100. Common prescription drugs (like Lipitor, Vicodin) can easily run hundreds of dollars per month. \u00a0You\u2019ve already taken on risk by doing the startup; without insurance, you\u2019re on the hook for the entire amount.<\/li>\n<\/ol>\n

      \u25c6 Our Methodology<\/h2>\n

      Classifying common healthcare needs<\/h3>\n

      To start, we asked a bunch of our startup friends what they wanted out of a health insurance plan. Many just wanted to limit how much they\u2019d pay in case something really bad happened. Others had ongoing medical conditions; they needed coverage for their treatments.<\/p>\n

      We found that most startup consumers fall into three categories, based on their healthcare needs:<\/p>\n\n\n\n\n\n\n
      Category:<\/th>\nHealthcare Needs:<\/th>\n<\/tr>\n
      Emergencies Only<\/strong><\/td>\n\n
        \n
      • Do not typically use medical services<\/li>\n
      • Need insurance only for emergency care<\/li>\n
      • Seek low monthly premiums, while having reasonable \u201cworst case\u201d costs<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
      Basic Healthcare<\/strong><\/td>\n\n
        \n
      • Go to the doctor a few times a year<\/li>\n
      • Sometimes need care for minor illness<\/li>\n
      • Seek low cost for office visits and minor illness<\/li>\n
      • Want reasonable \u201cworst case\u201d costs<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
      Ongoing Medical Conditions<\/strong><\/td>\n\n