Wow! I want to thank everyone for their kind words of encouragement. It’s now been a week since I’ve officially made this decision and one of the most frequent questions I’ve been getting is “what are you going to do for health benefits?” Certainly health care benefits are a big concern, at least in the United States, so it’s an important question.
For my purposes, I have several options which my wife and I are considering. Since my wife works part-time right now, we might be able to go with the health care plan of her employer. This would probably be the least expensive option for us.
Obviously, I can take advantage of COBRA with my current employer, which might be a viable short-term option (up to 18 months). This would be about $1500 a month (for family coverage), so it’s a bit expensive.
Since LogicalVue is a corporation, there are also several small-company health care plans that are available. First, Maine has something called DirigoChoice health care. It’s administered by Harvard Pilgrim and would run about $1,100 a month or so (the above web site erroneously indicates that Anthem is administering, but they stopped at the end of 2007).
And I also have a couple other plans from Anthem and Aetna that run about $700 to $1,100 depending on deductibles and coverage.
To get this information, I went to a local insurance agent that specializes in coverage for small businesses: Cross Insurance. They put together a very slick package of available plans and rates for us to consider.
March 2nd, 2008 at 8:47 pm
I think you’ll find that benefits (health insurance) and payroll taxes will be your biggest expenses in your new endeavor. Plan on your insurance rates increasing every year.
Make sure your rates are high enough to cover those expenses and save for the future. Remember, you didn’t start a business to find a job, you started a business to do something better with your future.
March 2nd, 2008 at 9:10 pm
You might consider using a Health Savings Account with catastrophic insurance. Basically, the idea is to treat health insurance like you treat car or home insurance: to be used only in the event of “Oh Crikey”, rather than as a routine payment method for all of your healthcare needs.
Catastrophic health insurance is insurance with a high deductible, in the $500 ~ $X,000 range. It is extraordinarily cheap relative to garden variety health insurance (about 20% of what I pay for my more typical employer-subsidized benefits) because you only need to use it if you get an “Oh Crikey” event and the vast majority of people won’t, where the vast majority of families will require checkups, a few trips to the doctor for flus, the odd broken leg, pregnancy, etc. You use the difference between what you are paying in your full health insurance plan and what the catastrophic coverage costs you to fund a HSA, which is a tax-advantaged account that you can pay health care costs out of. If you end up not needing as much as you save, it is still your money, and you can either pay taxes and take it or roll it into a variety of tax advantaged retirement accounts, typically without penalty. (Or, obviously, just keep saving again future health care costs. Not a bad idea.)
If you’re interested in opening one, talk to your bank or broker, most have the option these days. Your insurance agent might also have a suggestion. Buying the catastrophic coverage is seperate from choosing the provider for the HSA — one provides the insurance, the other provides an account for managing your money.
March 2nd, 2008 at 10:12 pm
I second what Patrick said about the HSA. That’s what I’ve got for my company. The coverage is through Blue Cross, and the account is set up through Chase. There may be lots more accounts available now, compared to when we set our up.
It’s amazing how much better doctors treat you when they know that their client+patient is sitting in front of them, compared to when it is just their patient sitting in front of them, and their client being the insurance company.
Good luck.
March 4th, 2008 at 8:55 pm
I’ve heard good things about HSA plans. A couple of the Aetna ones were HSA-compatible but still seemed to have rather high premiums. Thanks for the feedback!