The one HR benefit every startup should add

http://42floors.com/blog/the-one-hr-benefit-every-startup-should-add/

by jaf12duke • 13 years ago

243 184 13 years ago

goofygrin2• 13 years ago

We actually put Ltd in place this year. For our company (11 employees, almost everyone in their 30s) it added like $10 a month to our policy. We also pay 100 percent of the health care and it's our #1 expense after labor.

jaf12duke3• 13 years ago

OP here. I'm not an expert, but $10 per month sounds too low. Check the policy and make sure it covers your employees against disabilities that still allow them to work minimum-wage jobs.

Usually the income-parity clause costs extra.

goofygrin2• 13 years ago

I don't remember the actual number, but it's laughably low (maybe $10-20/employee, frankly it was a number of months ago).

aaronchriscohen• 13 years ago

Dental coverage is a scam. I priced dental insurance for my startups for three years. The only plans available to companies with less than 50 employees have benefit caps that were less than the cost of the yearly premiums! You get "free" cleanings and x-rays but it still makes much, much, much more sense to take the cost of the premium and put it in a health savings account for your employee to spend on dental care (or any other qualified medical expense).

rbritton• 13 years ago

Even medium to large company dental plans tend to have around a $1500 coverage cap (at least in Washington state). I priced out a couple of these as an individual to see if it made sense for me, and it ended up being something like $600 per year for $1000 max coverage that only covered 80% of the actual cost incurred.

silverlake• 13 years ago

At least in my area (NYC) the value of dental insurance is also they negotiate very low prices with their providers. For a root canal the difference was 50%.

pmahoney• 13 years ago

I don't have numbers, but back when I had no dental insurance, my dentist reduced the price without any prodding. I'd be surprised if this wasn't common.

acdha5• 13 years ago

Depends on where you live: around DC, the rates for dental coverage are about equal to the cost of your yearly premiums but the companies have negotiated pricing maximums which are significantly cheaper than what you'd pay out of pocket unless you love haggling.

jt2190• 13 years ago

AFAIK there are two common types of long-term disability policy:

1. You are covered if you can't do your current job. 2. You are covered if you can't do any job.

Every employer who has ever offered me this benefit offered the second version, which is great, but it certainly won't help replace my current income if I can't perform the job I have now.

jaf12duke3• 13 years ago

You're right. This is an important consideration.

A policy that covers your exact occupation is the best. It's easier to get when it's an occupation underwriters really understand. For instance a surgeon can easily get an occupation-specific policy because it would be easy to determine that damage to her hands would cause her to lose her income producing work.

It's harder to get a similar policy for say, an entrepreneur. What part of our body allows us to do what we do?

Thus, most startups that get a policy have to get the 2nd type--if you can work elsewhere after an injury, you don't qualify. There's one addendum, however, that is still crucial. You can get a policy that requires the new job have a similar income level. Thus, if you were only able to do work at a 70% decrease in salary, the policy would be triggered and you'd receive your benefit.

brucehart• 13 years ago

I'm not sure how you prove that you are partially disabled for any job that is primarily mental rather than physical. For example I once worked with a guy that was a lead software engineer. Shortly after he was hired, he got into a car accident and sustained a serious concussion. He claimed that after the concussion he could write basic code, but he didn't have the ability to concentrate enough to solve difficult problems or architect complex systems. How is an insurance company supposed to determine his level of disability? They don't really have a baseline to determine how strong of an engineer he was before the accident. Are they obligated to pay the difference between the salary of a junior and senior level engineer if he gets fired?

dkrich• 13 years ago

I'm not a WC attorney but my brother is so take this with a grain of salt, but my understanding is that adjusters will work to evaluate you to determine the legitimacy of your claim. This goes for just about any kind of claim, but you can bet that if you are making a claim that can add up to hundreds of thousands to millions of dollars over your lifetime, they are going to expend some effort to make that determination. This would involve experts in the field evaluating you through tests and interviews.

aestra8• 13 years ago

Claims for mental disabilities aren't uncommon.

lesinski• 13 years ago

It baffles me how few people have disability insurance. What would you do if injured your hands and could never type again? What would your family do? Everyone should have disability insurance -- it should be a fundamental part of your financial life.

utnick• 13 years ago

Isnt this what social security disability is supposed to cover? Obviously it won't give you as much money as a private plan, but it wouldnt be a total disaster.

jfarmer2• 13 years ago

Getting social security disability is a small nightmare and can take months. The majority of initial claims (60%+) are rejected and you'll have to appeal.

Which, you know, is no problem at all if you're actually so injured you can't work.

thomaslangston• 13 years ago

I am also flummoxed. Private short term disability insurance seems very common, but I'm not sure I've ever heard of private long term disability insurance.

drakeandrews• 13 years ago

This is in the UK, but is vaguely applicaple to the situation you describe, so take with a pinch of salt. A friend of mine had an accident about two months back and is unable to work. Despite having been certified as such by at least two psychiatrists and a whole host of other NHS staff, disability benefits don't kick in for six months due to the nature of his new found disability. I guess you're up shit creek if you don't have six months worth of savings in place.

nknighthb2• 13 years ago

What would you do if injured your hands and could never type again?

I don't disagree with your general point, but the truth is, there are a lot of adaptations and assistive input devices people use for computer input all the time. There are lots of ways a techie with a functional brain can continue to work even after quite severe injuries.

moron4hire10• 13 years ago

In any risk assessment, one must balance impact with likelihood.

krichman• 13 years ago

What would you do if injured your hands and could never type again?

I don't even disagree with you, but have a tangent to share:

Have you seen modern robotic prosthetics? I don't want to make light of anyone's situation, but I honestly think we are mere decades away from replacements that are better.

westicle4• 13 years ago

I just left an employer who had 100% salary continuance insurance in place.

Maybe mine is the minority view, but I found it a horrendous waste. When I left the employer it offered to have my portion of the policy transferred to me personally so that I could "continue to enjoy the benefits". I didn't even bother responding (despite leaving on otherwise very good terms).

While I work, I expect to be remunerated. But I don't allow myself the hubris to expect that remuneration should continue in perpetuity. If I decide not to work, or am unable to work, I would prefer to adjust my circumstances to accommodate that fact, rather than continue to pretend otherwise.

jaf12duke3• 13 years ago

I'll resist speaking ad hominem and try to generalize here.

I've found that founders that are married/have kids are much more concerned about HR policies that protect an employee's family, while startups with younger/single founders usually don't put as much thought into it.

I know from my own experience as a founder in my 20s and now in my 30s that this shift occurs.

The issue with long term disability is that the startup can make a statement to its employees that it will provide for that individual as well as that individual's family--through maternity/paternity policies, vacation time, health and life insurance, and long term disability.

Employees with dependents need this type of security and actively search out the companies that provide it. It's one of the reasons the startup community loses so many great engineers to larger companies, even though those engineers would prefer a startup. Not enough thought put into family security.

ceejayoz4• 13 years ago

Hubris? You're paying what you and the insurance company deems a fair price to ensure that you and your family aren't screwed if you become disabled.

Screw adjusting to circumstances, if there's a fair, legal way to keep my kids from being homeless, why shouldn't I take it?

packetslave• 13 years ago

You're married with two young children. While commuting to the office one day, you're severely injured in a car accident. This injury is so severe that you're unable to return to work, but not severe enough to kill you.

Congratulations! Your partner not only has to care for you for the rest of your life -- he/she also has to go to work full-time so your kids don't starve.

nawitus2• 13 years ago

-- he/she also has to go to work full-time so your kids don't starve.

And why is that so bad? The other parent already worked full-time before accident.

mikeash12• 13 years ago

Insurance is about distributing risk. Instead of e.g. 2% of people taking a 100% loss, 100% of people take a 2% loss. Since a guaranteed 2% loss is way more palatable to many people than a chance of a 100% loss, this works out well for many people.

It's not "hubris", it's simple economics. If you don't like it, you don't have to take it, of course. You're allowed to take the option of being forced to live on the streets if you suffer an injury that makes you unable to work for a living. But don't think that other people are somehow deranged for disagreeing.

baddox2• 13 years ago

If you don't like it, you don't have to take it, of course.

Unless you live in a country that funds such programs via taxation, which is most (all?) Western democracies.

westicle4• 13 years ago

I never said that I consider my view objectively correct or superior... and never intended to imply that a contrary view would be deranged! Far from it; I explicitly recognised that mine was probably a minority view.

However the submission implicitly assumes that this option is right for everyone ("The one HR benefit that every startup should add"). I recognise that some people see it as valuable. Hopefully those people can also recognise that other people don't!

I also think the strawman of "Take disability insurance or live on the streets" is rather hyperbolic. The actual alternative is relying on social security disability payments and my existing savings vs an insurance-funded pension. Maybe I'll have to let my chauffeur go, but I'm hardly going to be sleeping in gutters if I take the former option.

JackFr• 13 years ago

If you bought an annuity, you would expect it pay for the rest of your life -- that's how annuities work. If you baought a special discounted annuity that only paid in case you were injured it should. That's not hubris, that's a contract.

On the other hand, I would be very surpised if someone offered 100% salary long-term disability -- the potential for claims at the margin and actual fraud increases dramatically.

narcissus2• 13 years ago

I don't see it as 'expecting remuneration to continue', so much as I see it as simply paying for insurance of income.

Life insurance is essentially the same thing, as far as I'm concerned: I'm paying now so that if / when something in the future happens, there is a financial aspect that helps me / my family.

So out of curiosity, do you consider life insurance the same way?

westicle4• 13 years ago

Yes, but even more so if that makes sense.

I cancelled the life insurance policy which was automatically included in my retirement savings several years ago. I don't have any debt (even my mobile phone is pre-paid) so life insurance is basically a massive bet on me dying with no real upside.

Again, YMMV and some people consider it a worthwhile investment. Just trying to contribute my point of view to the discussion.

nemesisj• 13 years ago

Man, this really brings back bad memories of wrestling with health insurance, dental insurance, and the like in my previous USA startup. Now I'm in the UK and we don't have to worry about it!

joosters• 13 years ago

Long-term disability benefit is still important even if you have free healthcare. It's fantastic that state healthcare will keep you alive should something terrible happen to you. But that's not going to fully help any of your dependents.

goatforce5• 13 years ago

One of my UK employers was quite large and had particularly good disability benefits because a small number of staff worked in physically dangerous jobs, the union wanted those staff treated really well if something bad happened and so everyone in the entirely company was covered for 80-90% of their wage.

A new desk-bound sales guy started and had a stroke before lunch time on his first day and was going to be out of action for a good long while - perhaps forever. A serious stroke is bad news, but he was sure lucky that it didn't happen a few hours earlier.

chollida1• 13 years ago

And one of the things my dad brought up with me is just how important it is to have a good long term disability insurance plan in place. I had never actually heard about it. Long term disability is a policy that can pay out 60% of your salary for the rest of your life if you have an occupation-ending injury.

This is surprising to me. I'm Canadian and I've worked my whole life here so maybe this is one of those Canadian vs US things, but I've never had a job that didn't have long term disability as part of its offering.

Most pay the standard 60% of your pay for the rest of your life if you are unable to work at that job any more.

As someone with a family, I'd say its probably the most important form of insurance to have, if you have someone else to take care of your kids in the event of both parents dieing.

nknighthb2• 13 years ago

It's not atypical in US tech to be offered long-term disability coverage, startups just tend not to think about it until somebody brings it up. Incubators like YC should probably be raising the point with their alumni.

chrisgd• 13 years ago

I believe most large employers in the US do offer it, but much like the 401k it is opt-in, not opt-out, so I assume most people don't have it or if there employer offers it as opt-out, they may not be aware of it.

60% of your income, even if it is tax-free may not be enough to cover everything, the best solution is to take the employer sponsored, which is dollars (i.e. <$10) a month and adding a small one on top.

carlob3• 13 years ago

Isn't this provided by the national health coverage in countries with a welfare state? AFAIK there are a lot of people on disability checks in the US as well, I'm not sure it pays well though.

GFischer• 13 years ago

In my country it's mandatory, but it's an extra paid for by the employer (much like mandatory social security, etc..).

jguimont• 13 years ago

In Quebec, there is a maximum insured by the state and it start 180 days after the event. So if you hand up breaking your ribs/hands and stop working for 4 months, you never get this. My private insurances cover from 60 days up to the 180 days at 80% and then goes down to 60%. The effect of the state insurances is to lower the cost of the private insurances.

aestra8• 13 years ago

There is Social Security disability, which pays a little, but not much. You can also collect it for your kids, if your kids are disabled, etc...

walshemj5• 13 years ago

um the US doesn't have "national health coverage"

peteboyd• 13 years ago

This is one area where health care insurance costs are pretty affordable. We are a web design company in the sunny state of Florida, so these are our rates based on 10 to 20 employees.

From my understanding the larger you are, the cheaper the rates. Since the article /comments asked for typical rates, here is where we are at to compare. Not sure how many employees 42floors.com has, but $2,500 per year would probably be around 5 to 10 employees if they were all male.

STD/LTD Group Policies - Our rates are typically $21 to $60 per male employee and $71 to $150 per female employee per month. So it could add about $250 to $1,800 per employee depending on their salary and gender.

Maternity Leave - The good news is that this covers maternity leave of 3 months for our lady employees. This is a nice benefit to offer. It also explains the higher rates based on gender.

Health Care Coverage - Most group health insurance policies are super high in monthly premiums ($200 to $600 per month for individuals and $1,000 to $1,500 for family coverage). We cover this in full right now for individuals. But it is a huge ongoing cost, especially as everyone gets older and starts families. STD/LTD policies are very cheap by comparison (obviously geared towards a different life event).

Other options - It would probably be cheaper if you just bought long-term, if the concern is catastrophic coverage. But we cover short term too and that increases the rates.

michaelt• 13 years ago

  Our rates are typically $21 to $60 per male employee and
  $71 to $150 per female employee per month.

Did they mention why female employees cost so much more?

I thought (from car insurance prices etc) that men are more likely to get into accidents? I was under the impression female-only things like childbirth were fairly safe these days.

dustcoin• 13 years ago

From the GP:

  Maternity Leave - The good news is that this covers maternity leave of 3 months
  for our lady employees. This is a nice benefit to offer.
  It also explains the higher rates based on gender.

Maternity leave is much more likely to be utilized than long term disability insurance.

ataggart2• 13 years ago

I'm not clear on what the argument is here other than "X is good, therefore X should be provided by one's employer."

knowtheory2• 13 years ago

No, the argument is, X is good, but incredibly expensive for individuals. X (interestingly) is cheap for employers. Therefore employers can provide this substantial benefit X to employees in a manner they would not be able to alone.

mikeash12• 13 years ago

Additionally, without X, employer faces a decent chance of being forced to choose between firing a newly-disabled employee, or continuing to pay their salary even though they can't produce enough value to justify it. With X, you avoid being forced to choose between two bad outcomes.

baddox2• 13 years ago

Also, if the event X covers occurs, it would put the employer in an awful ethical position.

ataggart2• 13 years ago

I bring it up because there are downsides to coupling essential services to whoever happens to be your employer at the time. The upsides are mostly a consequence of the market adapting to decades-long tax policy. There's nothing special about employers, but I guess sometimes it's easier to reinforce a problem than to fix it.

scep12• 13 years ago

You can provide the illusion of invalidating any argument if you distill it down far enough. That said, there's no argument in this piece. He suggests that the affordability of X is not well-known, and given its low cost and terrific upside, it's a feasible and responsible addition to any company's benefits. What are you not clear about?

drewrv• 13 years ago

Seems you missed the main points then... Everyone needs X. It's way cheaper if employers provide X than individuals.

RougeFemme3• 13 years ago

The twist is that Everyone needs - or at least should have - it, but it's so expensive on an individual basis that most individuals forego it. The first few organizations I worked for did not provide it. I priced it and decided against it because it was so expensive and I was young and invincible. I would have been up a creek if I'd become disabled. Would that have been my employer's fault or responsibility? Nope. . .but it's an excellent benefit.

moron4hire10• 13 years ago

I actually really rather prefer buying my own insurance, and by that I mean I buy only the minimum required by law. Insurance companies design their policies to get more out of you then you get out of them, and they've gotten very good at figuring out ways to deny benefits to people.

Just give me the money in my paycheck and let me do with it as I see fit. The money I would spend on insurance I put into a personal savings account. I insure myself.

I spent $1200 total on health care costs in the last 3 years. Now that Obamacare requires I buy insurance or else get hit with a penalty, I'm going to be spending a lot more than that every year.

Why should it be cheaper to have group policies through employers? The entire freaking point of the insurance company is that they are pooling money from a bunch of people over time in the form of premiums to be able to distribute to a minority who need it in emergencies. It's already a paramutual arrangement, why do we have to obfuscate it with employer group policies?

Insurance, at least as it is done in the US, is a scam. It is an oligarchy designed to keep medical services prices high so they can justify outlandish premiums as merely just a small percentage margin.

Retric2• 13 years ago

It's cheaper because of information disparity. Basicly, individual learns he has condition X tells no one and buys insurance and suddenly the inshurance company is out 200,000+$ or worse (AIDS can easily run 1,000,000+$). However if a company is buying insurance then presumably the insurance company knows more about the risks than the HR person setting up insurance.

Guvante• 13 years ago

Actually the major thing with group insurance is the number of people.

It is unlikely that more than 1 or 2 people in a small company will have any major health issues, so if you are signing up 20 people your overall risk is lower (in your example a $10,000 per person cost).

Combined with different feelings toward risk, usually health insurance is a win win. The annoying thing about the recent "reforms" is it mandates preventative care be covered, eliminating the ability to get pure "oh crap" coverage.

moron4hire10• 13 years ago

That changes nothing. The aggregate probability should be the same. Even if we assume that the insurance company will modify premiums based on the type of work the company does, they'd do that to the individual as well, as they ask your occupation. The chance that the insurance company could get scammed by a covered person lying to indirectly through their employer is is the same as the insurance company getting scammed by a covered person lying directly to the insurance company.

Regardless, this is all covered under pre-existing condition clauses and contract law: i.e. they most definitely WON'T be out the $200k from your hypothetical.

RougeFemme3• 13 years ago

Actually, the insurance company would probably do some checking and, finding the proof that you were diagnosed before taking out the policy, would invalidate your policy based on your "fraudulently" filling out the application - and pay out nothing.

mikeash12• 13 years ago

Your story of spending $1200 on health care in three years could very well have been one of being completely bankrupted because you suffered a serious but not life-threatening injury. Unless you're a millionaire, you cannot self-insure when it comes to health care. It's not hard at all to rack up a couple of million dollars in hospital bills if you get unlucky, and you'd probably never be able to pay that back.

Of course, the hospital would still treat you, and the rest of us end up paying for your care through slightly higher insurance premiums.

In short, you're implicitly mooching off society, and apparently proud of it. You managed to get away without actually triggering it, so far, but you were pushing a lot of financial risk onto other people. (Ignore this if you are, in fact, a millionaire.)

You wonder why individual plans are so much more expensive than group plans. It's because of people like you! Group plans include every employee, healthy or not, while millions of healthy individuals forego buying individual coverage because they think they don't need it. This gives the individual market a much riskier pool of customers.

I agree with the basic idea that the US health insurance market is completely messed up, but you're really doing it wrong, here.

moron4hire10• 13 years ago

In any risk assessment, you have to balance impact with likelihood. Yes, it could have happened, but the likelihood is so rare that it's not worth the premium.

Once again, that's the entire point of the insurance company. They balance impact and likelihood.

Even if I had the insurance to cover me, you're still going to get slightly higher insurance premiums. You're actually more likely to receive a higher delta because I was covered than I wasn't, as the hospital will recoup its losses across all insurance providers, while the insurance company will recoup across only their own constituents.

The health insurance system is an oligopoly that allows insurance companies and health care providers to collude to set artificially high prices. Drug companies, hospitals, surgeons, medical schools--they all get their payday and the insurance company gets to make a "small" percentage margin on top of it. Which just so conveniently means that they're some of the most profitable companies in the world. Just look at the bottom dollar. If they weren't making out like bandits, they wouldn't be making out like bandits.

It's specifically because of ubiquitous health insurance that health services prices are so high. If more people covered themselves, the price of services wouldn't be high, insurance payouts wouldn't be so high, and thus insurance premiums wouldn't be so high. I'm actually doing you a favor by sticking to my principles.

EDIT: and regardless of all of that, nobody has the right to mandate what others do with their lives. I could have chosen to be a burger flipper for the rest of my life and your argument would of social impact would still hold, even be worse because society would be out my higher tax revenue.

chiph• 13 years ago

It's not clear if that $1200 was spent on care, or on premiums.

But in any case, a high-deductible policy with an HSA is a great option for people who don't have ongoing medical costs (diabetes, young children, etc). Not only are the premiums lower, but unlike a FSA, you can roll the money over at the end of the year and build up a balance.

If you do have ongoing medical costs, then yeah, traditional insurance (and maybe an FSA) would be the best choice.

paul_f2• 13 years ago

While I do agree with you, we need to back away from taling about the million dollar hospital bill. We used to have a $1M lifetime cap on our life insurance. I asked HR how often that happened. Apparently not once, by anyone in the entire history of the University System of Georgia. Sure, it MIGHT happen, but it seems it is exceedingly rare. Am hoping others with more facts than I could comment.

nawitus2• 13 years ago

In short, you're implicitly mooching off society, and apparently proud of it. You managed to get away without actually triggering it, so far, but you were pushing a lot of financial risk onto other people. (Ignore this if you are, in fact, a millionaire.)

Smooching off society is a good thing. In fact, everyone should do it. It's called universal health care.

bigiain• 13 years ago

" It's not hard at all to rack up a couple of million dollars in hospital bills if you get unlucky,"

That's at least in part due to the fucked up nature of the medical industries strange relationships with the medical insurance industry in the US. In many other countries that "couple of million dollar" hospital bill would probably not cost as much as a couple of hundred grand for exactly the same time/care/procedures/drugs/expertise.

The hospital has not actually incurred a couple of million in costs – did you see yesterday's NYTimes (I think) article about the ~$1 saline solution getting marked up to $500+, while the patient was also invoiced a couple of hundred dollars for using the emergency room and another several hundred for the staff who administered the IV drip? Saying that someone is "mooching off society" for risking defaulting on payments for things artificially marked up over 50,000% seems a little harsh.

(Having said that, I'm fully aware that those of us in "the rest of the world" piggyback freely on a lot of medical/health research that the "unusual" US health system funds…)

winter_blue• 13 years ago

It's not hard at all to rack up a couple of million dollars in hospital bills if you get unlucky, and you'd probably never be able to pay that back.

Just go to another country, if you need quality no-hassle healthcare.

pg says in one his essays, that he found after cashing in on Viaweb that he couldn't just walk into a hospital and swipe his card. It just doesn't work like that in America. You need insurance, even if you have 50 mil in your bank.

To top it off, individual health care is very expensive and designed to screw you (and since you're not a big company with hundreds of people signed up, you can't threaten to switch or do any other such sort of thing if they deny you care.) I know someone who needed a very expensive procedure, and his boss basically told the insurance company that if they didn't assent to the procedure, his company would switch to some other provider. As a lone individual, you have less of this kind of leverage.

Now, most other countries (I said most) don't work like that. You can go to any hospital, not have to worry about denials and pay in proportion to the service they render to you. And their fees come nowhere close to what the most U.S. hospitals charge.

As for options, based on my personal experience:

- If you want to go really cheap, choose India. India has a great medical system, but the generally unsanitary state of the country gives me doubts about the hygiene even in hospitals.

- If you are not seriously cash-strapped, try the UAE. They have a lot of really good hospitals, latest technology, and everything just gleams and shines there. For an example of pricing: laparoscopic surgery at premier specialty hospital in the UAE costs about $10k. I assume it'd be in the $50k (or more) in the US. (Au contraire, in India it's probably $1-$2k range.)

RougeFemme3• 13 years ago

In the original post though, the company is paying 100% of the premiums - and would presumably do the same for the disability insurancee. So you would pay nothing out of pocket. You could view it as 2500/x not going into your check - but it's probably 2500/x that would have gone elsewhere.

mcherm• 13 years ago

Why should it be cheaper to have group policies through employers? The entire freaking point of the insurance company is that they are pooling money from a bunch of people over time in the form of premiums to be able to distribute to a minority who need it in emergencies.

Good question. The answer is that the insurance companies know that people are self-selecting if they buy insurance on their own, while (to a good approximation) they do not select jobs on the basis of the insurance that they will get from it. So insurance offered through an employer comes from a pool of typical people with a certain age and wealth distribution, while insurance sold directly to consumers comes from a pool of people who think that they need that particular kind of insurance. Needless to say, the risk is MUCH higher with the individual policies, and it is priced accordingly.

davidw• 13 years ago

I'll see your anecdote and raise it one: when I was around 20, and in very, very good shape from lots of cycling, out of nowhere (no crash, no impacts, nothing I can think of), I had a collapsed lung, which I think came to around $20,000 in hospital/surgery bills. Luckily, I was insured at the time: I had not yet started my programming career, and had nothing like that amount of money available.

ams61103• 13 years ago

$20,000 is a chunk of money, but nothing an ordinary person can't get out from under. Most people spend more than that on a car.

moron4hire10• 13 years ago

Is it my fault that insurance premiums would increase by my non-participation in the insurance company's ponzi scheme, or is it the scared masses fault that medical services are so high because they relentlessly pursue getting everyone to join in for their own security?

Here's the problem with the arguments of "all for one and one for all": Most people are not going to have hundreds of thousands of dollars in medical bills (millions is ridiculous. I have never heard of such a thing, and regardless, the prices are over reported to make the argument that high premiums are necessary). All most people are going to need is yearly checkups, a cost they could easily take on themselves if they pay out of pocket. But instead they put it on their insurance, like it's some kind of free money.

Every time someone goes to a general practitioner for a basic rhinovirus and only pays their $10 co-pay, they're making the rest of us (yes, me included, because you generous folk figured out a way to force me to buy minimum insurance) pay for the rest of the over-inflated price of their unnecessary visit. Take a cough suppressant, drink lots of water, and stay home, you'll be better in 3 days. You don't need a doctor to tell you that. I haven't needed a doctor to tell me that since I was a teenager. Stop going to work when you're sick.

But the average person is meant to lose out on their premium, otherwise the system wouldn't work. But rather than treating it as the sunk cost that it is, money they're most likely to never get back, the average person goes the doctor for every sniffle and ache.

ceejayoz4• 13 years ago

Stop going to work when you're sick.

That's a pretty privileged statement to make.

aestra8• 13 years ago

Take a cough suppressant

The medical evidence for taking cough suppressants is poor.

http://dx.doi.org/10.1002%2F14651858.CD001831.pub3

http://dx.doi.org/10.1136%2Fbmj.324.7333.329

mcculley• 13 years ago

Just give me the money in my paycheck and let me do with it as I see fit.

Unfortunately, the way the system is set up, the money an employer spends on health insurance cannot be used effectively in the health care market. It is not a free market.

For my single employees, I pay $406.53 per month for health insurance on a very comprehensive plan. If I were to just put that in their paycheck and tell them to fend for themselves, first they would have to pay income tax on that money and second they would not be able to buy health care services at the rates negotiated by the insurance companies.

This doesn't even factor in the situations where an employer and the coworkers have to decide how much to help an employee with his medical bills when something happens.

enraged_camel3• 13 years ago

It just occurred to me that the more benefits jobs provide, the more dependent on those jobs people become, and the harder they fall when they lose those jobs.

This is NOT an argument against providing benefits, of course. But it does create a weird dynamic.

danielweber3• 13 years ago

People might be unable to leave because they need their current employer's health insurance, but not leaving because of losing disability? That's a new one.

enraged_camel3• 13 years ago

I didn't say that. Reading comprehension is your friend.

bcoates• 13 years ago

COBRA should fix the former, but it doesn't appear to cover the latter.

tomjen32• 13 years ago

Potentially stupid question, but wouldn't they be covered under their new employers insurance?

acdha5• 13 years ago

This argument comes up frequently when people discuss startups: once it involves losing health coverage, a significant number of people lose interest in participating. The current system heavily encourages anyone with less than perfect health / dependents to work for a mid-to-large-sized company, to our relative disadvantage when compared with the rest of the first world.

donpdonp• 13 years ago

Too Link-Baity; Didnt Read

"The one weird HR benefit every startup should add"

bstpierre• 13 years ago

One thing not mentioned here is the waiting period. I.e. after you are injured and stop working, you are typically required to use up all of your sick/vacation time, and/or wait for 180 days until you can receive benefits.

I've worked for companies that offer short-term disability insurance -- which will cover the gap -- but this is less common than LTD.

This is why it's important to have an emergency fund to cover your living expenses for at least the waiting period. Otherwise you could be looking at eviction before the money from your disability insurance comes in.

pg• 13 years ago

We didn't have this type of insurance at YC but now we're going to get it. So thanks for the tip Jason.

300bps2• 13 years ago

Group disability insurance is very often worthless and not worth even the paltry sum an employer pays for it.

Disability insurance is all about the definition of disability. Only a few people have a truly comprehensive disability policy through their employer. This is because the definition of disability for group policies usually requires that, when making a disability claim, you cannot work in your job "or any other job" (or something to that effect). As as a result, you usually must be completely and totally disabled on a permanent basis to collect long term disability from your employer.

http://www.bogleheads.org/wiki/Disability_insurance

Often, they don't kick in for 6 months and then because you're still able to sell pencils for 50 cents on the street corner they will not cover you.

The reason why individual policies are typically much more expensive is because their definition of disability is different. Many individual policies are "true own occupation" which means that if you're now a neurosurgeon they can't force you to work at a McDonald's drive through.

tcas2• 13 years ago

My LTD is 60% of my income, tax free (very important, always pay for any disability post-tax, if you don't your income from it is taxable), until I am able to make over 80% of my pre disability income.

It provides me benefits from 6 months after my disability (I decided not to pay for short term which starts at 2 weeks until 6), and will keep going until I am ~65 years old.

Eliezer• 13 years ago

That's what I came to the comments section to check out - it seemed like a diamonds to doughnuts bet that unless the insurance provider has an exceedingly good reputation, one should assume that the secret to their policy is that they never really pay out.

lancewiggs• 13 years ago

Yes. Read every clause of any insurance contract, and realise that the other party will fight to the word level to defend their default position of not paying out. Those clauses are very well thought out, and not by the buyer.

In my own circumstances I've found many insurance contracts to be worthless in practice.

mildavw• 13 years ago

I don't have it in front of me, but I recall the fine print on my policy stating that if they cover you, they will only bring your income up to 60% of your salary. If you are receiving other benefits, like social security disability, they subtract that from the payout.

walshemj5• 13 years ago

Death in service (normally 3x salary) is another cheap benefit if the worst happens your partner wont have to deal with any debts (mortgage mainly).

ams61103• 13 years ago

Term life insurance is very inexpensive for young people to buy on their own, unlike disability.

Spooky23• 13 years ago

Employer provided policies are governed by Federal regulation (ERISA) which is much less policy-holder friendly than state regulated insurance. (At least in "Blue" states, probably a different story in Alabama.)

contingencies• 13 years ago

Very, a merry, centric.

danielweber3• 13 years ago

Important note:

If the company pays for your disability with pre-tax dollars, your disability payments are taxed as income.

If you pay for your disability with after-tax dollars, you are not taxed on the income.

Keep this in mind when designing the plan. If taxing the employees on their disability benefits makes the benefits tax-free, you should give your employees that option.

paul_f2• 13 years ago

This is why many plans pay 60% of your salary in benefits. Since it is tax free.

grumps• 13 years ago

I'm not completely following this whole healthcare reform. I do know that it's more cost effective for employeers of small businesses to use a SHOP exchange: https://www.healthcare.gov/what-is-the-shop-marketplace/

According to my current employeer they wont be able to purchase 100% coverage using the health exchange. So personally this is going to start costing me significantly more...

Edit:Apparently - our benefits consultant commented that it would be cheaper for individuals to purchase their own health insurance. I guess I will deal with that when the time comes.

skittles• 13 years ago

Seems like many otherwise smart people think in terms of "how likely am I to need this?". Insurance should be thought of in terms of "how screwed would I or my family be if...?". If somebody depends upon your income, get life insurance and long term disability. If you depend on your income, get long term disability. Everyone except for billionaires needs major medical insurance (USA). And stop insuring things that you can afford to replace (warranties generally).

bradleyjg• 13 years ago

The difference in cost of benefits such as health, eye, dental, life and disability insurance, particularly if dependents are included can easily cost tens of thousands of dollars a year more for one employee than for another.

Do you want to haphazardly compensate your employees like that, without it even being bargained for during the hiring process? Wouldn't it be better to negotiate a total compensation number instead? You could potentially be looking at a whole different class of employees for the same total money.

Though maybe the (irrational) bad will generated would wipe out the gains.

Zenst• 13 years ago

Given the cost and the impact upon what would be a very bad disaster, this indeed makes so much sense and also seems cheap in comparision to other benifits a company pays out for.

Few questions though on these types of policy:

    1) What limitations are needed to be observed - must a company have a defined standard of health and safty and as such a defined quantifiable level of risk.

    2) Are such policys only limited to accidents or directly measurable incidents that casue a disability in an employee or are outside area's like a bad skiing accident also covered.  The whole area of say parkinsons and somebody who has a family history of it would that also be covered as that would be a disability reducing career situation.

    3) The employers impact - loosing an employee is very costly and some more than others but whoever you lose will be a impact that is fiscaly measurable from cost of finding replacement and training time invested, down to extra overtime upon the others to pick up the slack until somebody else is upto speed.  This is factoring in every thing is documented to the if I fall under a bus will my colleges be able to pick up the slack.  So with that a little bit extra on the insurance policy to cover the Employer impact is also worth investing in if not already coevred.  Especialy given the rates based on policy costs too me appearing cheap and rasing flags given the odd's of somebody getting cancer or a road accident that could very well limit there ability to work.

    4) Quality of work, if somebody who was able to be very productive has an injury that whilst not preventing them from working, yet reduces there productivity in a measurable way - then how i that covered?  This is probably a situation when you have a employee contract and that employee is so good he does other area's of work that everybody accepts without his contract being updated.  I know many people in IT who have a contract saying that they are say a DBA and yet they do sys admin, backups and other tasks that build up that if they just worked to contract and did database work then other area's would fall apart.  Though is very much a area of managment limits and avoiding giving people pay rises that just seems to happen.  But in IT you would find your contract being very open in definition of your role or be updating that contract weekly (can you halp me move this printer - sure let me get that added to my contract so I'm allowed to move heavy objects) and could get silly.  But from an impact perspective, if they can do a 2 week holiday without them being missed beyond there defined role then your probably safe, though if you end up calling them during that period then in short your being unfair to that employee (or allowing him to be unfair to his or her self, more the case); Which could have a noticable impact - not just in situations of them unable to do there job, but if they leave (which is how most communicate that they feel undervalued instead of talking with you about it, least with many IT types who are good at the job).

But for an employee, this type of cost for the return is frankly a no brainer given the example costs and with that I still can't help feel that the prices are perhaps too cheap and some actuary has messed up. I hope that ain't so, and my be that every other type of insurance is so over priced that I'm conditioned that way. But having worked in reinsurance, I do feel the risk and as such the cost of claim do seem somewhat out of sync and could be an insurance industries asbestos waiting to happen. But were all IT geeks and we now know how contracts and courts work so again this type of insurance for the cost is really just a no brainer that it can actualy save you and your family money to the extent that it is cheaper to insure the whole company instead of just yourself for family peace of mind - crazy and yet that is the case. But do check all the contract clauses as it does seem too cheap.

rkaplan• 13 years ago

My aunt used to work at a school that did not have this policy in place. The principle had a debilitating head injury that put her in a coma; she is now unfit to work for the rest of her life. It was tremendously sad for everyone involved, but it has also severely strained the school financially. Under Massachusetts law, the school is required to pay a large percentage of her original salary now that she is disabled. Had they taken out an LTD insurance policy this wouldn't have been a problem.

kalleboo• 13 years ago

Happy to have a nanny state take care of this bother for me

fudyy• 13 years ago

Currently working for a company that doesn't offer LTD, and it scares me whenever I think about not having it, but not enough to buy it on my own. It's definitely a major plus.

tlrobinson• 13 years ago

The obvious question is how is "occupation-ending" defined, in particular for knowledge workers who could quite possibly continue working with even severe physical disabilities?

mnml_• 13 years ago

It doesn't make sense, just put those 2.5K to upgrade your retirement plan.

FatalBaboon• 13 years ago

Comparing this with my French life is astonishing.

I can go in and out of hospitals/any doctor for almost free, ambulance ride included if necessary. For ~30€ monthly above the basic care (paid by employers). I don't recall ever worrying about money when it comes to health. What you have in the US is archaic.

basicallydan• 13 years ago

At Huddle, in the UK, we don't even need this (NHS. No, I don't want to argue about this.) but we have both health insurance and death-in-service coverage for families.

It's made a big difference to our general peace-of-mind, and there are a bunch of other things that go along with it to encourage fitness. We're all a lot fitter than we were before, and since the team is more family-oriented than we were when the company started, death-in-service coverage is very welcome.

The one HR benefit every startup should add

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