Rick Lindquist

What percentage of start-ups offer health insurance to employees in year 1? Year 2?

Asked July 12, 2012 by in Insurance & Risk Management

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Scott Taylor

Scott Taylor   September 11, 2012, Edited September 11, 2012

I work for Insperity in our Silicon Valley office. We partner with growing companies to provide all the tactical components of HR. I would agree with Gerrit in saying that this is not something most companies look at in terms of 'year 1' or 'year 2' but rather as something they need to put in place as soon as their level of funding justifies it. HR service and healthcare benefits are a significant investment for an early stage company. However, in Silicon Valley most employers know that employee benefits are a key factor in attracting and retaining top talent because startups compete in the same labor pool with companies like Google, Apple, & Intel that offer impressive packages. We help early stage companies offer their employees Fortune 500 level benefits and help them gain the competitive edge they need.

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Justin Hayward

Justin Hayward   July 16, 2012

I have relationships that do a fantastic job at benefits for startups. That being said- not many. The ones that do not receive funding I've found a much smaller percentage offering healthcare, but those who receive significant investments, especially when large pieces of the investments are being put towards hiring and retaining highly capable individuals we see it more often

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Miki Bellon

Miki Bellon   October 3, 2012

Depending on the growth strategy and recruitment needs, those startups seeking top talent will offer health, dental, vision, and life right off the bat and especially if there are plans for additional recruitment. Starting while you are small offers additional advantages with rates and other services too.

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Jeff Merchant

Jeff Merchant   5 months ago

I think it vastly depends on the industry. For example, I have worked with and provided benefits for many start-up law firms. It is a must to offer good benefit packages to attract the best applicants.

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Michael Chindamo

Michael Chindamo   2 months ago

I am not sure what the percentage is. However, it is critical to have a very strong employee benefit package right out of the box. This is most important if you want to attract the best emplyees. That said, Obama care might work for those with pre-existing conditions if a group plan cost is prohibitive.

Since employees are motivated by factors, it is important to address these factors based on the type of employees you would like to attract. For example, some employees are just interested in their job. They are motivated by basic incentives. Then there are managerial types. They could be motivated by a discretionary bonus. Then there are the "Gift of God" types. These are employees that are very driven, they deliver big time, they treat the business as their own, they bring in quality sales. They hit the ground running and they want a piece of the action.

I would like to encourage you to hire the "Gift of God" types as they are what all start-ups need. They deliver cash flow. Cash is king!. Engage the services professional Industrial Organization professionals to help you assess and build an initial starting team. This could make all of the difference between success and failure.

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Gerrit Betz

Gerrit Betz    July 17, 2012

Years is not a good dimension for this in my opinion. A bootstrapping startup may go a long time without.

Health insurance is extremely expensive. If they have the cash to support it sustainably in any year, I think they would.

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Belinda Waggoner

Belinda Waggoner   July 17, 2012

We work as the HR Department for a ton of Start-ups - most don't during the first year, but really want to. By year two, they're generally looking into it if they haven't placed it already. Benefits, while expensive, send a really important message about how much you care about the wellbeing of your employees.

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Matthew Iorio

Matthew Iorio   5 months ago

As some have said, and in relation to those that I've been around, it really depends based on what the company can afford. Most of those that I've been around have had to pay for health insurance on their own (CEO's for example). So it's really kind of a mixed bag depending most likely on the region you are in and the status of those startups.

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Prudence Sinclair

Prudence Sinclair   October 3, 2012

Nearly all technology start-ups offer health insurance to all employees.

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