Since Big Bang Technology’s inception almost three years ago, we have been forced to learn a lot about business. Max and Cameron have done a lot to make Big Bang a great place to work. As the company started to grow, we wanted to take ownership of our employer responsibilities, and take a bigger role in looking after our team. With Chris's one-year anniversary looming, and the staff growing at a steady rate, it became increasingly clear that we needed to put some basic human resource infrastructure into place. Read more...
My first project was to turn our contractors into employees, which isn’t as hard as it looks. Once that happened, I was asked to put company health benefits in place. Beyond their practical benefits, a company health plan helps to ensure that employees feel protected and invested in the success of the business. But here’s the problem: how can we make a good decision about health benefits when most of the information comes directly from the companies trying to sell us their policies?
Typically, getting a health policy for your business means working with a broker who's incentive is to sell you a policy. Brokers are paid by the insurance providers, not by the company buying the policy, so they are not necessarily looking out for your best interest. Knowing that, how do you know what policy is actually best for your company or its employees? And who can you trust to give you unbiased advice?
We started by investigating fee-for-service brokers. Fee-for-service are the best available option because they're paid directly by the customer, and not the insurance provider. They can give you unbiased advice because you pay them directly, and they don’t have loyalties to any particular insurance provider. Unfortunately most fee-for-service providers won’t work with a company as small as us. Luckily, they were willing to give us a few leads to pursue.
Armed with a list of brokers, we trusted our instincts and set up a few preliminary consultations. In most cases you are not obligated to sign brokerage agreements until you decide to go ahead with a plan. So if any of them try to tell you otherwise, just cut them loose and move on to the next one. We found three brokers representing a variety of different insurance providers, and asked for sample quotes.
Sample quotes usually list several varied coverage options, and represent the extremes of the coverage spectrum. Typically, insurance companies have a basic policy, and a Cadillac policy that includes their minimums/maximums for extended health care, dental, and vision coverage. You can mix and match policies to suit your companies needs, and even tier your policies based on a variety of factors. However, the more people you have on the same policy, the lower the premiums become.
Benefit plans also require a minimum contribution to life insurance, accidental death & dismemberment, and critical illness. Companies can choose how much beyond the minimums they want to cover their employees for in the case of unforeseen emergencies. Using some basic information about employees, such as age, gender, and number of dependants, they can give you a rough estimate for what the policy will cost per employee each month.
The next step is to decide what level of coverage you want for your employees and how you want to structure your contributions. Because there are so many options and endless combinations of coverage plans, finding a plan that is right for everyone can be a challenge. Most providers require that employers contribute a minimum percentage, usually 33%, but we have also seen 50% minimums. In order to determine what level of contribution Big Bang was going to make to employee benefits we spoke to some of our peers who have set up programs like this in the past.
We were curious about how other companies like ours set up their health insurance policies and if they are happy with their corporate coverage. We made sure to ask companies of similar size whose employees were in our age group because those are the primary factors that influence premiums. Some of the questions we asked were:
- How have their benefit needs evolved over the years?
- How would they do things differently?
- How much variation in plans did they have across their employees?
- What percentage of the policy did they pay for their employees?
- Did they tier the company contribution for their employees over time, or did they give everyone the same contribution from the start?
Although it might seem obvious to consult employees about what their ideal benefits package might look like, most employers never ask. Employers are usually concerned about keeping costs down, and assume that employees always want the highest levels of coverage possible. But ultimately, choosing a benefits plan depends on the individual needs of each employee. The problem is that most employees our age have never given this any consideration. So instead of making assumptions about a very important subject, we wanted to include the whole gang in our decision making process.
To do this, we set up a benefits workshop for everyone at Big Bang to give us an idea about what our benefits policy should look like. We reviewed the policies available from various providers, and took time to understand the difference between them. We completed a confidential questionnaire to help everyone think about the health coverage they want. We also discussed the ideal relationship between and employer and their employee and what constitutes a fair employer contribution.
A lot of startups never think about offering a solid health benefits plan. Maybe they think that only established companies need them, or best case scenario, they think about them as an incentive to attract talent. We couldn't disagree more: having a health plan in place is absolutely necessary. Not only because we’ll be better off as individuals and as a company, but simply because it's the right thing to do.