{"id":29100,"date":"2014-08-21T04:44:53","date_gmt":"2014-08-21T11:44:53","guid":{"rendered":"https:\/\/www.smartrecruiters.com\/blog\/?p=29100"},"modified":"2014-08-25T17:05:51","modified_gmt":"2014-08-26T00:05:51","slug":"startup-recruiting-the-state-of-healthcare-benefits","status":"publish","type":"post","link":"https:\/\/www.smartrecruiters.com\/blog\/startup-recruiting-the-state-of-healthcare-benefits\/","title":{"rendered":"Startup Recruiting: The State of Healthcare Benefits"},"content":{"rendered":"

In years past, companies of all shapes and sizes needed to offer a good employee benefits program, with which to attract the best candidates.\u00a0 That was even true for early-stage startups,<\/a> since that was one of the hooks to get someone to leave their big company jobs and rich benefits packages.<\/p>\n

But, a lot of things have changed over the years, and my feeling today is early-stage startups should not worry about offering benefits.\u00a0 If you can afford them, great, offer them.\u00a0 But, honestly, how many startups can really afford them, on their tight startup budgets. To help me frame the topic, I am going to focus a lot of my discussion around healthcare benefits, since that is typically the most demanded, and most expensive of all employee benefits offered.<\/p>\n

Healthcare Trends<\/strong><\/p>\n

First of all, healthcare<\/a> costs are rising so quickly (a whopping 15-20% per year, 5-6x the rate of inflation), that even many big companies are cutting way back on the amount of healthcare benefits they are offering their employees (e.g., lower percentages of costs covered, less benefits for non-employee family members, HMOs vs. PPOs).\u00a0 Secondly, individual plans have never been easier to source, especially in the wake of the Affordable Healthcare Act (AHA), so employees don\u2019t necessarily need a company-sponsored plan to get access to affordable healthcare.\u00a0 And, thirdly, many employees are very \u201cmobile<\/a>\u201d in their careers, jumping from company to company every couple years (and hence don\u2019t want to have to re-apply for health coverage every time they move jobs, and prefer a more \u201cportable\u201d plan that moves with them from job to job).<\/p>\n

How Startups Are Responding<\/strong><\/p>\n

I spoke with an insurance<\/a> broker, to get a sense of how many startups were actually offering healthcare benefits.\u00a0 Here is what I learned.\u00a0 For companies with 2-15 employees, approximately 35% offer healthcare benefits (so 65% of those startups have decided not to offer it).\u00a0 And, for companies with 16-50 employees, a materially higher 65% of such companies are offering healthcare benefits, as their budgets grow.\u00a0 And, the AHA law<\/a>, all companies with 51 or more employees will now be required to offer healthcare.\u00a0 So, this helps validate my assumption:\u00a0 early-stage startups should not feel like they have to offer benefits, but as revenues and profits scale over the startup\u2019s development<\/a>, more and more of them do, and will have to, after they get to the 51 person requirement point.<\/p>\n

In addition, I wanted to know for the companies that did offer healthcare benefits, how much of the plan costs are the companies actually paying for. \u00a0The 2-15 employee companies are typically only covering around 50% of the plan costs of employees and 30% of the costs of any additional family members. And, for 16-50 employee companies, they are typically covering around 70% of plan costs of employees and 50% of the cost for any additional family members. So, once again, the level of benefits<\/a> offered scale up with the company\u2019s size, when they can better afford to offer such benefits.<\/p>\n

Alternative Incentives<\/strong><\/p>\n

So, if benefits are not the key draw for attracting early-stage startup employees<\/a>, what are?\u00a0 Let me count the ways!!\u00a0 Firstly, hopefully the employee is getting equity in what could become a huge financial windfall, if the company is successful (albeit with high risk here).\u00a0 Secondly, the employee has a lot more responsibility and fun working inside a nimble, early-stage startup, compared to working a \u201ccog in the wheel\u201d, routine job within a big company.\u00a0 And, thirdly, there is nothing more personally rewarding than being part of a team that is building something from scratch and seeing it succeed.<\/p>\n

So, rest assured, all you early-stage entrepreneurs.\u00a0 If you are not offering benefits today, it is not a big deal these days, as you are in really good company among your peers.<\/p>\n

 <\/p>\n

\"George<\/a>This article was written by\u00a0George Deeb<\/em>\u00a0from Forbes and was legally licensed through the\u00a0NewsCred\u00a0publisher network. Learn more about\u00a0SmartRecruiters<\/a>, your workspace to find and hire great people.<\/em><\/p>\n

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Startup Recruiting: The State of Healthcare Benefits<\/a><\/blockquote>