From Anne Giles Clelland:
Since beginning my first company in 2008, I've been dreaming startup, not small business. Unlike a small business that offers its products and services on a small scale – perhaps to a defined geographic area – our business model aims to make products and services available initially to the few, but can scale rapidly to offer them to the many, massively and globally.
I expected our first years of growth to be built by independent contractors working without benefits (link is to Small Business Administration's definition of an independent contractor), but I have been concerned about their well-being, especially with regard to health insurance. We are too few in number to offer a group health insurance policy (requires two employees and we have only one, moi, and I am one of the lucky startup founders covered by a spouse's policy) and we have a startup's revenue (small). Still, I wondered, can we help contractors with health insurance?
Given stats on the number of uninsured Americans and the current and upcoming provisions of the Patient Protection and Affordable Care Act, I knew I didn't know what a contractor might need, what was available, how they could get it, or how we might help. When I don't know, I ask an expert. I didn't know a health insurance expert.
Absolute truths are rare but I have come to believe this is the one absolute truth about being successfully in business: "It's who you know." I asked those I know to recommend a health insurance expert. Burman Clark, they answered.
(I founded Handshake 2.0 based on the principle that, even online, "It's still who you know." Although not an absolute truth, in general, to know is to trust. I knew him! Burman Clark was featured on Handshake 2.0 in 2010.)
With an email address from a contact, I reached out to Burman Clark. The response was swift. We corresponded via email, spoke on the phone, and met. Awesome. I have much to share. I'll begin with how I've decided our startup will answer the question I posed, "What can a startup do about health insurance for contractors?" I am following these exploratory steps.
- Consider offering payment towards a contractor's individual health insurance policy, rather than offering full coverage. (How to offer payment towards a contractor's health insurance costs has options, including a Health Reimbursement Arrangement. As part of the exploratory process, I will definitely consult experts on the "how," including an insurance agent and an accountant, possibly an attorney.)
- Decide internally on what qualifies a contractor to be considered for assistance with health insurance from the company. What will be the criteria? Number of hours worked, amount of payment received, length of time worked? A combination thereof or other factors?
- Decide internally how much the startup can afford to pay. $50 per contractor per month? $100 per month? More? Less?
- Research health insurance options and the application process for independent contractors. Given what we learn from our research, will our startup decide to offer health insurance assistance to contractors?
I have completed steps #1-#3 and will personally conduct the research in #4 with Burman Clark by "pretending" I am an independent contractor and applying for an individual health insurance policy. To get started, I only had to answer three questions: 1) Where do you live? 2) What is your age? 3) Do you smoke?
What our startup will ultimately do about health insurance for contractors is a work in progress and I will share what I discover. In the meantime, I feel satisfied that I'm taking action to address my concerns and am grateful for the generous gift of Burman Clark's expertise and time.
Of possible further interest: