Health Insurance for Bootstrappers

GUIDE: Michele wrote an in-depth companion guide for this episode. Read a more thorough rundown of the different health insurance options. Michele Hansen  0:00 

Remember how a couple weeks ago, you were saying, you're really excited to get feedback and questions from our listeners. Colleen Schnettler  0:08 

Yes, I do. Michele Hansen  0:10 

So we got a really good question from someone recently that they asked me to address. And it is maybe one of the biggest obstacles that entrepreneurs in the US face. Can you guess what it is? Colleen Schnettler

Healthcare? Michele Hansen

Yes. Is it healthcare, it's healthcare. Yes, healthcare as an entrepreneur in the US is absolutely insane. And I had gone through so much getting health insurance for us, and had tweeted out a really long thread of the process, because I think people who aren't entrepreneurs don't realize just how crazy and expensive and difficult it is. And so I thought today that I would share some of the things I learned as we went through that process, the different things that we we use, and some of the tricks that I found to, you know, even convince health insurance companies that we qualified for health insurance with them. Colleen Schnettler  1:16 

Great. Michele Hansen  1:17 

So I want to start, because this is one of the big inflection points for people is when we were first considering running the company full time, right, so we, you know, we started to co do as a side project and ran it for three and a half years as a side project. And I think we ran it as a side project for longer than probably most people would, because we were afraid of, of health insurance. And you know, something that's really important. As an entrepreneur, I find it is understanding your own psychology. And, you know, we talked about this with Alex a lot, I keep, I feel like we keep talking about that interview. And even when I was a kid, my dad was a consultant. And so we had our own health insurance. And I remember my parents would refer to the company that we got health insurance through. And I think it was called US Healthcare, as US Health Scare. Because it was just so terrible to deal with. And they were as they're always talking about things about, oh, they wouldn't cover this or that, or this was crazy expensive, or this doctor, we need one actually take it and like, I just remember, it was just always a topic of conversation. And I remember when my dad finally went in house when I was 10, or so, like one of the big reasons was, they wouldn't have to worry about health insurance anymore. I'm sure there are other reasons but my 10 year old self that was that was one I picked up on. And so I think I always had that in the back of my mind thinking about our own company and having a family and I just had this idea in my head that getting your own health insurance as a self employed person is really difficult then when you do get it the insurance you get is awful. I still have that in my mind. Colleen Schnettler  3:11 

I mean, that's a huge driving force for it. You know, it is for my spouse awry. One of us will always have a like, quote, corporate job just for that reason. I mean, that's exactly what I think. Michele Hansen  3:26 

Yeah, I guess because you guys have federal, or, or VA Health? Colleen Schnettler  3:28 

Yeah, we had, we had health insurance under my previous full time employer, which was Blue Cross Blue Shield, and now we have it through my husband's job. But especially with kids like that, to me, would be the biggest, like scary point of us both going independent. Michele Hansen  3:45 

Exactly. So that was the big scary thing for us. And so when I went full time, the plan was that I would go full time, and then my husband wouldn't, because he had insurance through his job. And that only worked for about six months. And just things were growing and growing. And we couldn't stay on top of it with just me. And so he went to his boss and said that he wanted to quit. And his boss said, No. And we're like, well, this is a good negotiating position to be in. So he ended up negotiating down that he would work three days a week and reduce his salary, but keep his full benefits. So we didn't have to lose health insurance, which was so so great. And then six months later, like we were just growing so much more getting a lot of enterprise customers and like if stuff goes down and you can't respond to it immediately, you're going to lose customers, especially the big ones. So we end up going fully full time, two years ago, September. And so what we did for the first 18 months, which so again, talking about this inflection point of "when do I go full time," which is kind of the next big one after, "How do I get something that works and makes money?". We did Cobra for 18 months. So Cobra is a basically a federal program for continuation coverage. So for example, if you lose your job, then you can continue getting health insurance, you just have to pay the full premiums that the company would be paying for you. So you know, usually when you're an employee, somewhere, you pay maybe 15, 20, 50% of the premiums instead with COBRA, you get to stay on their plan. But you pay the full premium amount. And it used to be that you could be on it for 12 months. And then with the Affordable Care Act, this was extended to 18 months. And so I think for us, this was about $1,100 dollars a month, which is a lot of money. It was less than the Marketplace plans we looked at that time. And it was also made it easy, right? Because we kept our doctors, we right, we knew what we paid and co pays and what like it was a known thing. And then we had to buy dental insurance on top of that, which I think was about 150 or so a month. And that was actually really easy to buy, you can just like go on Delta Dental's website and just buy it. You still end up with huge bills, when you go to the dentist, though that was really annoying. So. So first we did COBRA, and I was just if people have this option, it can be a really good one to just look into it. For us, you know, like family premiums were $1,100 dollars, but think about that, it is a business expense. So if you have a business that is running and is is profitable, then yes, you're going to take a hit on the health insurance. But it is a business expense. And so you get to write that off. And hopefully, since you're working full time on your business, it can grow more, you can get more customers, and you can recoup that. So the next big inflection point for us came when COBRA was running out. And this was March of this year. And I dreaded that for 18 months having to go to the Marketplace plans because they are insanely expensive and terrible at the same time. I don't know if you've ever like looked at them just for fun. I mean, why would you look at no for fun, but.. Colleen Schnettler  7:43 

I would not do that. No. Michele Hansen  7:51 

I remember I went and and I was like, Okay, let me figure it out what it is like, like, what is a plan that is, you know, like, takes our doctors like, that was the one thing we wanted. So at least like we didn't have to switch pediatricians and stuff, right? Because like where we live, like it's really competitive to get into pediatricians and you know, they all have waiting lists and and like, let's just keep them. S...