Starting a Small Business for Health Insurance?

[mtshastawriter]

I posted about this in the living under 30K thread, but wanted to talk more about this.

Do you think people will get together and start businesses with at least part of the point being to have access to "group" health insurance?

I have a friend with two small kids who wrote a great new online application and wants to turn it into a business. She found an angel investor who also believes in this application and is going to fork over some cash to help start the business.

Both of them need access to affordable coverage and neither have the ability to get that on their own. (CA is very strict on health insurance options and decent family coverage here is Blue Cross or Aetna, both at well over $1000-2000 per month.)

I am a freelance technical writer and do not have access to medical insurance due to income and pre-existing conditions. So, for the time being I have MediCal coverage.

The three of us are going together to get this business up and making us money with one of the main purposes being the ability to then buy group insurance under the business and have that be part of our compensation.

I can't help but think that other people will do this because it provides a way to become insured, save on taxes, etc... What do you think?

(I have actually already decided that if this business does not make money, for some reason, then I am going to start my own business, gather up some help from people in the same situation as above, and make a go at getting insurance that way for all of the group.)

[Deleted]

It seems like getting an individual policy would be less hassle, but I have never shopped for an individual policy before, so I don't really know.

[Savoir Faire-Demogague in NJ]

In order to get group rates for health insurance, you will need more than three people in a group.

[Sum Dum Gai]

If the only people in your group are people with pre-existing conditions that can't get individual policies your group rate is going to be astronomical.

[gobermitcheese]

I believe you also need to prove that you created the business for a legit purpose other than providing health coverage. Not sure if it is IRS regulation or some other agency.

[gsbrq]

In my experience, group policies for small businesses aren't easy to get (many companies simply decline to bid on you), can be extremely expensive, and the rates tend to shoot up every year. I'm sure it varies from state to state, but I wouldn't count on getting some great deal just because you form a business.