The Case for Startups Offering Employee Benefits

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

But, a lot of things have changed over the years, and my feeling today is early-stage startups should not worry about offering benefits. If you can afford them, great, offer them. 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.

Healthcare Trends

First of all, healthcare costs are rising so quickly (a whopping 15-20% per year, five to six times 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). Secondly, individual plans have never been easier to source, especially in the wake of the Affordable Care Act (ACA), so employees don’t necessarily need a company-sponsored plan to get access to affordable healthcare. And, thirdly, many employees are very “mobile” in their careers, jumping from company to company every couple years (and hence don’t want to have to re-apply for health coverage every time they move jobs, and prefer a more “portable” plan that moves with them from job to job).

Healthcare Trends

First of all, healthcare costs are rising so quickly (a whopping 15-20% per year, five to six times 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). Secondly, individual plans have never been easier to source, especially in the wake of the Affordable Care Act (ACA), so employees don’t necessarily need a company-sponsored plan to get access to affordable healthcare.  And, thirdly, many employees are very “mobile” in their careers, jumping from company to company every couple years (and hence don’t want to have to re-apply for health coverage every time they move jobs, and prefer a more “portable” plan that moves with them from job to job.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary