Yes, you should pay 100% of your employees' healthcare premiums from Day 1

One of the things I'm most proud of as a "job creator" is that from the very beginning — even when we were bootstrapped — every goTenna employee has had 100% of their health insurance premiums paid for by the company.  

This is not only reasonable, it's also right. I'd like to share what spurred me to do this (as it certainly wasn't advice I received from anyone), and it's a question that often comes up when I speak with earlier-stage founders. Let me wind back about 10 years.

In my early to mid-twenties, I worked for a startup which ended up being acquired by a publicly-traded Fortune 1000 behemoth. Both pre- and post-acquisition, every two weeks, my paycheck showed a roughly $200-250 set of deductions that went toward my health insurance premiums, or $400-500 on a monthly basis. My employer said they were happy to cover a portion of the associated costs. Exactly which percentage they covered was never really clear, but knowing what I know now, I'd be surprised if my employer had been paying more than 50%.

Fast-forward to the first-half of 2013. With working goTenna prototypes in hand, I rushed to incorporate our legal entity so we could officially hire our first full-time employee and go out and raise a seed round. I researched Professional Employer Organizations (PEOs), as I knew we'd need a third-party to handle our payroll and benefits, and comparison-shopped medical, dental, and vision premiums. I was prepared to be shocked by the costs — after all, even a massive Fortune 1000 company hadn't been able to fully cover the cost of my insurance, which is why we'd had to split the cost, right?

The media and politicians say healthcare costs are so terrifically burdensome on businesses that in the United States (even today), no company is legally required to provide its employees with health insurance.

In fact, the Affordable Care Act's "shared responsibility provisions" for businesses state that if you employ more than 50 full-time equivalent (FTE) employees, you must either provide health benefits or pay a tax penalty. In other words, an employer can pay their way out of providing health insurance if they really wanted to. And if an employer has less than 50 FTEs, they aren't required to provide any insurance at all.

Without digressing too far into the dark political economy of the health insurance industry in America, there I was, about to hire goTenna's first employee. Through my PEO and health insurance research, I was surprised to learn that the best plans on the market were, well, reasonably affordable enough to pay for 100% of all medical, dental, and vision premiums up front. Not only that, I also decided to commit to paying for at least 50% of all dependents' insurance premiums. And that's the way we've done it ever since.

As it turns out, health insurance is so relatively affordable, I can't believe management at this venture-backed startup I worked at — which turned into a successfully-acquired-by-a-Fortune 1000-company — didn't decide to pay for 100% of its employees' health insurance premiums. (And I know for a fact that some of my colleagues at the time were barely making a New York living wage.) I now realize companies like this one don't pay for 100% of employees' premiums because they simply do not want to.

In part due to my experience as an employee, I'm certain we're doing the right thing at goTenna by investing in our team's well-being and peace of mind. And if the moral argument isn't convincing to you, then in purely economic terms, without investing in human capital, no business will succeed.

In the spirit of full transparency, I'd like to share the costs we currently incur by pursuing this policy at goTenna (below). In addition to offering our team the highest-tier health insurance plans available from our PEO, we also cover costs associated with things like Citibike, short-term disability insurance, etc. We currently have 45 FTEs, and certain employees have declined some coverage either because they're covered by a spouse/partner or because they aren't interested in, say, dental or vision insurance.

I am convinced our current annual spend on benefits ($532,000) pays back in dividends. Take a look for yourself: