Startup deals for health insurance

Where to look for savings

1. Check your investor's perks page

Many venture firms negotiate benefits offers for their portfolio companies. Check your investor's perks page or ask your platform team before you buy, and tell any provider you talk to who backs you.

Treat a perk like any other quote. A discount on a PEO's admin fee doesn't change what the PEO charges for the health plan itself, and a free first month doesn't help if the renewal jumps. Ask for the full monthly cost per employee, what's included and how year-two pricing works, then compare it with at least one quote that isn't a perk.

2. Don't fall for teaser rates

I would treat a low first-year rate as a question to investigate, not proof of a teaser. Ask how long it is guaranteed, whether a discount expires, and which factors change the renewal. Compare several future-rate scenarios instead of assuming any vendor routinely doubles its premiums. Keep the scenarios separate from actual quotes so a planning exercise does not become an unsupported claim about a competitor.

3. The Small Business Health Care Tax Credit

If you have fewer than 25 full-time equivalent employees with average wages below an IRS limit that's adjusted each year, pay at least half of employee-only premiums and buy a plan through the SHOP marketplace, you may get a tax credit of up to 50% of what you pay in premiums (35% for tax-exempt employers), for two consecutive years. Check wages and ownership exclusions before estimating a credit; being a startup does not itself create eligibility.

The credit period is two consecutive taxable years beginning with the first qualifying claim. Owners’ premiums may be excluded. Have the accountant evaluate actual qualifying employee premiums, carryback or carryforward rules and the deduction adjustment before selecting the claim year.

Tax credit mistakes I see founders make

• Count hours correctly. Use the IRS credit-specific FTE method, generally capped at 2,080 hours per worker, with applicable owner and seasonal-worker exclusions. Do not substitute the ACA employer-mandate calculation for the credit calculation.
• Apply ownership exclusions accurately. Exclude the owners and specified relatives covered by the IRS rules; do not assume every minority shareholder is excluded.
• Buying outside SHOP. A plan bought outside a SHOP marketplace doesn't qualify, unless a limited IRS exception applies. Ask your broker to quote SHOP plans specifically.
• Paying 50% of family premiums but less of employee-only. The 50% test is measured on employee-only coverage.
• Wasting the two years. The credit lasts two consecutive tax years. Claiming a tiny credit in a year with one employee can use up the window.

4. Use the tax rules you already have

• Employer contributions are deductible and tax-free to employees.
• Section 125 plans let employees pay their share of premiums pre-tax. You need a written plan document; payroll providers and benefit vendors often supply one for little or nothing.
• HSAs let employer money for medical costs go in tax-free and stay with the employee. For 2026 the limits are $4,400 self-only and $8,750 family. See What is an HSA?
• New for 2026: qualifying individual-market bronze and catastrophic plans receive special HSA treatment, including qualifying off-Exchange coverage under IRS Notice 2026-5. This does not cover every employer bronze plan. Certain defined direct primary care arrangements no longer prevent contributions, subject to monthly fee limits. Permitted telehealth before the deductible is permanently allowed for plan years beginning in 2025 or later.

5. Free up cash with the R&D payroll tax credit

This is a separate tax incentive, not a health-insurance discount. A qualified small business with less than $5 million in current-year gross receipts and no gross receipts before the five-tax-year period ending with that year may elect up to $500,000 of research credit against payroll tax. Qualifying research and calculation rules apply; the election is generally limited to five tax years.

• Elect it on Form 6765 with your original, timely filed income tax return.
• The credit first offsets employer Social Security tax up to $250,000 per quarter, then employer Medicare tax; unused amounts carry forward under the rules.
• It starts in the first calendar quarter after you file the return, through Form 8974 with your quarterly Form 941.

6. Stop paying admin fees

Use your written fee schedule. As a purely illustrative calculation, a $100 monthly service fee for each of 15 employees is $18,000 a year. That fee may buy payroll or HR work you would otherwise need to replace. Prescience charges no admin fees for its health-plan offering, but this does not make every service in a PEO bundle unnecessary.

At Prescience, we design and run your company's health plan, from setup and enrollment to claims, compliance and COBRA. What your team gets:

• An effective $0 deductible, so the plan helps from the first visit.
• Simple copays shown before a visit, capped by a low out-of-pocket maximum.
• A broad national PPO network, plus providers we contract with directly.
• 24/7 physician-led care navigation: a care team that finds the right provider, books appointments and explains costs up front.

What your company gets: one monthly cost set in your quote, usually 10–20% below comparable fully insured coverage and fixed before the plan starts, with no admin fees. You keep your payroll provider, and the plan can start mid-year.

How to collect every deal you qualify for

1. Build a census (day 1) List each employee's age, ZIP code and coverage tier (single, couple, family). Every quote starts here, and it lets you compare offers on the same people.
2. Run the tax credit test (day 1) Count FTEs (2,080 hours each, owners excluded) and average wages. If you're under 25 FTEs and under $68,200 average wages for 2026, ask a broker for SHOP quotes and have your accountant run Form 8941.
3. Collect three quotes (weeks 1–3) One from your investor's perks page if there is one, one carrier plan through a broker or your payroll provider, and one alternative such as Prescience. Ask each for monthly cost by tier and the renewal method.
4. Compare two-year cost (week 3) Premium plus fees, minus any tax credit, for year one and a realistic year two. Add employer HSA money if the plan is HSA-eligible.
5. Turn on the tax plumbing (week 4) Adopt a Section 125 plan document, set premium deductions pre-tax in payroll and set up employer HSA contributions if you're giving them.
6. File for the credits (tax time) Form 8941 for the health care credit and Form 6765 for the R&D payroll election, both with your return.

"Deals" that aren't

• Health-sharing ministries and discount cards. They aren't insurance, may not pay claims and don't meet ACA rules. Do not describe them as equivalent to comprehensive insurance.
• Skipping coverage until you're bigger. It saves money until you try to hire someone with a family. See startup benefits package.
• High deductibles without available cash. Compare the deductible, premiums, employer account contributions and covered services. Ask whether employees can handle bills early in the year rather than assuming every high-deductible option has the same value.
• Stipends. A taxable cash stipend costs you payroll tax and buys employees less. Read health insurance stipends before choosing one.

Budget the credit after the eligibility work

A credit is not the same as cash available when the premium invoice arrives. For the small business health care tax credit, have the accountant calculate the allowable premiums, both FTE and wage reductions, and the effect on the premium deduction. Tax-exempt employers have a different percentage and refund limitations. If the company cannot use a general business credit immediately, timing and carryover rules can change its practical value.

For an investor offer, save the written eligibility and expiration terms with the ordinary quote. Confirm whether the discount applies to payroll, platform fees or medical premiums. Model the total after the promotional period ends. If the proposal does not disclose future prices, label those years as assumptions, not savings. The best choice may be the regular-rate plan if its coverage, support and contract terms fit better.