# What should a startup benefits package include?

Source: https://www.getprescience.com/guides/startup-benefits-package
Author: Aditya Jain, MD, Cofounder and COO, Prescience
Published: 2026-11-04
Updated: 2026-11-04
Cite as: Aditya Jain, MD. "What should a startup benefits package include?." Prescience, November 4, 2026. https://www.getprescience.com/guides/startup-benefits-package

I would build a startup benefits package around usable medical coverage, a clear contribution policy and a few core benefits the company can sustain. Dental, vision, retirement and leave deserve separate budgets and eligibility rules. The worked example below shows one hypothetical 15-person package; it is not a market quote or a universal cost per employee.

- **Core:** Medical, dental, vision
- **Tax-advantaged:** HSA, Section 125, 401(k)
- **Biggest lever:** Medical plan design
- **Prescience Choice administration:** $20 per enrolled employee/month

## The core package

**A strong 2026 startup benefits package**

| Benefit | What good looks like | Required by law? |
| --- | --- | --- |
| Medical | $0 employee premium for single coverage, low or effective $0 deductible, broad network, real care support | Federal ACA offer obligations generally apply to ALEs; check prior-year counts and state law |
| Dental and vision | Employer-paid for employees, optional for dependents | Adult standalone benefits generally optional; pediatric and state rules differ |
| HSA or FSA | HSA with an employer deposit if you offer an HSA-eligible plan; otherwise a health FSA through a Section 125 plan | No |
| Mental health | In-network therapy access without long waits, covered like any other care | ACA individual/small-group essential-benefit and applicable parity rules matter |
| Retirement | A 401(k), ideally with a match once you can afford it | Check state retirement-program requirements and federal rules for any plan adopted |
| Leave | Paid parental leave and clear PTO | Depends on state: many states require paid sick leave or run paid family leave programs |
| Life and disability | Basic life and long-term disability, employer-paid | No (a few states run short-term disability programs) |

My priority is to make core benefits understandable before buying extra perks. Show the employee-only and family payroll deductions, maximum covered cost sharing, provider network and prescription rules. Then explain retirement contributions and leave in separate terms. Different candidates have different priorities; I would not assume a single survey percentage captures your team's preferences.

## What to offer at each stage

**A practical order of operations**

| Stage | Add | Why |
| --- | --- | --- |
| 2–10 people | Medical (group plan or an HRA), dental, vision, Section 125 plan | Evaluate core coverage and the tax treatment of any employee premium contributions |
| 10–25 people | 401(k), HSA or FSA, basic life and disability, written parental leave policy | Review affordability, eligibility and possible startup credits before launch |
| 25–50 people | 401(k) match, dependent subsidies, commuter benefits, mental health programs | Retention; you're approaching the 50-employee rules |
| Approaching ALE size under prior-year rules | Affordable, minimum-value coverage to full-time staff, ACA reporting | Employer mandate applies; see [applicable large employer](https://www.getprescience.com/guides/what-is-an-applicable-large-employer) |

The sequence is my planning framework, not a legal schedule tied to those headcounts. A state retirement requirement or employee leave obligation can arise earlier. Quote each benefit, assign an owner and decide what the company can maintain through growth or a difficult renewal. A small list that works reliably is easier to communicate than an uncosted list of promises.

## What a 15-person package costs

**Annual benefits budget for a 15-person startup**

Illustrative. 15 employees: 9 on single coverage, 6 on family coverage. Medical premiums at the 2025 KFF national averages ($9,325 single, $26,993 family). The company pays 100% of single and 75% of family premiums. Dental and vision assumed at $50 per employee per month (check your own quotes). 401(k) with a 3% employer contribution on an average salary of $140,000. This assumes all employees receive the stated retirement contribution. Figures exclude plan fees, life/disability premiums, leave costs and taxes; dollar outputs are rounded.

- Medical, single: 9 × $9,325: $83,925
- Medical, family: 6 × $26,993 × 75%: $121,469
- Dental and vision: 15 × $50 × 12: $9,000
- 401(k) contribution: 15 × $140,000 × 3%: $63,000
- Total employer cost: $277,394
- Per employee per year: $18,493
- Share of $2.1M payroll: 13.2%

Medical is **74% of the budget**. Skip the 401(k) contribution and the package is about $14,300 per employee. Each family employee pays about $562 a month for their 25% share. A better medical plan at the same price, or the same plan for less, moves this number more than any perk.

**Contribution strategies at 2025 average premiums (KFF): employer cost per year and employee cost per month**

| Strategy (single / family) | Employer, single | Employer, family | Employee pays, single | Employee pays, family |
| --- | --- | --- | --- | --- |
| 100% / 100% | $9,325 | $26,993 | $0 | $0 |
| 100% / 75% | $9,325 | $20,245 | $0 | $562 |
| 100% / 50% | $9,325 | $13,497 | $0 | $1,125 |
| 80% / 50% | $7,460 | $13,497 | $155 | $1,125 |

Qualified employer health coverage generally receives favorable federal tax treatment, while Section 125 rules can allow eligible employee premium contributions before tax. Owner and other exceptions matter. KFF's 29% statistic describes covered workers at small firms whose employer pays the entire single premium, not 29% of all small firms. I would label that denominator whenever using it in a benefits comparison.

## 2026 limits for tax-advantaged benefits

**Federal limits for 2026**

| Benefit | 2026 limit |
| --- | --- |
| HSA contribution (employer + employee) | $4,400 self-only, $8,750 family; +$1,000 at 55+ |
| Conventional HSA-qualified HDHP minimum deductible | $1,700 self-only, $3,400 family |
| Health FSA salary reduction | $3,400; carryover up to $680 if the plan allows |
| 401(k) employee deferral | $24,500 |
| 401(k) catch-up | $8,000 at 50+; $11,250 at ages 60–63 |
| Standard SIMPLE IRA deferral; some plans have higher limits | $17,000 |
| Commuter transit or parking | $340 a month each |
| QSEHRA for eligible non-ALE employers with no group health plan | $6,450 self-only, $13,100 family |

> **Two tax credits small startups miss:** The small business health credit has employee-count, wage, contribution and SHOP conditions. For 2026 the wage phaseout starts above $34,100 and ends at $68,200. Eligible retirement-plan startup credits can offset qualified costs for three years, but $5,000 is a ceiling, not an automatic award. Employee counts, non-highly-compensated participants, prior-plan history and actual eligible costs affect the calculation. Have the tax adviser check separate automatic-enrollment and employer-contribution credits before including them in a budget.

## What candidates actually compare

I would make these five questions easy to answer before a candidate or employee has to ask. Use the actual documents and contribution schedule, and give people a private route to check their provider or medicine:

1. **What will I pay each month** for myself, and for my family? Show the employee's share in dollars, not percentages.
2. **What are the deductible and maximum?** Show family and individual rules, covered services before the deductible and the reset date. A premium contribution alone does not establish the cost of care.
3. **Is my doctor in network?** Especially for anyone in therapy, pregnant or managing a chronic condition.
4. **Is there a 401(k), and is there a match?**
5. **What's the parental leave policy?** Write it down before someone asks.

Ask employees which optional benefits they would use, with no pressure to disclose medical conditions or family plans. Compare participation and service feedback after launch. I would keep separate budgets for core coverage and optional perks so a change in one does not silently reduce the other.

## Mental health without a separate vendor

Start by checking therapy, psychiatry, medications and network access in the actual medical plan. Federal mental health parity rules, when applicable, govern financial requirements and treatment limitations using classification-based tests; they are more specific than a promise that every service has identical coverage. Non-grandfathered individual and small-group policies also have essential-health-benefit requirements. Have the administrator confirm the applicable rules. Ask how a member finds an available appointment and appeals a denial before buying another app.

## Ways to offer medical at a startup

If ICHRA fits your team, I recommend comparing Prescience Choice first. Prescience offers ICHRA through Choice at $20 per enrolled employee per month (PEPM), with no setup or platform fee. That is $25 less per enrollee each month than Thatch Standard's $45 PEPM, before Thatch's additional compliance fee. Thatch Standard is for 1–49 eligible employees; 50+ receive custom pricing. Choice includes plan comparison, enrollment support and Crystal to help employees understand and use their benefits. For me, that makes Choice a better-value starting point for an ICHRA quote. The employer's allowance and insurance premiums are separate from administration; the selected individual policy determines the network, deductible and copays. [Ask us about Prescience Choice](https://www.getprescience.com/get-started).

> **Prescience Choice: ICHRA for $20 per enrolled employee per month.** Choice is the simplest medical benefit for a very small or fully remote startup: one allowance, individual plans in all 50 states, $20 per enrolled employee per month.
> - **You set a monthly allowance;** each employee picks and owns an individual plan
> - **$20 per enrolled employee per month,** with no setup or platform fee
> - **Works in all 50 states and DC,** so remote and multi-state teams fit
> - **Plan comparison, enrollment help and Crystal,** our assistant for benefits questions
> Best for small teams, teams in several states, and anyone pricing ICHRA. [Get a Choice quote](https://www.getprescience.com/employer/choice)

- **Small group plan** directly from a carrier or through a broker. Pooled ACA rates; you choose the plan. See [how carriers price health insurance](https://www.getprescience.com/guides/how-carriers-price-health-insurance).
- **PEO.** Access to a large-company plan, bundled with payroll and HR. Watch for first-year pricing and exit terms. See [is Rippling PEO worth it](https://www.getprescience.com/guides/is-rippling-peo-worth-it).
- **ICHRA or QSEHRA.** You give a tax-free allowance and employees buy individual plans. Flexible, but quality depends on your local individual market. See [is ICHRA a scam](https://www.getprescience.com/guides/is-ichra-a-scam).
- **Taxable stipend.** Simple but inefficient: the money is taxed as wages. See [health insurance stipend](https://www.getprescience.com/guides/health-insurance-stipend).

## Edge cases founders hit

- **Remote employees in other states.** Make sure the network works where they live, and check state leave and payroll rules for each state you hire in. See [health insurance for remote employees](https://www.getprescience.com/guides/health-insurance-for-remote-employees).
- **Contractors.** Including 1099 contractors in a group health plan can create employment-status questions. See [health insurance for contractors](https://www.getprescience.com/guides/health-insurance-for-contractors).
- **Waiting periods.** A group health plan generally cannot impose more than 90 days once a worker is otherwise eligible. Check the written eligibility conditions and the actual enrollment date instead of assuming that three calendar months equals 90 days.
- **Founders only.** Some carriers require at least one non-owner employee for a group plan. Check before you hire your first person.
- **People who decline.** Carriers set minimum participation, often counting employees with other coverage as valid waivers. See [can employees opt out](https://www.getprescience.com/guides/can-employees-opt-out-of-health-insurance).

## How to roll it out

1. **Set a budget per employee** Set employee-only and dependent contributions. A fixed amount limits the contribution per enrollee, but total cost still changes with hiring, tier changes and administration.
2. **Quote medical first** Get at least two quotes of different kinds. Medical decides most of the budget.
3. **Set up a Section 125 plan** Have the administrator establish and operate a written Section 125 arrangement if appropriate. Confirm eligible participants, payroll deductions, election rules and nondiscrimination responsibilities.
4. **Add dental, vision and retirement** Compare providers, payroll compatibility, fees and employee access. Ask the tax adviser to determine whether any retirement startup credit is available; do not subtract it before eligibility is established.
5. **Write it down and explain it** One page per benefit: what it costs the employee, what it covers, how to use it. Put total compensation, including benefits, in offer letters. See [how to run open enrollment](https://www.getprescience.com/guides/how-to-run-open-enrollment).

**Turn the medical benefit budget into a quote**

Keep medical, dental, vision and other benefits on separate budget lines. Use the employee census to compare a written medical proposal before finalizing the benefits packet or launch date.

[Price my startup's medical benefits](https://www.getprescience.com/quote)

[Prepare the employee census](https://www.getprescience.com/integrations)

## Getting the medical plan right

For employers choosing group coverage, at Prescience we design and run your company's group 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.

> **Prescience Diamond: A company health plan with an effective $0 deductible.** The table at the top of this guide calls for a $0 employee premium and a low or effective $0 deductible. Diamond is designed to make that package affordable for a 2- to 200-person company.
> - **An effective $0 deductible** and simple copays shown before a visit
> - **A broad national PPO network,** plus providers we contract with directly
> - **24/7 physician-led care navigation** that books visits and explains costs
> - **Usually 10–20% below comparable fully insured coverage,** fixed in your quote, with no admin fees
> Best for teams of about 15 or more that want one great group plan. [Get a Diamond quote](https://www.getprescience.com/get-started?p=Employer&product=diamond)

## Reconcile the package before the first payroll

I would assign one person to reconcile employee elections, carrier confirmations and payroll deductions before coverage starts. Have that person check a single enrollee, a family enrollee and someone who waived coverage. Confirm the effective date, contribution formula and number of pay periods. A monthly contribution divided into twenty-four payments produces a different deduction from the same contribution divided into twenty-six.

Give employees one contact for enrollment corrections and a separate private route for clinical or claims questions. Save the final benefit summaries, contribution schedule and vendor responsibilities together. Review the first invoice against actual enrollment rather than the original quote census. This catches administrative differences before the company uses the new package as its benchmark for the next hire.

## Frequently asked questions

**What benefits should a startup offer?**

Start with a strong medical plan, then dental and vision, an HSA or FSA, mental health access, a 401(k) and paid leave.

**How much do startup benefits cost?**

Cost depends on enrollment, contribution formulas and benefits. The article's hypothetical package is about $18,493 per employee annually and excludes several costs. Obtain actual quotes before using that amount in a hiring budget.

**Do startups need a PEO to offer benefits?**

No. You can offer your own medical plan with as few as 2 employees and add dental, vision and a 401(k) through specialist providers.

**Are startups required to offer health insurance?**

Federal ACA shared-responsibility rules generally apply to ALEs based on prior-year full-time employees plus equivalents and related-employer rules. State requirements can apply below that threshold.

**Should we pay for dependents?**

If you can. Family premiums averaged $26,993 in 2025, and paying a large share is one of the clearest ways to stand out against other small employers.

**Is a 401(k) worth it for a 10-person startup?**

Often yes. The federal startup credit covers up to $5,000 a year of setup costs for three years, and some states require a state auto-IRA if you offer no plan.

**What are the 2026 HSA limits?**

For 2026, HSA contributions are capped at $4,400 self-only or $8,750 family, including employer deposits, plus the eligible age-55 catch-up. Conventional HDHP minimum deductibles are $1,700/$3,400. Individual eligibility and statutory exceptions also matter.

**Are benefits better than a higher salary?**

It depends on employee needs and the tax treatment. Qualified health coverage can offer favorable federal tax treatment, but wages offer flexibility. Compare both without assuming everyone values benefits equally.

## Sources

- [Thatch, Standard pricing checked October 15, 2026 (1–49 eligible employees; 50+ custom)](https://thatch.com/pricing)
- [KFF, 2025 Employer Health Benefits Survey](https://www.kff.org/health-costs/2025-employer-health-benefits-survey/)
- [IRS Revenue Procedure 2025-19 (2026 HSA and HDHP limits)](https://www.irs.gov/pub/irs-drop/rp-25-19.pdf)
- [IRS Revenue Procedure 2025-32 (2026 health FSA, commuter and QSEHRA limits)](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)
- [IRS, COLA increases for dollar limitations on benefits and contributions](https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions)
- [IRS, Retirement plans startup costs tax credit](https://www.irs.gov/retirement-plans/retirement-plans-startup-costs-tax-credit)
- [HealthCare.gov, The Small Business Health Care Tax Credit](https://www.healthcare.gov/small-businesses/provide-shop-coverage/small-business-tax-credits/)
- [IRS, Fringe benefits](https://www.irs.gov/publications/p15b)
- [IRS, Small business health credit](https://www.irs.gov/affordable-care-act/employers/small-business-health-care-tax-credit-and-the-shop-marketplace)
- [IRS, HSA changes](https://www.irs.gov/pub/irs-drop/n-26-05.pdf)
- [DOL, Waiting period rule](https://www.dol.gov/newsroom/releases/ebsa/ebsa20140297)
- [CMS, Mental health parity](https://www.cms.gov/marketplace/private-health-insurance/mental-health-parity-addiction-equity)