Y Combinator-backed SimplyInsured takes its online healthcare solution nationwide

Y Combinator startup SimplyInsured has announced an expansion outside of California to begin offering healthcare options for small businesses across the US. The company is focusing first on eight new states, including New York, Florida and Massachusetts, and it now has a license to operate in all 50 states.

SimplyInsured CEO Vivek Shah, who previously worked as a healthcare analyst at McKinsey & Company, said in an interview that he started the company after a confusing experience trying to buy health insurance for himself on the open market.

“It fundamentally made me angry that I was trying to buy health insurance to reduce my fear of going to the doctor, but the process of buying health insurance made me more afraid,” he said.

Though SimplyInsured does work with some individuals, it focuses its efforts on reaching out to small businesses, which have traditionally had to deal with brokers on a time-consuming, opaque application process. The startup offers instantaneous quotes, fully-online paperless filing, 24/7 support, an advocacy group, mobile insurance cards and higher acceptance rates.

According to Shah, the average broker has a 25 percent rejection rate, much of which is caused by not being aware of obscure rules from individual insurance providers. SimplyInsured’s rejection rate is currently hovering around 10 percent.

SimplyInsured is emerging during a time when the nation is obsessed with the healthcare issue. Open enrollment just wrapped up for President Obama’s Affordable Care Act, and the technical struggles of government sites like Healthcare.gov have been widely documented. While small businesses aren’t directly affected by the mandate, the fact that individuals are required to have health insurance will trickle down to smaller companies.

“The [Affordable Care Act] has created a lot of attention, but also a lot of confusion because of all the changes,” Shah said. “We can reduce people’s fear in the new world.”

SimplyInsured estimates that it saves customers $500-$1,000 a year per employee on average, though extreme cases could see even more of a benefit. One customer saw her monthly healthcare costs drop from $1,600 per month to $350 while still receiving equivalent benefits. A three-person financial services company recently saw a reduction of $30,000 per year from their insurance costs after working with SimplyInsured.

Companies like Trinet have built up the professional employer organization (PEO) industry around full-service offerings, but a new batch of startups, such as SimplyInsured and ZenPayroll, has arrived to improve individual components of an organization’s HR, accounting and benefits needs.

Finding health insurance for a small batch of employees has long been one of the major pain points for businesses, so SimplyInsured’s expansion should do a bit more good in the world.

Image credit: Adam Berry / Getty Images