Nonprofits Offer Mixed Bag Of Health Plans
April 9, 2014 Marty Daks
Concerns regarding rising healthcare costs have been at or near the top of the worry list of many nonprofit executives. An analysis of the Nonprofit Organizations Salary and Benefits Reports for 2010 through 2013, along with conversations with executives, shows the concern benefits have on the budget’s bottom line.
In 2013, the final full year before the enactment of the Affordable Care Act (ACA), 85.47 percent of nonprofit s offered some kind of medical plan, a proportion that has grown slightly from 2010, when 84.70 percent did so. The number of nonprofits offering medical coverage to part-time employees also inched up during that period, from 23.06 percent to 23.63 percent.
In 2013, 61.74 percent of nonprofit organizations offered relatively unrestrictive Preferred Provider Organization (PPO) health plans to their employees, according to the most recent Nonprofit Organizations Salary and Benefits Report issued by The NonProfit Times in partnership with Roswell, Ga.-based Bluewater Nonprofit Solutions Conversations. That proportion is down from 66.62 percent in 2010.
The wait time to qualify for medical benefits is declining with 18.11 percent in 2013 enabling employees to sign on as of their start date, compared to 15.63 percent in 2010. Similarly, in 2013, 28.1 percent offered medical benefits to employees on the first of the month following their start date, against 26.10 percent in 2010; and the number of organizations that held off until 90 days after an employee’s start date fell from 30.35 percent in 2010 to 27.73 percent in 2013. Those who must wait until 30 days after the start date edged down to 20.89 percent, compared to 21.85 percent in 2010.
Some organizations have turned to a self-insurance model as a way to rein in costs, backed by “stop loss” insurance to protect against very large or unexpected claims.
“The smartest thing we ever did was go to a self-insured health benefits program more than a decade ago, after we incurred annual increases of about 60 percent,” said Rick Nation, chief executive officer of Blue Valley Community Action Partnership, a Fairbury, Neb.-based nonprofit that offers health, education, nutrition, and housing programs to families and communities in southeast Nebraska and north central Kansas.
“There’s an employee out-of-pocket maximum of $2,000, then we self-insure the first $35,000 of employee healthcare costs,” he added. “We have reinsurance that limits our exposure to that first $35,000.”
With about 150 employees, Blue Valley Community Action Partnership focuses on wellness initiatives as another way to contain costs, Nation noted.
“An annual employee health fair, free flu shots, eye exams and bone-density testing are part of the package,” he said. In fact, our reinsurance costs have actually declined, since we have not had to tap it this year.”
Junior Achievement USA also adopted the self-insurance model for healthcare coverage. “Our annual increases have averaged about five percent, far below the industry average,” said Tim Armijo, chief financial officer of the Colorado Springs, Colo.-based nonprofit. “Our self-insurance exposure is limited to a ceiling of $175,000 per individual, with secondary insurance covering us beyond that.”
Junior Achievement’s wellness program, which features free yearly health exams, and other financial and other incentives, has been well received by employees, added Armijo.
The American Heart Association, headquartered in Dallas, Texas, has been self-insured for years, according to Katherine Neverdousky, vice president of human resources and corporate learning. “Self-insurance works well for a large organization like ours, which has about 3,000 employees,” she said. “For smaller organizations, they would have to evaluate the number of employees and risk tolerance to determine if that model would work for them.”
The American Heart Association also has a “comprehensive” employee wellness program titled “It is All About Me!” she said.
“The highlights include quarterly lifestyle challenges, personal health coaching, and a health risk (wellness) assessment that feature the ‘My Life Check – Simple 7’ questions,” Neverdousky explained. “Additionally many of our facilities offer designated walking paths in the building and on the grounds to encourage physical fitness and healthy activity.”
The issue seems to be ignored at a significant number of organizations. In 2013, for example, approximately 15 percent of nonprofits did not offer medical plans. By category, just fewer than 27 percent of organizations focused on arts, culture and humanities did not have medical plans, followed by 25 percent of educational, environmental and animal nonprofits that did not offer those benefits. At the other end of the scale, employees at 92.77 percent of human services nonprofits were offered medical benefits, as were employees at 87.5 percent of international and foreign affairs organizations.
Considered on a geographic basis, the Southeastern U.S. was the leader, with 89.83 percent of nonprofits having employee medical plans, closely followed by the Northeastern with a rate of 88.94 percent. The rest of the U.S. clustered around the 80-to-85 percent mark, with the exception of the Southwest, which at 70.97 percent, had the tail position regarding medical benefits.
When it comes to retail-pharmacy prescription drug plans, PPO types were the most popular, offered by 63.24 percent of nonprofits in 2013 (65.38 percent in 2010), followed by Health Maintenance Organization, or HMO-style drug plans, which were offered by 28.82 percent (down from 33.31 percent in 2010), while 10.88 percent offered Point of Service, or POS plans, falling from 11.28 percent in 2010.
The PPO format was also the most-offered model for dental plans, with 74.01 percent of organizations featuring that model (almost unchanged from 74.04 percent in 2010), followed by dental HMOs at 14.39 percent (down from 15.21 percent in 2010), and 9.98 percent for the dental POS model, virtually level with 9.94 percent in 2010). Coverage for vision was mixed, with 76.92 percent of nonprofits offering a Vision Preferred Provider organization plan in 2013, little changed from 75.78 in 2010, while 23.50 percent offered a Vision Maintenance Organization (VMO) format, down slightly from 26.91 percent in 2010.
Martin Daks is a freelance business writer based in Bethlehem Twp., Pa., and a regular contributor to The NonProfit Times.