Controlling costs, providing competitive benefits, and complying with the ACA – these make up the converging trifecta of difficulties that many small-midsize organizations face on a daily basis when it comes to employer sponsored healthcare. And increases in healthcare costs, which aren’t keeping pace with inflation, are a main sticking point for CEOs and EDs.
In 2016, premium increases are anticipated to be at 7-10% or more before any plan design changes (Wells Fargo Insurance Spring Healthcare Trend Survey). And the larger the organization, the more the increases will negatively impact overhead budgets. With specialty drugs and high claims driving the average cost of employee benefits up, many employers are turning towards less employee-friendly methods – such as cost-shifting and changing carriers – to better manage their bottom lines while maintaining compliance with ACA. In fact, between 2006 and 2014 the number of employees who now are responsible for at least part of their deductible rose 20% and the average deductible itself more than doubled from $584 to $1217 (Kaiser Family Foundation).
According to Arthur J. Gallagher & Co., a “comparative lack of more innovative methods” in healthcare offerings is playing a significant role in these difficult employer decisions. And while many organizations are currently going the “safe” route of cost-shifting, the company says that leading organizations who exemplify cost-control are looking beyond this strategy and implementing alternatives such as self-funding. In that vein, research by Arthur J. Gallagher & Co. found that 35% of surveyed organizations are considering switching to a differently funded model (e.g. self-funding). However self-funding carries high financial and operational risks that make it still a challenging model to adopt for small-midsize businesses – especially nonprofit organizations that need to account for every dime.
That said, savvy healthcare entrepreneurs who want to radically change the way the healthcare system operates are developing innovative solutions – especially for small-midsize organizations like nonprofits. One such creative approach is partial self-insurance, which combines less expensive, high-deductible healthcare plans (HDHPs) with a supplementary reserve funds. Partial self-insurance allows companies the safety of an insurance carrier in conjunction with the flexibility and cost-savings of a self-funded plan. In addition, with a partial self-insurance plan the larger the organization, the higher the potential savings.
For more information on Nonstop Wellness, a unique approach to partial self-insurance that includes a baseline savings of 12.5% and the potential for unrestricted quarterly returns, please contact us.
You can also learn more about partial self-insurance by downloading
The Nonprofit Executive's Guide to Partial Self-Insurance.
The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose