Five Reasons Why You Should Partially Self-Insure

PSI – shorthand for partial self-insurance– is a highly effective way for nonprofits to provide employees with access to quality, affordable health insurance without eating away at fragile budgets. But many organizations, stuck in the staid method of traditional fully-funded insurance, likely haven’t been exposed to PSI. This could be due to myriad factors, including a lack of willingness on their broker’s part to explore alternatives because of the high commissions earned from some fully funded plans (e.g. lower deductible/higher premium plans).

But PSI might be the best solution you’ve never heard of, so it’s worth taking some time to dig into it a bit more on your own or with the help of a supportive broker. To help you get started, we’ve listed five reasons why we think PSI is a long-term viable healthcare solution for nonprofits.

1. Recruitment and retention: With Partial Self-Insurance, your organization can determine how much you want your employees to pay out-of-pocket for medical services – they could contribute a specific percentage or you could decide to cover copays and deductibles entirely on their behalf. Considering the burden of skyrocketing healthcare costs, which are often shifted to employees, a PSI program means you can offer a $0 healthcare plan with customized benefits to attract in-demand workers.
2. Organizational cost-savings: By combining a high deductible healthcare plan (HDHP) with a reserve fund to support employee out-of-pocket expenses, your organization will pay less each month in premiums. And when employees need care, the reserve fund has them covered up to the out-of-pocket maximum, allowing you to pay-for-use rather than being billed at 100 percent regardless of how much medical care is consumed (e.g in a traditional plan). For most organizations the result is a savings in range of 10+ percent annually in healthcare costs.
3. The return of unspent healthcare dollars: And speaking of the reserve fund, with PSI you can retain unspent healthcare dollars to be reinvested back into your organization for programming needs, staff development, or any other operating expenses.
4. Year-over-year predictability/stability: With PSI, you are assured that all expenses over the out-of-pocket maximum amount will be covered by your carrier. And any payments due before that maximum is reached is paid for out of your reserve fund, which you contribute a pre-determined amount to each month. As a result, your monthly payments stay stable and you can build up your reserve fund to offset future premium increases.
5. Increased employee engagement and productivity: Similar to point one above, PSI allows your organization to improve benefits for employees and reduce the amount they pay each month towards medical services. This means access to early and preventative care, resulting in less sick days, healthier employees, and a greater ability to focus on work rather than healthcare needs. 

Intrigued? To begin exploring PSI for your organization, download our Exploring PSI guide, which walks you through some simple steps to researching this approach.