The cost of health care is adding up for employers. Many believe they will see a six percent increase in the costs of health care by 2023. This comes after a five percent increase that employers saw this year, found from data collected from a Willis Towers Watson survey. It also found that 54% of the 455 U.S. employers participating in the survey believe health care costs will exceed budget allotments this year. This will impact many employers, especially nonprofits, who already face their own set of challenges.
Understanding the Challenges Nonprofits Face
Nonprofit organizations are already at a disadvantage because they lack resources compared to for-profit businesses. Another challenge is that nonprofits often aren’t sure how much revenue they will bring in every month. It often fluctuates.
One study found that nonprofits believe that traditional group health insurance options don’t work for them because of several reasons:
- They can’t afford it
- Employees have diverse health needs
- They don’t have time to administer it
- They don’t have control of budgets because of sporadic revenue intake
- Employees live in multiple states
How to Reduce Health Care Costs
There are ways that nonprofits can cut some of the costs associated with employee health care.
Choose High Deductible Plan – This plan comes with a higher deductible than a traditional health insurance plan. However, it allows the policyholder to pay a lower monthly premium. You should consider out-of-pocket maximum costs if you select this option. This works well with nonprofits that don’t anticipate high medical expenses with their workforce.
Individual or Family Plans – Experts suggest hosting a company-wide survey with employees to learn which benefits are most important to them. Try to find out about the medical needs and history of employees and their family members. This will help you figure out the risk level. Remember that deductibles tend to be higher for people on family plans. If you can figure out how many employees need individual plans and how many need family plans, you may be able to lower health care spending.
Health Reimbursement Plan – This plan is also called an HRA. It reimburses employees for their out-of-pocket health expenses. It allows a nonprofit to allocate funds each month per employee. Then, employees will select their health care policies from the state’s marketplace or an insurance broker. Reimbursements that come back to the employees are free of payroll and income tax.
Additional Methods of Relief
Some believe that health care reform on the state or federal level would benefit nonprofits and other businesses that are concerned about the rise in costs. One in four companies said they plan to pass on the costs to employees through higher premium contributions. The Affordable Care Act can be a useful resource for nonprofits. However, certain rules apply to nonprofits based on how many employees they have.
Companies like Alltrust Insurance offer resources that businesses can pass on to employers like wellness programs. Some of these resources include information to improve your physical health along with your mental health.
Alltrust Insurance: Here to Help You Succeed
Alltrust Insurance also offers other resources that can be beneficial to employers and employees. Our website features a health newsletter that discusses the last information concerning health and wellness. We feature the Harvard Health Ledger from Harvard Medical School each month. We also have a weekly digest newsletter that updates employers on information they need to know regarding employee benefits and human resources. You might find an article about proposed legislation that could impact employers and updates on federal labor laws. Our blog showcases in-depth information concerning cost management, compliance, and other trending topics. For more information on how Alltrust can support your nonprofit with managing health care options, please contact us today.