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Many nonprofits picking up healthcare cost increases.

"Healthcare is a huge issue for us," said Rich Souto, chief operating officer of Harlem RBI in New York City. The ability to continue to provide a generous healthcare package is a challenge as it continues to get more expensive, especially with the organization's growth in personnel each year.

"We try to have a healthcare plan that requires employees contribute the minimum we can afford," he said. "With that, it's a struggle finding plans that can provide effective care for a family and are affordable for the organization."

The nonprofit used to pay 100 percent of health coverage for employees but two years ago enacted a modest payroll deduction, ranging from 2.5 percent to 15 percent. A decision was made that, even though the amount is nominal, employees "share in the cost and be aware of that cost," he said.

It's still less than what most organizations said they ask staff to pay for health benefits, according to the most recent The NonProfit Times/Bluewater Solutions Nonprofit Organizations Salary & Benefits Report. The percentage of monthly medical costs paid by the organization averaged at least 85 percent for a single employee, regardless of whether it was a Preferred Provider Organization (PPO), Health Maintenance Organization (HMO) or Point of Service (POS) plan. For an employee plus one, or an employee on a family plan, the overall average was closer to between 62 and 70 percent.

More than four out of every five nonprofits surveyed offered some type of medical plan for their employees. The most common offerings were:

* Preferred Provider Organization (PPO), 54.2 percent;

* Health Maintenance Organization (HMO), 30.7 percent;

* Point of Service (POS), 9.3 percent;

* Exclusive Provider Organization (EPO), 3.6 percent; and,

* Indemnity (Traditional Fee-for-Service), 1.5 percent.

Less common among nonprofit offerings were dental insurance benefits, but still, more than 64 percent of organizations offered some type of plan to employees, with the most popular being:

* Dental Preferred Provider Organization (DPPO), 43,4 percent;

* Dental Point of Service IDPOS), 10.7 percent;

* Dental Health Maintenance Organization (DHMO), 7.6 percent;

* Indemnity (Traditional Fee-for-Service), 4.1 percent;

* Dental Reimbursement Plan, 3.4 percent; and,

* Dental Exclusive Provider Organization (DEPO), 1 percent. Vision insurance was half as commonly offered as dental insurance, with almost 31 percent offering it. Approximately one-quarter of nonprofits surveyed offered a Vision Maintenance Organization (VMO) and more than 6 percent offered Vision Preferred Provider Organization (VPO).

Healthcare costs are also a concern at the American Lung Association (ALA), where the increase last year was minimized to 10 percent, "but that was really an effort," said Adrienne Glasgow, chief financial officer. The employee share was not changed, but she said they've been unable to commit to that for next year and are seeking alternatives.

A single employee pays 8 percent of the premium while an employee on a family plan pays about 35 percent, which might increase in the future, according to Glasgow. "Anything you pay is out of pocket but we'll probably have to look at that," she said.

Souto doesn't expect employee health contributions at Harlem RBI to change anytime soon, despite the cost, which is powered by growth in personnel. There is approximately 45 full-time staff, in addition to 80 part-timers, which has been growing by about five per year for several years, according Souto. The annual operating budget is about $7 million this year and revenue and expenditures have grown between 11 and 13 percent during the past five years, he said.

"We just don't think it's fair for employees to be expected to contribute much more than we've already asked. That healthcare benefit that we provide is one that should stay where it is for some time."

Souto said that each year it seems as though the organization is quoted double-digit healthcare premium increases, but it manages to get them down to more like 10 percent by the end of negotiations. "Because we grow in personnel and in the cost of coverage, we see that overall fringe benefit line increasing substantially every year," he said.


"Through changes and choices in the plan, it's something you can bring down slightly," said Souto. "If we look at the plans every year, we find ourselves making decisions about shrinking networks and increasing co-payments or other charges that the employee is responsible for," he added.

"We've been able to try to do little things that go a long way," said Souto, such as occasional spot bonuses or gifts at certain times of the year, or providing extra time off for staff at certain times of the year. Among other "little things" Harlem RBI offers a complementary life insurance a negotiated discount for gym memberships, a transit card program, as well as a wellness program that employees can learn about weight loss and stress management, among other things.

Employees have a 403(b) to which they can contribute but the organization hasn't been able to supplement that, or fund any type of retirement programs, Souto said. Some type of retirement plan could be in Harlem RBrs future. "We would like to consider a way we can at least supplement savings our employees are committed to having, for example, through a contribution to their 403(b) or a match," said Souto.

Nearly two-thirds of the organizations that participated in the The NonProfit Times/Bluewater Solutions Nonprofit Organizations Salary & Benefits Report reported offering a retirement plan as part of employee benefits.

A 403(b) plan was the most common, at 20 percent. The next most popular were: a 401 (k) at 14 percent; 6 percent offered a SEP-IRA; 3.3 percent had a defined benefit pension; and, 2 percent reported having a Section 457 plan. Harlem RBI offers generous vacation time benefits. New staff can have four weeks of paid vacation.

The typical organization in this year's survey offers an average of almost 6 days of paid vacation after six months of employment. Few organizations provide as many as 20 days to employees with less than 10 years of employment. Some of the averages eclipsed 20 days among large nonprofits in the survey after 10 or 15 years of employment, but the overall average didn't reach 20 days until 25 years of employment.

Like Harlem RBI, at Ursuline Senior Services in Pittsburgh, Pa., employees began contributing to their healthcare benefits in recent years. "In some ways, the bigger concern has been changes we might have to incorporate if we ever had to absorb a rather large spike in benefit costs," said Executive Director Tony Turo, who estimated the annual budget is slightly less than $5 million, with a staff of almost 75.

"We have a long-standing history in this area with the same company and that's probably kept us over the past several years below a 10-percent increase for healthcare insurance," said Turo, adding that other colleague agencies in the region have absorbed increases of 20 to 40 percent.

Ursuline has been able to absorb the increases by budgeting them into its own contract increases, but the organization did move forward on a 5-percent employee contribution to healthcare premiums in recent years. The monthly payroll deduction of about $20 hasn't changed Turo said, although the healthcare premium has increased a little, so the contribution has probably dropped to less than 4 percent.

The average age of employees is probably about 40. so that might help with healthcare costs but the big challenge in the future for Turo is to get more employees active with value-added services in the health plan.

Things such as discounts to fitness clubs and smoking cessation plans are offered through the plan, hut Turo gets frustrated when he sees the lack of use. "There's money in the plan to be used, but I don't see a great degree of use of them," he said. He plans to bring in representatives of the various benefit plans to do some in-service programs and walk staff through the fine-print of their health plans. "It's not that they're not given information, but clearly they've not availed themselves of it," Turo said. 'Td like to help them understand that instead of thinking of the health plan as what you use when you go to the doctor, look at it more proactively; we're paying for benefits that you can use even when you're not sick."

Turo said he wants to make sure they're "not wasting opportunities on other things that come with these plans that we pay for."
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Author:Hrywna, Mark
Publication:The Non-profit Times
Date:Feb 1, 2012
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