How To Know If Partial Self-Insurance Is The Right Fit For Your Nonprofit

It’s the season for mid-year healthcare plan renewals. As such, many organizations are likely re-examining their current healthcare plans (and possibly brokers) to determine if there’s any room for improvement and/or more savings. But while a large percentage of small-to-midsize nonprofits typically opt for traditional fully-funded employee healthcare, partially self-funded healthcare might actually be a better option.

A partially self-insured plan builds on already existing group health insurance. Organizations purchase less expensive, high-deductible healthcare plans (HDHPs) for employees, and then provide supplementary funds for all enrolled employees. These supplementary funds help pay for out-of-pocket expenses related to having a HDHP. Organizations only pay for the services employees use, which saves money, and in some cases remaining funds can be reinvested back into the business at the end of the year.

But how do you know if moving from a fully-funded insurance plan to a partially self-insured plan is the right move for your organization? Below are the top five things to consider as you re-evaluate your current health plan and look to the future:

• Number of employees on benefits: Most partially self-funded plans work best when there are more members (e.g. 50+) on benefits to ensure a greater rate of return in low-to-average claims years and reduced premium costs.
• Level of risk tolerance: Consider how much financial wiggle room you have to take on a high claims year, or flexibility with staff time to support third party administrators, claims, and billing reconciliation.
• Organizational values and healthcare goals: If your values and goals center on employee health and wellbeing, as well as long-term retention, partial self-funding may be the right approach for your organization.
• Organizational financial goals: Consider how and where you would like to save costs, and if supporting employee reductions in healthcare spending is on the list.
• Openness to trying something new: There may be uncertainty and a differing level of openness among various members of leadership teams when discussing healthcare options. Ensuring that everyone understands all of the possibilities on the table is a first step. You will also need to consider your current broker and how a change in approach could affect that relationship.

Nonstop Wellness is one approach to partial self-funding that removes the financial and administrative barriers of self-funding, and allows for significant savings on premiums annually and improved employee benefits with zero out-of-pocket costs.

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