Mobile Edition
Print
Get the Mag
Weekly UpdatesThe way Brian McConnell sees it, rising healthcare costs at some point will exceed his nonprofit's ability to provide wage increases. "I just don't see how we can keep up with the ongoing increases," said McConnell, who has been executive director the past six years at the Greater Steuben Chapter of the American Red Cross in Coming, N.Y.
Nonprofits from around the country that responded to The NPT 2009 Salary
& Benefits Survey reported wide-ranging increases in healthcare premiums. One nonprofit in the South expects an 18-percent spike, with the organization covering the tab. Another nonprofit, in the North Central region, expects premiums to increase by 24 percent, even after shopping around the policy for lower premiums and making changes in the benefits levels to pay for the increase. Among the highest reported increases was at a nonprofit in the North Central region, where premiums will rise 38 percent.
Of the nearly 1,500 responses to this year's survey, 61 percent expect employee health premiums to increase during 2009. Some 14 percent expect them not to increase and 16 percent don't know, while 9 percent have no health insurance benefits. Just as many nonprofits (263) said they shopped around for lower premiums as organizations that made changes in benefits levels (262).
[ILLUSTRATION OMITTED]
Respondents expect an average increase in premiums of about 12.5 percent, with a high of 80 percent. The most popular way to pay for increases was splitting the cost between the employee and organization. The average share of employees' premium increase was more than 20 percent while organizations paid an average of 52 percent of the premium increase.
Headquartered in central New York near the Pennsylvania border, the Greater Steuben Chapter expects a 25-percent jump in premiums, McConnell said, with 80 percent of the increase picked up by employees. Much of the spike in costs, he added, can be attributed to more part-time employees being eligible for benefits through a program offered by the national Red Cross.
The Steuben County Chapter has seven full-time employees and four part-timers. The National Benefits Program includes coverage for part-timers who work a minimum of 20 hours per week. The previous healthcare plan covered those who worked more than 30 hours.
Typically, health benefits make up about 10 percent of the chapter's annual budget of about $600,000. The chapter budgeted $12,000 for health coverage between July and November, but costs have jumped to $20,000, McConnell said. "We budgeted for an increase but we didn't know it'd be as much as it was," he said, adding that most of the increase is due to three more employees being covered.
The chapter covers a rural area roughly the size of Rhode Island, where individuals are willing to work part-time, McConnell said, though not necessarily for the paycheck. "For our folks, that's definitely a perk," he said of part-time health benefits. Medical spending accounts make sense for the nonprofit but with a very traditional constituency, he wasn't surprised when only one employee enrolled.
Prior to 2008, McConnell said the chapter would budget increases of 10 to 15 percent for medical coverage with the local Blue Cross/Blue Shield and some years talking to the provider about different programs and coverage to keep rates down. "It always felt like it was a stair step, no matter where you jumped into health care, you always knew the rates would go up," he said. Each year the chapter reviewed and negotiated a different plan. "It wasn't necessarily a lesser plan, just a redistribution, maybe the employee paying a little more or higher deductibles," he said.
COORDINATING BENEFITS
Approximately 70 percent of the 720 Red Cross chapters nationwide participated in the national program until it was implemented at all affiliates last year, according to Anna Shearer, senior director, employee benefit and retirement programs, for the American Red Cross headquarters in Washington, D.C. There are some 28,000 eligible employees.
Chapters can customize some parts of the Benefits Advantage program, Shearer said, such as the cost sharing with employees and whether to include part-time employees. The average employer share of medical coverage is about 75 percent, and slightly less for dental and vision, she said.
Until the national program was implemented, Shearer said there were 300 different medical programs across the organization. "We consolidated all those into a more standardized program," she said. Some chapters experienced big increases or decreases in the transition, but premiums are pretty stable now, with an increase of about 6 percent expected this year. The increase varied depending on the cost of health care within a state, Shearer added.
McConnell said there's concern about training revenue reaching projections and some major gifts coming in, but they'll aim for no more than 3-percent salary adjustments this year.
Community Prevention Partnership of Berks County (CPPBC) also expects a 25-percent hike in premiums this year. Some years the increase in health premiums has been 12 to 13 percent. Executive Director Cheryl Guthier recalls that on at least one other occasion the hike has been more than 20 percent, which is when the organization tends to switch companies.
"We've shopped around every year" for a new health care provider, she said. "We look around and end up with one for a couple years, before we end up switching." The nonprofit has been with its current provider one year and renewed for a second year.
Based in Reading, Pa., about 60 miles northwest of Philadelphia, the social service agency's health insurance can be a big draw for prospective employees. Benefits kick in on the first of the month following their date of hire, as do retirement benefits. "That has been a draw I believe," Guthier said as many other companies still have a 90-day grace period.
EMPLOYEE PARTICIPATION
Employees paid nothing for the health benefits until about five years ago when CPPBC started a $10 employee contribution after it was hit with a significant increase in premiums, Guthier said. Today, the organization still picks up roughly 88 percent of the cost while employees cover about 12 percent, a level at which she expects it will remain.
The 12-year-old nonprofit has about 46 employees, 33 of whom are full-time and eligible for health insurance. The cost of health benefits makes up about $180,000 of the organization's approximately $4-million annual budget, according to Guthier.
Primarily funded through federal dollars, CPPBC has kept salary increases around 3 percent, Guthier said, with some years closer to 2 or 4 percent.
FEED