How a Maine nonprofit saved $1.7 million
Kennebec Valley Community Action Program (KVCAP), a large nonprofit in Waterville serving families in need, has saved more than $1.7 million over the past decade by partially self-funding their health insurance. Self-funding is a model through which organizations pay employee health claims out of pocket instead of paying a monthly premium to an insurance carrier. Once established, this model can create a culture of health and wellness within an organization while saving thousands of dollars in operating costs.
As shown in the table below (and another case study published last fall), self-funding a health insurance plan has the potential for enormous savings for organizations with 50 or more employees. This model requires a strong commitment from the organization’s leadership, trust between the board and CEO, and a partnership with proactive brokers who have experience setting up self-funded plans.
KVCAP credits their success to Healey & Associates, a Maine company they recognized as 2015 Business of the Year for their steadfast belief in, and support for, nonprofits across the state. In their award letter to Healey & Associates, KVCAP Executive Director Suzanne Walsh wrote:
“KVCAP is fortunate to have Healey & Associates as a partner and business associate that understands and is committed to our mission. You go the extra mile to understand our unique needs as a nonprofit, the clients we serve, and our staff in order to provide the best services and products possible. It is obvious hat you genuinely care about the mission and the overall health of our organization.”
Cathy Kershner, KVCAP’s Human Resources Director, also noted:“The employee experience has been very positive. We have great coverage. We have a great broker, so we knew what we were getting into ahead of time.” In particular, she points to benefits such as an enhanced Wellness Program and 100% coverage on any and all preventative services/procedures.
The model is not a fit for every agency. Successful adoption of the model can involve a significant culture shift within the organization with an increased focus on prevention and wellness and a commitment to staff and leadership training over several years. Ms. Kershner shares the following advice for organizations considering this approach:
- Hire a broker who has worked with, and set up, this type of program in other nonprofits.
- Invite the broker to attend a board meeting to discuss all of the options.
- Obtain adequate re-insurance to protect the organization from risk.
- Have senior managers stipulate what is covered and what the co-pays will be.
Regardless of an organization’s ability to benefit from self-funding, CEOs, executive directors and senior staff should regularly put their health insurance, as with all vendors and services, out to bid to ensure they are receiving the best value for their needs. Quality vendors will be willing to explore creative options to contain costs, so that nonprofits can keep their overhead low and invest as much as possible directly into programs and services that benefit our communities.
Interested in learning more about self-funding health insurance? Contact MANP Executive Director Jennifer Hutchins at 207-871-1885 or JHutchins@NonprofitMaine.org.