It is not a secret. Nonprofits are struggling to afford health insurance coverage for their employees and they are looking at lower cost plans, reducing contributions or even eliminating some types of coverage to balance their costs.
Sorting through health insurance is already tough. Throw in the 60 hours of research and administration needed to find a new health insurance plan an implement it, and you've got a task that feels nearly impossible. Nonprofit admins hardly have the time to become health insurance experts on top of everything else.
But they also can’t afford not to. Ohio is home to nearly 60,000 nonprofits, employing 564,000 people. (That’s 12% of their total workforce.) And while there are a few BIG non-profit employers that skew the numbers, let’s not forget that 80% of Ohio nonprofits employ less than 25 people. We’re focusing on the smaller segment for this article.
So, what are the options for these smaller-sized nonprofits in Ohio trying to provide health insurance?
Quick review of health insurance options
When it comes to employee health insurance coverage for small nonprofit organizations in Ohio, five main options stand out. Each has its own set of advantages and disadvantages. It might seem like a lot of health care jargon. We’ll dig into each one in a moment.
- (New) Individual Coverage Health Reimbursement Arrangement (ICHRA)
- Fully-Insured Health Plans
- Level-Funded Health Plans
- Self-Funded Health Plan via COSE
- Giving extra cash
How smaller nonprofits are left out
Like most small businesses with under 20 employees, smaller-sized nonprofits have a challenging time finding health insurance options that are both affordable and comprehensive. Health premiums have increased over 400% over the last two decades, making it near impossible to keep up with a competitive benefits package and likely why, according to this survey, just 18% of nonprofits offer group health insurance.
Pros and Cons of health insurance options for Ohio nonprofits
1. ICHRA (Individual Coverage Health Reimbursement Arrangement)
The ICHRA model is a newer health benefit option. Instead of choosing a group health plan, the employer chooses a pre-tax allowance that their employees will use to reimburse for a health plan they buy and choose from the marketplace. This unique type of group policy provides flexibility to the nonprofit administrator and their team — employees can choose their health plans, and the admin can set a budget that they can afford.
Advantages:
- Easy to control costs. The nonprofit administrator can set a monthly benefit of pre-tax money that they can afford.
- Flexible and personalized for employees. Employees can pick a health plan that fits their needs rather than having one chosen for them.
- The money goes further. Since the contribution is pre-tax, the benefit dollars go a lot further than giving employees additional dollars in their paycheck.
- Setup takes 10 minutes. (Or at least StretchDollar’s ICHRA enrollment does.) Just fill out some online paperwork that includes business details as well as the monthly allowance.
- Ohio health insurance marketplace has a diverse range of options. The exchange for Ohio’s largest cities — Columbus, Cincinnati and Cleveland — have 8 carriers with 100+ plan offerings.
Disadvantages:
- Health insurance can be a maze, and your employees might need some guidance. Some companies like StretchDollar offer one-on-one help to help guide employees, but it's not a universal offering.
2. Fully-insured group health insurance plan
For many years, small employers, including nonprofit organizations and small businesses, have preferred fully-insured plans. In these types of arrangements, the nonprofit typically collaborates with a broker to select a group health plan. They then pay a fixed premium to the insurer, who takes responsibility for processing claims from enrolled employees.
Advantages:
- Predictable monthly premiums. Sure, these plans might be on the pricier side (check out the disadvantages), but at least you know exactly what you're paying each month.
- Comprehensive coverage options. Since these plans are state-regulated, insurers have to offer a specific level of benefits, ensuring all employees get decent coverage.
Disadvantages:
- Higher premiums. In fact, this tends to be the most expensive group health insurance plan of all the ones available.
- Less flexibility. Small nonprofits frequently offer just one health plan option for the entire team.
- High minimum participation rates. Typically, 60-70% of employees need to sign up to make it available, which can be a big ask for a lot of small businesses.
- High minimum premium contribution. Often carriers want at least a 50% premium contribution, which can hit nonprofits hard, especially when yearly rate increases hit double digits.
3. Level-funded group health insurance plan
These types of group health plans work similarly to traditional fully-insured ones. The key difference is that part of the premium paid goes into a claims fund to cover health expenses for employees. If there's money left over at the end of the policy term, it could get credited back to the employer, which means potential savings for the nonprofit. On the flip side, if claims go over what was collected, premiums can shoot up. That’s why health insurance companies offering level funded plans usually ask employers to go through an underwriting process.
Advantages of level-funded health plan:
- Potential refunds if claims are low. This makes the savings potential better than a fully insured health plan.
- Have healthy employees? Your costs might be lower. Health insurance carriers selling level-funded health plans generally require underwriting which means they’ll ask you and your employees questions to gauge your risk.
Disadvantages of level-funded health plan:
- Your employees have to stay healthy. The cost-advantage only exists if your employees don’t have a medical issue. One expensive claim can cause rates to jump.
- High minimum participation rate and premium contribution. Just like a fully-insured health plan rolling in a group plan means that on average, at least 60% of employees must enroll and the employer must contribute 50% toward their premiums
- Less flexibility. Small nonprofits often get a one-size-fits-all plan, making it tough to tailor things to specific needs.
4. Self-funded group health insurance plan via COSE
First off – what is COSE? Unique to Ohio, COSE stands for the Council of Smaller Enterprises. This offering, exclusively offered through a segment of Ohio chamber of commerces, tailor plans for small employers with fewer than 200 employees through a mechanism known as a MEWA (yes, yet another acronym). Without delving too deeply into the complexities of health insurance and another weird acronym, this arrangement permits the carrier, Medical Mutual in this case, to group similar businesses (small employers) together to provide a self-funded option. With a self-funded arrangement, most of the premium goes into the pool to pay out claims.
Advantages of self-funded MEWA health plan:
- If you have healthy employees, your premiums will likely be lower than a traditional fully insured plan and there is potential for refunds, if claims are low..
- In Ohio, they offer a more cost-advantage option for smaller-sized nonprofits. (Fully insured small group health plans are limited and costly in Ohio.)
Disadvantages of self-funded MEWA health plan:
- Like level-funded plans, your employees have to remain healthy or face a jump in premium prices.
- They also require a minimum participation rate and premium contribution, often over 50%, which may be too high for some nonprofits.
- Less flexibility. Specifically for Ohio, the carrier that offers this type of plan is exclusively Medical Mutual.
5. Give extra cash in the paycheck
After running into a bunch of dead ends, smaller nonprofits may throw in the towel on finding a group health plan and just add the extra cash to employee paychecks instead. It's a nice thought, and sure, there are some good points to it, but overall, this move doesn't always pan out the way they hope.
Advantages of money instead of a health benefit:
- It’s easy. All an employer has to do is add extra money to a paycheck.
- It’s also predictable — they give exactly what they can afford.
Disadvantages of giving employees extra cash:
- Missed value. Employees may not realize they're getting extra cash for health insurance because it just gets lumped in with their regular pay.
- Taxes eat up a lot of what you give. Employees in Ohio will still have to pay up to 10% in SUI taxes plus up to 3.5% in state income taxes, in addition to up to 22% for federal income taxes.
- Employees may not get your desired outcome — health insurance. Do employees actually use the money for health insurance? It's hard to tell, so they might not even reap the benefits that the cash is supposed to provide.
What about the cost: Small group versus individual marketplace insurance in Ohio
You might be surprised to learn that small group fully-insured health plans cost at least 70% more than individual plans on the health insurance marketplace. In some cases, the premium price difference is over 100%.
Let’s take a look at a few cities.
Health insurance in Columbus, Ohio
Small group fully insured plans cost about 120% more than individual health plans on the Ohio marketplace.
Average costs of health insurance coverage from the marketplace in Columbus, Ohio based on a 35-year old male.
- The least expensive gold plan in Franklin, Ohio (Columbus) is Oscar Health’s Gold Classic Standard (Select) - HMO (~$460/month).
- The cheapest silver plan in Franklin County, Ohio is the Oscar Health’s Silver Simple PCP Saver (Select) - HMO (~$415/month).
- The bronze plan that costs the least in Franklin County, Ohio is Oscar Health’s Gold Classic Standard (Select) - HMO (~$341/month).
Health insurance in Cleveland, Ohio
Small group fully insured plans are about 50% more than individual health plans on the Ohio marketplace.
Average costs of health insurance coverage from the marketplace in Cleveland, Ohio based on a 35-year old male.
- The least expensive gold plan in Cuyahoga County, Ohio (Cleveland) is Molina Healthcare’s Gold 1 - HMO (~$425/month).
- The lowest cost silver plan in Cuyahoga County, Ohio (Cleveland) is Molina Healthcare’s Silver 8 250 - HMO(~$380/month).
- The cheapest bronze plan in Cuyahoga County, Ohio (Cleveland) is Medical Mutual - Market HMO 9450 (~$366/month).
Health insurance in Cincinnati, Ohio
Small group plans are about 125% more than individual health plans found on the Ohio marketplace.
Average costs of health insurance coverage from the marketplace in Cincinnati, Ohio based on a 35-year old male.
- The least expensive gold plan in Hamilton County, Ohio (Cincinnati) is Ambetter’s Clear Gold - HMO (~$428/month).
- The lowest cost silver health plan in Hamilton County, Ohio (Cincinnati) is Oscar Health’s Silver Simple PCP Saver (Select) - HMO (~$400/month).
- The bronze health plan that costs the least in Hamilton County, Ohio (Cincinnati) is Medical Mutual - Market HMO 9450 (~$328/month).
Check out all of our Ohio city guides
There are a lot of details to dig into when it comes to health insurance. Check out some of our other guides in the buckeye state.
Bottomline: What’s the best health insurance for nonprofits in Ohio?
Dealing with health insurance for small nonprofits is a juggling act of affordability and complexity (while also weighing retention and recruitment). Choosing the right option truly depends on your nonprofit. The good news is that knowing your health benefit options is an important step in finding a solution that matches your goals and keeps your team happy.
