Top Tip: Use Open Enrollment Season to Review Costs and Add Value

Good Insight helps nonprofits recruit talented senior leaders and strengthen their boards. Nonprofit budgets are tight since the onset of the pandemic and employees are burnt out. As our clients finalize next year’s budgets and update policies, our team has heard from nonprofit boards and executives that they need creative solutions to manage compensation expectations, health benefits, and paid time off policies. 

In any given year, a competitive compensation package is a crucial element of recruiting and retaining nonprofit talent. Our executive search work gives our clients some broad guidance on developing a great offer for a particular candidate, but when it comes to organizational strategy, we refer them to our talented colleagues for their strategic expertise. 

This conversation includes some friends of Good Insight, Kristina Griffin of Pinnacle HR Consulting, LLC, and Stephen Blair of Lyceum Insurance Services. As Owner and Principal Consultant of Pinnacle HR Consulting, Kristina and her team work with nonprofits and small business clients on human resources consulting and outsourcing needs. A President of Lyceum Insurance Services, Stephen specializes in the nonprofit market, offering cost-effective benefits plans and strategies that maximize employee outcomes and minimize employers’ risks. 

Contact information for both Kristina and Stephen are included at the end of this post. They welcome your questions about crafting the right strategies for your organization or business.

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It’s open enrollment season, and nonprofit boards and executives are evaluating how they can get maximum coverage for minimum cost. What steps can nonprofits take to find new cost savings?

Stephen Blair, Lyceum Insurance Services. When evaluating medical insurance programs, the relationship between premium cost and deductibles, coinsurance and copays is important. Increasing deductibles or cost shares for copays or coinsurance makes premium costs go down. Inversely, if we lower the cost share items, premiums increase. The biggest challenge is finding the optimal sweet spot for your organization and its employees. 

For Health Savings Account (HSA) eligible plans, we find the sweet spot between increased deductible and premium savings, falls around the $2,000 individual/$4,000 family level.  Increasing deductibles past that point seems to have a much smaller effect on premiums, because the average consumer spends less than $2,000 per year on healthcare. Someone spending more than that will likely hit the insurance companies with additional claims, making the rate-to-spend ratio much smaller and premiums much tighter past that level.

For traditional health plans (non-HSA), we have had a good bit of success pairing medical plans with higher deductibles for major medical (hospital related services and diagnostic) with non-traditional third party hospitalization and accident policies. For instance, if I can save $100 in monthly premium with a high deductible plan paired with an external policy that covers hospitalization for $40, then I have a net savings of $60 in premium, while reducing the potential hospitalization expenses with the external, free standing policy. (These numbers are for illustrative purposes and not meant to bind or price coverage).

Nonprofits should also be aware of changes within carriers that are providing smaller networks with decreased pricing. United Healthcare recently created a new network in partnership with Medstar Health, where all services would be rendered within the Medstar system. This saves subscribers a substantial amount in premiums while providing a robust, integrated healthcare system. 

As nonprofits begin adapting to the new remote work environment, one trick we have used successfully with clients with CareFirst BCBS is to utilize a relatively new hybrid product called Advantage, instead of only PPO plans for employees that live outside of the area. Advantage uses the local BlueChoice Network within the CareFirst footprint (MD, DC and Northern Virginia) and the PPO network for the rest of the country. Through Advantage, employees located outside of the CareFirst footprint would always be PPO and would never have to use the BlueChoice Network. In fact, I was just working with an employee of one of my clients this morning and by moving from the PPO to the Advantage plan she was able to save around a 40% with no difference in plan copays or deductibles. It is really important to work with a broker that understands and shows these nuanced benefits to maximize savings on plans.

Are your clients planning for cost of living adjustments and raises for next year, or are there non-monetary rewards they’re giving to employees?

Kristina Griffin, Pinnacle HR Consulting, LLC. Our nonprofit clients generally want to be very generous. They are sensitive to what employees are enduring at the workplace and at home. Executive Directors and boards must pay close attention to their finances before making cost of living adjustments (COLA), raises, bonuses, and the like. 

2020 has been a challenge like no other, but we don’t know what’s ahead for 2021 either – end-of-year giving, stimulus payments, there is a lot of uncertainty with nonprofit funding. Decisions to increase employee pay needs to be made with real financial  data and information and balanced with care, concern, and thoughtfulness around your employees. Fundamentally, you need to know if you can afford to do something without creating an issue down the road.

If the reality is that the usual COLA or year-end bonus can’t happen this year, be straightforward with your employees. We need more honesty and integrity in 2020. Be transparent with your team about what is and what is not possible. 

Earlier this year, one of our clients asked us to do a market survey to review internal compensation. It got delayed because of COVID and other factors, but in the meantime the board decided to take the more conservative approach now, of a 2% COLA for all staff. 

If your nonprofit is unable to do either COLA or merit-based increases, still consider nice gestures of your appreciation, like a Visa or MasterCard gift card that can be spent anywhere.   Another small but kind gesture is a gift to a meal delivery service like Uber or Door Dash, for an “employee lunch.” If you’re having a meal delivered, make sure you are giving prior notification so that they are home when it arrives!

If your nonprofit can’t do any of these things, it’s still okay. Be honest with yourself and your employees about what’s possible this year. 

A benefits package plays an important role to attracting and retaining employees. Are there additional benefits that nonprofits should consider to take advantage of in order to increase the value of their benefits packages?

Stephen Blair, Lyceum Insurance Services. Outside of the traditional medical and dental coverage that most of my nonprofit clients offer, a quality vision insurance program is often overlooked and is relatively inexpensive.  Many post-Affordable Care Act (ACA) plans do not cover adult vision services and for around $10 per employee per month, you can find a first class vision program that offers amazing benefits for glasses, contacts and examinations. The amount of goodwill received for a relatively small amount of financial investment is huge. I find that employees really value these programs.

If you are not offering disability insurance (short and/or long term), you are really doing your employees a disfavor. The number one reason for bankruptcy in the United States is due to medical conditions. If you are no longer able to work because you are going through treatment for a chronic medical condition, your household income will be detrimentally reduced. 

A disability insurance program for your staff will protect their income in the event that they are no longer able to work due to an accident or illness. Waiting periods and payment periods can vary and effect pricing on the policies. Policies can be employer paid or voluntary. Because of these different options, it is extremely important to work with a knowledgeable broker as the insurance companies can and do put a lot of limitations into the contracts. You may not know what you are getting in a plan because the contract language is often not illustrated in the proposals. The disability benefits arena is often very cost driven and most brokers sell based on rates and not on what’s in the contract.  This is an unfortunate side of our industry for sure, so make sure that your broker understands what benefits you are looking for in a policy.

We’re hearing more and more about employee burnout these days. What are some creative ways nonprofit executives can make space for employee self-care?

Kristina Griffin, Pinnacle HR Consulting. Similar to above, nonprofit executives first need to review their current financials to determine how much the organization has to spend. If you can, offer employees one floating Friday off between now and December 18. Many nonprofits close the office between Christmas and New Years, and this year even more are planning to give that time off. 

Let’s also not be short-sighted in the fact that we made it through 2020. People are obviously so overwhelmed with work, health, family, caregiving, and more and we may need to collectively help one another highlight the positives. You completely pivoted to a digital environment, you maintained and sometimes grew services. Your measures of success might be different than in 2019, but you’ve still succeeded. Plan a State of the Union for your staff, ask employees to share about their wins. A quick survey – what did you learn, how did this impact you, etc. – gives employees a chance to speak up, build engagement, and hear from one another, something we’re sorely missing. 

Finally, many nonprofit workplaces offer employees access to an Employee Assistance Program (EAP), which connects employees and their families to confidential assessments, short-term counseling, referrals to mental health providers, and follow-up services to address personal and/or work-related programs. Gently remind employees to make use of this free-to-them service. We all need this right now.

Stephen Blair, Lyceum Insurance Services. In a similar vein, our Agency has partnered with SMILE Therapy Services so that our clients can have access to robust mental and behavior health services via virtual webinars and teleservices. There has been an overriding need for enhanced behavioral services to assist employees with the growing strain of COVID, social justice, and personal isolation. This partnership has worked very well for us and our clients!

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Thanks to Kristina and Stephen for sharing their smart insights about addressing COVID-driven workforce challenges. If you think your nonprofit would benefit from a further conversation about HR, or you’re looking to update your insurance offerings, please don’t hesitate to reach out to them. 

Kristina Griffin, Pinnacle HR Consulting, LLC, kgriffin@pinnaclehrconsulting.com or (240) 244-9414, https://www.pinnaclehrconsulting.com

Stephen Blair, Lyceum Insurance Services, steve@lyceumins.com or 202-236-5519, http://www.lyceumins.com