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Benefit or Burden: The Impact of Rising Health Insurance on Non Profits

Nowhere is the insurance crisis more keenly felt than among small non-profit organizations. While commercial businesses may pass along increased costs to their customers, non-profits cannot. One the oldest non-profits in Columbus is facing a sharp and unexpected 23 percent increase. The Godman Guild will have to pay the higher premium to keep its employees insured. The employees, in turn, will be digging deeper into their own pockets to help their employer pay for the more expensive coverage.

"Good afternoon, Godman Guild...Peaches...How may I help you?"

Named for 19th century Columbus shoe manufacturer and benefactor Henry Godman, the guild started as a settlement house aiding immigrant families. Times and methods have changed, but for more than a century the Guild has been helping men, women and children make better lives for themselves. The guild provides a number of services, including hosting Head Start classes.

"You've got apples on your tree? I don't see it! That's all the apples on your tree? You better make more; yeah, make more!

The guild has 26 full-time employees whose salaries average about $30,000 a year. The guild pays about 90 percent of their health insurance premiums. It's a significant portion of the agency's $3 million budget. And the cost keeps rising every year. Marci Ryan is Godman's human resources director.

"Our bills are $144,000 a year for all of our employees," Ryan says. "We do have them pay a portion of that."

How much they pay depends on whether they chose the $250- or $750-deductible. All but a few chose the higher amount. That means a single person with no dependents this past year paid a modest $37 a month. It's a manageable amount which employees say they appreciate.

As with most insurance plans, the rates go up for each additional family member added to the policy. But the Guild was hit with a new form of higher health care pricing a few years back. Ryan says carriers began adjusting rates according to age.

"And they never used to do that before. It used to be that if you're an employee you pay this much no matter if you're 19 or 50. Now it's based on your age and the age of your dependents so every single person's premium is different," Ryan says.

That forces the Guild to require each employee to complete a new application every year. To get the best deal, Godman hires an independent insurance broker who shops around and makes recommendations to the guild's administrators.

But in a scene becoming all too familiar in board rooms across the country Ryan recently had the uncomfortable task of telling her boss, executive director Randall Morrison, that the insurance rates for the new fiscal year have skyrocketed.

HENDREN: What's coming up? Something big happening on the horizon?

RYAN: We have a renewal and it's a little larger than we would like. I look at my boss...

HENDREN: Why is he looking like that?

RYAN: Because we really haven't had a conversation about it yet.

MORRISON: She keeps saying that it's bigger than we thought.

RYAN: Yep. We budget for about a 12 percent to 15 percent increase every year in our insurance; which is substantial in itself. But it's, uh, it's a little, uh, higher than that this year.

The increase ended up being nearly double - 23 percent higher for fiscal year 2008. That raises Godman's health care premium to $203,000.

To fund programs like Job Readiness courses the Godman Guild relies heavily on The United Way of Central Ohio. It contributes nearly a third of Godman's budget. But that money, according to local United Way spokesman Kermit Whitfield goes to fund individual programs, not member agencies.

"When it comes to something like insurance premiums rising and that sort of thing it would almost be impossible for United Way or other funders to take that into account as we look at long term funding cycles," Whitfield says. In a classroom at Goodman trainer asks: "We can't make special factoring in just for that."

"Can anyone tell me how long it takes for an interviewer or human resources person, whoever is doing the hiring, how long it takes to make an impression of you?"

As the Godman Guild teaches adults how to get a job, its employees will learn another lesson. They will soon see a 5 percent increase in their contribution to their health insurance plans.

"When I started here, employees with single coverage didn't pay anything," Marci Ryan says. "And that was eight years ago. So we have tried really hard to minimize what that contribution is but they have to help us carry the cost. It's a wonderful benefit that we offer but it's a burden for all of us."