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Health Insurance for Small Libraries

by on June 26, 2015

My library’s induction into a health insurance pool came about after I attended a Village Board meeting and learned that their health insurance costs had gone down 8%. This was the same year that the library’s costs had increased approximately 13% for the second year in a row. After my brain stopped exploding and the meeting was over, I talked with the Village Finance Manager and learned that they had joined a health insurance pool almost a decade earlier. This move occurred after they experienced the strategies health insurance companies use in setting premiums. It is particularly frustrating for organizations that employ less than 50 full-time equivalent staff.

I immediately started exploring whether there were any existing health insurance pools for libraries in my area. I found two good ones but learned that because of rules set by one of the largest health insurance companies, our library couldn’t join a pool unless we already belonged to a pool. This despite the fact that we were currently clients of said insurance company.

Determined to get off the merry-go-round of escalating premiums and facing the regulated options for small businesses, I dug deeper and discovered a large insurance pool that had the option of our library joining one of the sub-pools of smaller municipalities and government groups.

The health insurance pools I explored are self-funded pools, which means that the organization assumes all the risk in return for more control and financial benefits. Self-funding offers more control over design plan and costs. The organization pays claims from collected premiums rather than using predetermined premiums to compensate an insurance provider for assuming financial risk.

(Predetermined premiums are based on projected claims and offer no reimbursement if those costs are lower than what was projected.)

The Library Board listened to presentations by the the insurance pool as well as the Village Finance Manger to understand what they were getting into. As a point of contrast, they also heard a presentation about small business options in the ACA Marketplace. Even the possibility of ceasing to offer health insurance to staff was contemplated. A staff committee was appointed to hear the same options and make a recommendation to the Board. After several months of careful consideration, the Board voted in favor of the staff committee’s desire to join the health insurance pool.

Our library joined the pool a few months ago and our coverage goes into effect in July of this year. Because of the lack of claim history, the first year premiums are very conservative. Even with that conservative approach, premium costs for our HMO options are less than last year. PPO premiums did increase but the staff who desire PPOs were willing to meet that cost. The process of switching over has been ably facilitated by the brokerage that works with the health insurance pool.  While insurance pools have been around for quite a while, our library has entered a brave new world.

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