2 businesses opting of health insurance as illustration for impact on NPOs

Previous post discussed the specifics of two businesses that are thinking about dropping their health insurance in 2014 and paying the penalties under ACA.

Now to get a feel for the impact on NPOs, I’ll revise that analysis by adjusting the data we see there to an NPO.

First scenario – currently providing health insurance to some staff

Let’s start with assuming the same facts except the organization is an NPO without the tax bite.

First company:

  • current cost –$140k to cover 25 of 102 full-time staff
  • full health insurance next year – over $500k
  • no health insurance next year – $144k

The second company:

  • current cost –$100k for 20 of 120 full-time staff
  • full insurance next year –$600k
  • no coverage next year – $180K

So for the first hypothetical NPO, dropping all health insurance would leave costs as is. Providing coverage would increase the budget about $360K.

For the second example, dropping all coverage would increase costs $60K. Providing coverage to all eligible staff would increase costs about half a million.

Second scenario – not providing health insurance this year

I’ll assume a different but not unlikely situation where the NPO does not currently provide health insurance.

First example discussed a company with 102 full-time staff. If that were an NPO that doesn’t currently provide any health insurance, this is what 2014 would look like:

  • start health coverage next year– $500k
  • don’t provide insurance next year – $144K

The second example is a company with 120 full-time staff and 130 part-time staff. Let’s assume that is an NPO that doesn’t provide health insurance.

  • start insurance next year – $600k
  • don’t provide insurance next year – $180K

Organizations with 102 or 120 full-time staff could ill afford the penalty of $144k or $180K, let alone swing an extra $500k or $600K for insurance.

Massive assumption

All of those insurance amounts assume the costs we see now without an expected 20% or more increase in premiums next year.

Time to start thinking

If you haven’t already been thinking about the impact of ACA, now would be a superb time to start.

If you haven’t started crunching numbers, this would still be a good time to begin. I hope these two examples from the WSJ give you a general framework on how to start your analysis. Modify as needed for your situation. These examples should give you a few pieces of info to at least do a quick guess on what next year might look like.

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