Problem:

Funding for health insurance was limited to a fixed dollar amount and given to employees to obtain individual coverage.1 There appeared to be a greater financial commitment to buildings and other physical investments consuming the funds needed to create a group-based employee benefit package for full-time employees. This issue was becoming critical, as this private school employed many faculty who were unable to obtain individual coverage due to medical conditions. The void in group health insurance also hindered the school's ability to attract new staff.

Solution:

The new headmaster negotiated a dollar amount ($132 per full-time employee per month) to create an employee benefits package. Braden Benefit Strategies, Inc. produced a benchmark report showing the benefits packages at like institutions in the southeast. From this report a first year benefits package was constructed as follows:

Results:

• Medical Insurance - Many of the teachers and full-time staff had previously established high deductible individual health plans. BBSI was able to offer employees a choice between a PPO or the new High Deductible Health Insurance with a Health Savings Account (HSA) match up to $50 per month. 47% of the staff elected to participate in this plan.
• Long-Term Disability - Using the Independent School Management (ISM) product, designed just for the education industry and generally priced below any product available on the open market, we were able to establish a 90-day elimination period, with 60% of monthly salary to age retirement. This is being paid 100% by the school.
• 403(b) Retirement - The retirement plan in place is one in which the employees can contribute with no match from the employer. Most of the employees were unaware of their ability to participate in the program. Education about the retirement plan and the availability to participate eliminated any confusion. In addition, we believe the school is going to be able to match participants in the plan with 1% of salary at the end of the school year.
• Dental - Using a very strong dental vendor, we are were able to offer dental coverage on a voluntary basis, deducting premiums pre-tax, 26% of the full-time staff participated in this program.
• Life Insurance - Using a guaranteed issue product through Independent School Management (ISM), and in combination with other employee benefit products offered, we were able to obtain a very competitive life insurance price, 50% took advantage of this offer.
• Section 125 Pre-tax - Using Independent School Management (ISM) pre-tax program we were able to offer applicable premiums paid by the staff pre-tax, as well as incorporate Flexible Spending Account and Dependent Care options for those employees who wanted to participate.

In addition, we chose to offer a few select products from AFLAC to complement the package and make sure we had the needs of the teachers and staff covered. These products were Short-Term Disability, Vision, Cancer, Accident, and Personal Sickness.

As we got into the enrollment on the medical, the number of employees enrolling increased over what we had expected, as did the medical conditions. This changed the price because we had explained to the employees in advance this might happen. While they were disappointed when it did, they accepted the change and have moved forward with the change.

Note - for the program to work, all employees were informed that they would no longer be receiving the individual allowance for health insurance, with no exceptions.¹

On a very limited budget, this private school went from not offering employee benefits to a complete and robust benefits package. The headmaster commented to his finance committee he had talked to other agencies and looked at other programs, and no one was willing to put this kind of time and energy into looking at their total needs and actually building the entire program. In the staff presentation, the amount of information and choice was overwhelming - a very welcome overwhelming!

(1) Corporate funds used to pay for individual health insurance policies is against the Department of Insurance regulations.