Budget Planning is a Strategic Opportunity
For many athletic departments, budget planning goes beyond gathering expenses and revenue numbers from head coaches and department heads. It is a strategic opportunity to review the athletic department’s performance, and use that knowledge to make necessary change and informed future decisions.
Athletic insurance can be a large expenditure in your budget. Having a complete understanding of how this line item is calculated will help your athletic department determine how you can take control of the athletic department costs.
Benefits of including Athletic Insurance in your Budget Planning Process
There are some key benefits you should be aware of as it relates to how athletic insurance impacts your budget. For instance, the budget review process offers you:
- An opportunity to review your performance compared to previous years
- A better understanding to anticipate potential challenges
- Concrete financial information on which to make educated decisions
- Improved transparency and direction
- Greater confidence in your decision-making
Strategic Considerations
From our experience, we have identified five key components that are crucial to understanding how athletic insurance can impact your athletic department positively or negatively.
1. Insurance Claims History
Claims are the single largest variable when projecting future costs of insurance. Having a comprehensive program in place to mitigate the amount of claims that a program sees is crucial to keeping costs down. The implementation of primary insurance requirements, primary insurance verification, discount programs and streamlined claims payments are ways to improve insurance processes from year to year.
2. Funding Insurance (How do you pay for this coverage)
There are several different types of plans that a college can use to fund their athletic insurance program. Traditional (fully insured) plans allow you to pay for the insurance up front regardless of whether the school has a good or bad claims year. This type of plan can fluctuate in premium depending on previous year’s claims but is easy to budget for the coming year. With a self-insured option, it truly depends on the amount of claims during the policy year. Payments are made when claims are processed by your third party administrator (TPA) and the institution will provide claims funding as needed. The aggregate deductible option is a hybrid of a fully insured and self-insured program. It allows a school to benefit from having a very good claims year by paying less while providing a back stop and capping the potential cash outlay in the event of a bad claims year. This plan can offer a safety net when insurance related funds are owed.
3. Plan Utilization
What percentage of your student athletes have primary insurance? Obviously, the higher percentage of students that have primary insurance will take a burden off of the secondary plan in place. In addition, in network benefits versus out of network benefits can have a huge impact as well. Many institutions will implement an internal policy mandating student athletes have primary insurance to participate in athletics. Your insurance partner should be able to advise you on how best to utilize this strategy.
4. Provider Pricing
The universities relationships with providers are important to the success of an athletic insurance program. Geography plays a big part in the choice you may have in regards to where you send student athletes for treatment. If there are numerous providers to choose from, leverage may be used in a respectful way to receive the best pricing possible. The timing of claims payments also contributes to how much discounting you may be able to get from providers.
5. Medical Inflation
Also known as medical trend, healthcare inflation continues to rise in the US. The cost of healthcare is very important to understand when projecting potential expenses in the future.