The Struggle Is Real: Pre-Funding for 21st Century Healthcare Costs

Health care benefits costs

There’s an old saying that “a rising tide lifts all boats,” but when we talk about the costs of health care, benefits and retention packages for employees, the ever-increasing expenses are making it difficult for credit unions just to tread water. The National Conference of State Legislatures estimates that the cost of family coverage rose 5% in 2018 and offsetting these increases has become even more difficult with recent accounting changes.

Benefits pre-funding, to summarize, is any account that a credit union establishes under NCUA Part 701.19(c) to offset the costs of their “employee benefit plans.” The regulation allows credit unions to step outside their normal permissible investments to achieve higher returns, so long as the investment is deemed “reasonable given the [federal credit union’s] size, financial condition and the duties of the employees.”