Human resources in mental health

Human resources in mental health practices

Posted in Developing Human Resources
Tagged ,

Does any new practice owner decide to begin a practice so they can develop a Human Resources in outpatient mental health? I doubt it. So why does the management of human resource benefits eventually become necessary?

Why we got into Human Resources

At first, I was able to find people to hire who did not require benefits. Some had a spouse whose employer gave them the benefits they needed. Others purchased the insurances and retirement benefits on their own. But that did not last.

Eventually, we found that we were interviewing potential employees who could not join us because they needed health insurance. We were competing with the job the candidate already had. Many of those jobs, for example, in hospitals or in not for profits, had pretty robust benefits packages. To land those employees, we needed to up our game.

Developing and maintaining a health insurance program

Larger companies have Human Resource departments to build benefits systems. We had to figure it out on our own. 

The first benefit we felt we needed was health insurance. As I recall, the first people I talked to were my accountant and attorney. What I was seeking was an insurance broker who could help us develop a health insurance program we could afford. Most accounting and legal firms are small businesses with the same needs for benefits as we had. And they know people. We got started.

Once connected to the broker, the process was one of allowing myself to become educated about the rules that govern what an owner can do. 

How employer health insurance programs work

In our case in Illinois, the employer must pay at least 25% of the premium cost for each employee who signs up. Additionally, all employees must be allowed to join the program. Furthermore, employees’ family members can join the program. If they do, the employer is not required to contribute to premiums for the additional family members. 

Let me highlight two consequences of this benefit. First, not all employees will use this benefit. Some will continue to use a spouse’s health insurance or purchase a policy on their own. Second, as you can imagine, the costs to the employer add up. 

Several practices I know deal with the inequity and the employer costs by charging back the employee for these premium costs. In that way, the employee gets the benefit but is paying 100% of the costs. This approach sets up an if-you-want-it-you-pay-for-it situation. We did not do it that way. Instead, the company absorbed the costs.  

Experiments in Human Resources in mental health

New broker

After several years with one insurance broker, we changed to a different one. This change came about due to a conversation with a fellow practice manager. In comparing notes, I felt he was getting better service than I was. We made the change. 

In truth, the new broker was marginally better. We did get some additional ideas, but soon we were in the same rut. I do not think I would do it again.

Farming out HR

One year we decided to farm out our HR to a local benefits management company. Essentially, what happens is that all our employees become the HR company’s employees and use their benefits structure and contracts. 

Hiring an HR benefits management firm has some pros, but in the end, the cons made us take it over again after one year. The positives were that they did have lower employee and employer costs for their benefits. Additionally, they had a few elective insurances, such as short and long-term disability insurance, that some of our employees chose. 

The cons were these. The health insurance policy was a grandfathered policy that did not have all the coverage that post-Obamacare insurances must. This situation made me uncomfortable, even though, to my knowledge, these limited benefits did not injure our employees. I still wanted to provide the best available benefits to my employees.

Additionally, we did not realize how this move would affect our Worker’s Compensation Insurance premiums for that year. This issue gets a little technical, so hang in there with me. 

Worker’s Comp works like this. Every company is required to pay monthly Worker’s Comp premiums for each employee. Previous claims made against the company set the premium cost. 

What we did not know was that Worker’s Comp has a rule that says that a new company must pay the highest rate for the first three years of payments. When Work’s Comp sees no fees for a year, they defined us as a new company. For three years after taking over benefits, we had to pay a higher Work’s Comp premium. This error cost the company thousands over those three years. 

In the end, it was a failed experiment. The savings were not significant enough to warrant the issues I have enumerated above. 


Once we had our health insurance benefit in place, we added other benefits. For example, we set up a structure for our employees to purchase life, disability, and some other elective insurances through their payroll deductions. The company did not contribute but just managed the benefits through our payroll and broker. 

We also set up a SIMPLE IRA retirement benefit program. In this plan, the employer has two options. The employer can either:

  • match the employee’s contribution, up to 3% of the employee’s salary or
  • the employer can make a flat 2% contribution for each employee, whether they choose to participate or not

The rules for this program are more straightforward, and the costs less than a 401K plan. 

Human resources in mental health

Any human resource benefits program an employer creates costs the company. We felt that we needed to develop these structures to get the quality of employees we thought we wanted to join us. I have no regrets about investing in these benefits for our staff. I see it as one more way of investing in our team.

Of course, human resources is also about the process of recruiting, interviewing, hiring, and managing staff. I have written about those topics in these posts:

Recruiting the best employees for your mental health practice

Conducting excellent job interviews for clinical staff 

Hiring new clinicians: Building a staff one hire at a time

How we used regular meetings for building our culture

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.