Navigating health insurance is already a headache. Throw in over 60 hours of research and administration, and you’ve got yourself a Herculean task. It’s not like nonprofit admins have spare time to become health insurance pros on top of everything else.
Yet, access to employee health insurance is a big deal. Texas alone is home to 150,000 nonprofits. (Everything IS bigger in Texas.) And the vast majority of these organizations have fewer than 25 employees.
So, what’s on the table for smaller-sized nonprofits looking to provide health insurance?
As part of the Plans for Life family, Health Plans for Non-Profits is dedicated to simplifying the process of finding and managing health insurance. We understand the unique challenges faced by smaller nonprofits, and we offer tailored solutions to meet your needs.
Smaller nonprofits, especially those with fewer than 20 employees, are in a tight spot trying to find health options that are both affordable and comprehensive, all while going head-to-head with bigger organizations that can offer more enticing benefits packages. Health insurance costs have increased over 400% over the last decade, keeping up with rising costs and offering a competitive benefits package is becoming near impossible.
It’s probably why only a small chunk of nonprofits, about 18%, manage to offer a group health benefit.
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Fully-Insured Group Health Insurance Plan
For many decades, small organizations (nonprofit and for-profit small business), have leaned towards fully-insured plans. In this setup, the employer generally works with a broker to find a group health plan and then pays a fixed premium to the insurance company, which then handles all the claims from enrolled employees.
Advantages:
Disadvantages:
Level-Funded Group Health Insurance Plan
Level-funded plans work like traditional fully-insured health insurance plans, but part of the premiums go into a claims fund to cover health expenses for employees. If there's money left over at the end of the policy term, it could get credited back to the employer, offering potential savings.
Advantages:
Disadvantages:
Extra Cash in the Paycheck
Some nonprofits opt to give extra cash to employees via their paychecks instead of providing a group health plan. While well-meaning, this option often doesn’t translate into the intended value.
Advantages:
Disadvantages:
Individual Coverage Health Reimbursement Arrangement (ICHRA)
ICHRA allows employers to reimburse employees for their health insurance premiums up to a fixed amount, offering flexibility to both the nonprofit administrator and their employees.
Advantages:
Disadvantages:
A decade ago, small group health plans were substantially cheaper than buying an individual health plan. Today, the price of a small group health plan is relatively the same as individual plans on the health insurance marketplace. Here’s a snapshot of pricing in Texas:
Small group plans cost about 8% more than individual health plans.
Small group plans are about 9% less than individual health plans.
Costs are about the same.
For small nonprofits in Texas, figuring out health insurance is like walking a tightrope between tight budgets and attracting great talent. We’ve got three main options: Fully insured health plans, level-funded health plans, extra cash, and ICHRAs.
Key Takeaway: Dealing with health insurance for small nonprofits is a juggling act of affordability and complexity. Knowing your options is the first step to finding a solution that matches your goals and keeps your team happy.
Navigating health insurance is already a headache. Throw in over 60 hours of research and administration, and you’ve got yourself a Herculean task. It’s not like nonprofit admins have spare time to become health insurance pros on top of everything else.
Yet, access to employee health insurance is a big deal. Texas alone is home to 150,000 nonprofits. (Everything IS bigger in Texas.) And the vast majority of these organizations have fewer than 25 employees.
So, what’s on the table for smaller-sized nonprofits looking to provide health insurance?
As the U.S. job market tightens, nonprofits seeking to hire the best and brightest candidates face greater challenges. Offering health insurance benefits to employees has become a powerful lure.
Offering health insurance is a top contributor to job satisfaction and retention. Happy employees perform their jobs better and are more productive.
If your nonprofit employs 50 or more full-time employees, you don’t have to offer health insurance, but under the Affordable Care Act (ACA), you’ll be penalized if you don’t provide a minimum level of insurance coverage. The ACA does not require you to provide health insurance to your part-time employees.
