The Covid-19 pandemic has had an undeniable impact on what amounts to every single system in our world. The labor market is no exception.
And as public health continues to be a main topic of conversation and healthcare costs continue to rise, a benefits package that includes health insurance will remain at the top of would-be employees’ lists of must-haves.
So how can nonprofits offer affordable healthcare options to their employees?
Alternative Options for Employee Benefits
As nonprofits, it’s often difficult to know where our income is coming from. Over the next year, the next quarter—even the next month.
And because we work so hard to be able to offer paid positions, it can be daunting to think about adding health insurance coverage to the package.
Here are three alternatives to traditional group plans that may work for nonprofits with smaller budgets.
Health Reimbursement Arrangements (HRAs)
Health Reimbursement Arrangements—or HRAs—are monthly allowances set aside for every employee to draw from as reimbursement for medical expenses. In this setup, employees can purchase their own health insurance. Instead of paying premiums set by an insurance company, a nonprofit organization can set its own budget and dictate how much it contributes to employees’ HRA funds.
Neither contributions by the organization nor reimbursements to employees are subject to taxes.
HRAs are a flexible option. Employees can draw from the funds to cover things like insurance premiums, dental coverage, prescriptions, medical devices, or direct medical costs.
Much like credit unions, insurance co-ops are member-owned organizations. Made up of many owners and contributors, they are nonprofits in and of themselves. Costs are kept low because they aren’t padded by administrative expenses. They’re also often able to negotiate for better pricing with insurance providers than their privately-held counterparts.
Health insurance co-ops are usually entered into and administered by groups of employers—hospitals, universities, or groups of nonprofit organizations that serve similar purposes, for example.
Existing co-ops are spread across the country, and they’re subject to state-specific rules and regulations. This means that certain important protections for members may not be in place, depending on the location of the co-op.
If they’re active in your area, however, they can be a draw for employees. So they’re worth looking into and investigating whether or not their structure might work for your organization.
High-deductible plans are exactly what they sound like—health insurance plans with a higher deductible than is standard. This means that employees will need to cover more costs out-of-pocket before their insurance coverage kicks in.
High-deductible plans are attractive to employers because they come with lower premiums. This makes sense—insurance companies are effectively on the hook for far less coverage.
A common selling point for high-deductible plans is that they encourage employees to “shop around” for cost-saving care. Of course, this line of logic assumes that your employees would otherwise be seeking healthcare beyond what they need—in reality, there’s simply very little basis for that assumption.
Still, high-deductible plans are attractive when your budget is on the smaller side. And they aren’t always a losing situation for your employees, either; you can combine high-deductible plans with a health savings account (HSA) in the amount of the deductible to help offset costs. This covers your employees while often still saving your organization money.
Seek Input Before Choosing Your Nonprofit Benefits Package
Don’t be afraid to shop around for a broker who can help walk you through the process. Covering your employees’ needs and retaining the talent that can truly serve your community is a top priority!
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