Offering employees health benefits is important for businesses in all fields to do, but nonprofit organizations often struggle to provide healthcare. Research conducted in 2019 found that only 18% of nonprofit organizations offer group health insurance. Over 80% of these organizations said that they couldn’t afford group health insurance, while others said that they have employees with a wide variety of needs, and they had difficulty providing for all of them. If you run a nonprofit and want to offer health insurance but are unsure how you can manage it, you should know that traditional group health plans are not the only route you can go to provide your employees with health benefits.
Do You Have to Offer Health Benefits?
In general, the choice to offer your employees health insurance is up to you. You should be aware, though, if you have 50 or more full-time employees, you do not have to offer health insurance, but you will be penalized for not offering some level of coverage. If you have fewer than 50 employees, then you are not required by the ACA to provide insurance, but there is an incentive for you to do so, which we will discuss later.
The main issue is that you really should offer healthcare to your employees, if at all possible. Offering health benefits is important because it helps keep your employees healthy and happy. Providing healthcare is beneficial for you, as well: studies show that offering health benefits is important for hiring and retaining top talent.
Nonprofit Health Benefits Options
Many small nonprofits simply do not have the resources to offer traditional group health insurance to their employees, but it does not mean they do not want to. It is a major challenge for most, but fortunately there are other ways to provide benefits:
SHOP Marketplace Group Plans
If you’re a small nonprofit with fewer than 50 employees, you can choose to offer a group health plan through the Small Business Health Options Program (SHOP). These affordable plans have four tiers of coverage, like individual ACA plans, and you have the ability to choose how much or how little you want to contribute to your employee’s premiums.
One of the best things about SHOP for smaller nonprofits? The tax advantages. You may be eligible for the Small Business Health Care Tax Credit if you have fewer than 25 full time employees, pay average annual wages to your employees of less than $50,000 per full time employee, and cover at least 50% of your full-time employees’ health insurance premium costs. You’ll be eligible for the minimum tax credit if you meet the above criteria; you’ll be eligible for the full tax credit if you have fewer than 10 employees who are paid less than $25,000 per year. The credit for tax-exempt nonprofits could be worth up to 35% of the cost of your contributions to your employees’ health insurance premiums.
A health reimbursement arrangement (HRA) is a way for employers to reimburse employees for medical expenses such as health insurance premiums and out-of-pocket expenses. The best part is that HRAs are tax-free! You can choose a certain tax-free monthly allowance to provide to your employees which rolls over each month. This will allow you to budget each month for employee health benefits, while giving your employees the option to choose the coverage that best suits their specific needs. There are 3 different kinds of HRAs:
- Qualified Small Employer HRA (QSEHRA)– for employers with fewer than 50 full-time employees. These HRAs have a limit on the monthly amount you can offer. In addition, you cannot offer a group health plan alongside a QSEHRA.
- Individual Coverage HRA (ICHRA)– for employers of all sizes, these HRAs can function as a stand-alone benefit or as a separate option in an organization’s health benefits program, alongside group health insurance.
- Group Coverage HRA (GCHRA)– employer-funded medical reimbursement plan linked with a group health insurance plan, usually a high-deductible plan.
How EZ Can Help
Depending on the size of your nonprofit, you might have different options for offering health benefits. EZ.Insure works with businesses and organizations of all sizes and types, and understands that each business has different needs. We work with the top-rated insurance companies around the country and can compare plans in your area and help guide you to the best option for your nonprofit organization. Because we care about helping others and not making a profit off them, we offer our services for free. To get free instant quotes, simply enter your zip code in the bar above, or to speak directly with one of our licensed agents, call 888-998-2027.