Providing health insurance benefits is an excellent way for nonprofits to attract and retain top talent. However, budget restrictions can get in the way of offering a health insurance plan that is both affordable and valuable.
Today, approximately 87 percent of nonprofits offer some type of medical plan to their employees, according to the Nonprofit Times. Health insurance is considered one of the most sought-after employee benefits across all industries.
Improving Health Insurance Plans For Nonprofits
While offering any type of medical benefit is a great start, nonprofit organizations can enjoy a wide range of advantages when they take the necessary steps to improve their health insurance plan.
Offer HRAs And HSAs
With so many different health insurance plans available, it is easy to get confused. Two common plans that are often mixed up include health reimbursement arrangements (HRAs) and health savings accounts (HSAs).
An HRA is an employer-sponsored health arrangement between an employer and an employee. Under this arrangement, the employer provides the employee with an allowance and gets reimbursed for any out-of-pocket medical expenses and insurance premiums.
At the end of the year or when the employee leaves the organization, any leftover funds remain with the organization.
Unlike an HRA, which is owned by the organization, an HSA is owned by the employee. This special account allows employees to make pre-tax contributions that can only be used for eligible medical expenses.
Since HSAs are owned by the employee, any contributions made to the account remain with the employee even after they leave the organization.
Offering HRAs and/or HSAs to employees is an effective way for nonprofits to help their employees pay for some or all of their medical expenses. Nonprofit organizations can also enjoy certain tax incentives when they choose to offer tax-advantaged health plans.
Compare Individual vs. Group Insurance
Group coverage refers to health insurance provided to employees by an employer or association. When employees purchase their own health insurance outside of the workplace, it is called individual coverage.
With group insurance, employees typically have the choice of different health insurance plans in which their employer pays some or all of the monthly premium. Businesses often deduct a share of the premium automatically from employee paychecks each pay period to streamline the payment process.
Individual health insurance plans require more planning as employees must shop for a plan and make the purchase themselves during an open enrollment period. Individual policies also tend to be more costly than group insurance.
One of the best ways that nonprofits can improve their health insurance offerings is by understanding the differences between individual and group insurance. This information can then be concisely explained to workers allowing them to make an informed decision.
Combine With Wellness Programs
While health insurance can be useful for diagnosing, treating and managing existing medical conditions, wellness programs can help prevent illnesses and injuries from developing in the first place.
When combined with a health insurance plan, a wellness program can promote a healthy lifestyle among employees and address the physical, emotional and mental needs of participants.
There are many types of wellness programs that can benefit a workplace, such as on-site fitness centers, smoking cessation programs, paramedical services, transit options, yoga classes, healthy snacks and employee assistance programs.
Invest In Short- And Long-Term Disability
When looking for ways to improve their health insurance plans, nonprofits should consider the benefits of short and long-term disability. When an employee becomes ill or injured and cannot return to work, disability insurance can provide some financial assistance during recovery.
Employers are not legally required to offer disability insurance to employees in every state, but offering this benefit can give nonprofits a competitive edge.
Short-term disability insurance generally begins when an employee has used all of their paid time off (PTO). The duration of short-term disability is dependent on the plan but typically spans from a few weeks up to one year.
Long-term disability insurance is used by workers who have exhausted their short-term disability benefits due to a serious injury or chronic illness. A long-term disability policy generally covers about 60 percent of an employee’s salary and can last a few months, years or for the rest of someone’s life.
Explore Level Funding
If a nonprofit has a relatively healthy workforce, level funding can be an excellent option to explore to improve health insurance plans and achieve significant cost savings.
Level funding is a type of group health insurance that is similar to a fully insured product but provides businesses with greater opportunities to save money.
With level funding, a business pays a fixed monthly premium into an account. The money in the account is then used to pay any claims from employee health care expenses. If there is any money left over at the end of the year, it is returned to the organization. In some cases, an employee will make claims that exceed the amount of funds in the account. When this happens, the health insurer will generally cover the difference.
Speak With A Benefits Consultant
Nonprofits often struggle with limited resources, making it difficult to offer a comprehensive employee benefits package. The good news is that it is possible to improve their health insurance plans by making some key changes. To learn more about health insurance for nonprofits or to schedule a consultation with an experienced benefits consultant, contact Business Benefits Group online today.