Although nonprofit employers believe offering health insurance to employees is valuable, many find that it is not cost-effective, according to a survey by Zane Benefits Inc.
Respondents say offering benefits is primarily for recruiting and retention; however, it has become too expensive, especially among nonprofits that are financially struggling. Among respondents with fewer than 50 employees, only 47 percent provide employer-sponsored coverage.
In an effort to battle costs, Zane Benefits recommends that nonprofits consider moving toward stand-alone health reimbursement accounts rather than traditional health plan models. HRAs are flexible, more sustainable for nonprofits and allow for more cost controlling.
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When switching to a stand-alone HRA model, a nonprofit would first cancel the current group health insurance plan, if one is available, and then define the amount the organization can afford for health benefits, Zane Benefits said. With a stand-alone HRA plan, nonprofit employees can buy their own individual or family policies and choose how they spend their health care costs.
Stand-alone HRAs give nonprofits more control because they can decide the amount of allowances, and the fixed rates provide more predictability, Zane Benefits said. A nonprofit can also decide whether unused balances are rolled over or lost at the end of the year as well as the types of medical expenses eligible for reimbursement, who is covered and cost-sharing options.
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