Providing valuable health benefits is just asimportant to nonprofit and religious organizations as it isto traditional businesses. 

|

The priorities and struggles ofthese groups with regard to health benefits are unique,though⁠; the flow of revenue, time demands on management,and the characteristics of employees are all materially differentthan what's seen in for-profit ventures.

|

To help nonprofits successfullynavigate their health benefitsoptions, benefitsadvisors must understand these challenges. In PeopleKeep'sNonprofits on Benefits: 2019Report, small nonprofitsand religious organizations shared their thoughts on what theystruggled with most in choosing health benefits.

|

These are their top fivechallenges.

  1. Group health insurance costs

For many organizations, grouphealth insurance is the first and most obvious choice when puttingtogether an employee benefits package. Unfortunately, risingpremiums often put this offering out of reach for many.

|

In 2018, the average cost toinsure an employee reached nearly $7,000, according to KaiserFamily Foundation's most recent Employer HealthBenefits Study. That's anincrease of 20 percent in just the last five years.

|

Perhaps unsurprisingly, then, thevast majority of nonprofits (81 percent) said they struggled withthe cost of group health insurance when searching for a benefitthat fit their needs. In fact, just 18 percent of nonprofits saidthey have ever offered a group health insurance policy.

  1. Diverse employee health needs

Another issue nonprofitsencounter with group health insurance is its one-size-fits-allnature.

|

Because of the niche spaces theyoccupy, nonprofits employ individuals with very differentbackgrounds and very different health needs. Older employeesgenerally prefer more comprehensive coverage, for example, whileyounger employees are more comfortable going without insurance ifthe cost is too steep. Married employees may have health insurancethrough their spouse, and part-time employees may not have coverageat all.

|

It's exceedingly difficult forone small group health insurance policy to accommodate all of theserequirements. For that reason, more than half (52 percent) ofnonprofits say they struggle with finding a benefits package toaddress the diverse health needs of all theiremployees.

  1. Time requirements

Nonprofit directors strugglesignificantly with time management. With a limited number ofemployees and often far-reaching mission statements, nonprofitleadership must juggle several job responsibilities on top ofmanaging health benefits.

|

Related: Nonprofits look for health care reform, but maybenot Medicare for All

|

The demands are so great, 35percent of nonprofits say they don't have time to administer aformal health plan at all.

|

Regardless of the health benefitschosen, nonprofit directors will spend time helping employees getenrolled, fielding questions, and settling claims. They'll also bemeeting with their benefits advisor, accountant and, perhaps, theirinsurance carrier.

  1. Unpredictable revenue streams

By their very nature, nonprofitswork toward fulfilling missions rather than maximizing profit. Thatcan make it challenging to anticipate income and maintainpredictable revenue. This is especially true for small nonprofits,which operate without the budget of larger groups like universitiesor government-backed organizations.

|

Without a stable income,nonprofits struggle with health benefits whose costs they can'tcontrol. Annual renewal for group health insurance policies can beespecially stressful.

|

Twenty-eight percent ofnonprofits cited this element of unpredictability in explainingtheir health benefits challenges.

  1. Employees in multiple states

Though not a common problem, morethan 10 percent of nonprofits reported struggling to find a healthplan that would work for employees in multiple states.

|

Nonprofits in this situation havedifficulty finding one plan that suits all of theiremployees.

|

 Because insurancecarriers are regulated at the state level, many plans don't coverout-of-state workers. National health insurance policies are anoption, but choice is limited and the cost is oftenout-of-reach.

|

Finding solutions for nonprofit clients

|

Benefits advisors must beprepared to navigate these challenges if they want to make inroadsin the nonprofit sector. Without experienced benefits professionalson staff, nonprofits will turn to advisors for help in findingsolutions tailored to fit their unique needs.

|

In some cases, traditional grouphealth insurance may still be the best choice. While very few smallnonprofits take this path, group health insurance is still a goodoption for groups that can afford the premiums and whose employeeshave similar health needs.

|

Other nonprofits may be temptedto substitute a formal benefits plan for an informal healthinsurance stipend. Though adding money to employees' paychecksallows groups to control their budget and limit administrationtime, these stipends are subject to tax and employees rarelyconsider them a true benefit.

|

Another option is a healthreimbursement arrangement (HRA). For small nonprofits, thequalified small employer HRA (QSEHRA) is both budget-conscious andeasy to administer. The nonprofit simply offers employees a monthlyamount of tax-free money and employees buy the health care theywant, including individual insurance premiums. Among nonprofitsthat offer a QSEHRA, more than 90 percent say they'd recommend itto other groups in the sector.

|

Beginning in 2020, anotherHRA the individual coverage HRA (ICHRA) will be available to groups of allsizes.

|

Benefits advisors should makesure to educate themselves on these and other options as theyprepare to assist new nonprofit clients. Understanding the fivechallenges outlined here and being ready to address them withpractical solutions will lay the foundation for a productiverelationship now and in the future.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.