As a nonprofit organization, the cost of providing health insurance to employees can be prohibitive. And yet, it is vital for nonprofits to offer health insurance for recruitment and retention of key employees. Health Reimbursement Arrangements (HRAs) offer nonprofits a tool to offer quality health benefits at a lower cost.
Nonprofits can utilize a standalone HRA as an alternative to group health insurance, or can use an integrated HRA to significantly save on the cost of their group health insurance plan. Here are four real-life case studies of how nonprofits are using HRAs to offer cost effective health insurance.
Washington Nonprofit Offers Health Benefits For The First Time
Love INC of Yakima is a faith-based non-profit in Washington. With only one full time employee, Love INC was looking for an alternative to traditional group health insurance that would allow them support a valuable member of their organization.
In February of 2013, Love INC implemented an HRA, and was able to offer health benefits for the first time without the steep cost of a group health insurance plan. The result has been low maintenance, tax-free reimbursement of the full-time employee's insurance premium and medical care expenses.
Colorado Nonprofit Sees Employee Health Benefits Savings
Youth for Christ (YFC) is a faith based nonprofit based in Englewood, Colorado with over 200 employees. YFC had a partial self-funded health insurance plan that became too costly. Like many non-profit organizations, YFC needed competitive benefits for recruitment and retention that also met the organizational budget. To solve this challenge, YFC switched to an HRA in November 2009. Now, their employees receive a monthly allowance they can use toward their individual health insurance premiums and medical expenses. The nonprofit is able to completely control their health benefits budget.
Massachusetts Housing Nonprofit Avoids High Group Health Insurance Costs
The Massachusetts Affordable Housing Alliance (MAHA) is an affordable housing nonprofit based in Dorchester, MA. MAHA depends on health benefits for recruiting and retaining top employees. When their group health plan exceeded internal budgets, MAHA needed a new health benefits solution that offered the same level of health care for its employees while remaining within budget.
In early 2010, MAHA switched to a higher deductible group plan and implemented an integrated HRA. This strategy allowed them to continue offering the same level of health insurance coverage but with a reduced financial impact for the nonprofit and employees.
Washington DC Historical Non-Profit Sees Significant Savings on Health Insurance
The Society of the Cincinnati is a historical non-profit in Washington DC with over 20 employees. With group health insurance costs rising considerably each year, The Society of Cincinnati needed a new health care solution that was affordable yet still offered employees the same level of benefits.
The Society of the Cincinnati reduced the amount they were paying for the group health insurance premium by raising the deductible, and implementing an integrated HRA to cover the difference in out of pocket costs. This change in the structure of their benefits resulted in $20,000 cost savings for the nonprofit.