Non-Profit Health Insurance Coverage Options & Considerations
By: Benefits by Design | Tuesday June 15, 2021
Non-Profit organizations, sometimes known as Not-for-Profit (although they technically mean different things), operate a little differently than most businesses. These differences bring along specific considerations when it comes to providing an employee benefits plan.
For example, non-profits have tax-exempt status, but operations and financial statements must be open to the public, so that donors can see that their contributions are being used effectively. This places additional pressure on the organization to be fiscally responsible.
However, non-profits are still kept up and running by hard-working and dedicated employees and volunteers who are looking for the same things as other working Canadians: benefits coverage.
Common Non-Profit Employee Benefits Priorities
At Benefits by Design (BBD) Inc., we insure plenty of non-profit organizations. Over time, we’ve found some consistent benefits priorities that come into play, including:
- Cost containment — many non-profits’ budgets come from government grants and donations, so the ability to control the cost of the benefits plan is often a priority.
- Simple benefits administration — non-profits are busy places, with dozens, sometimes hundreds of staff and volunteers coming and going. Simple administration is crucial!
- Plan stability and sustainability — volatile benefits plans, with costs going up and down, can be difficult to manage, particularly if your non-profit budget relies on government grants or donations. A stable, sustainable plan over the long term is a must.
- Ability to offer coverage to volunteers — many non-profit organizations have hardworking volunteers who they would also like to cover.
- Company values align — many non-profits place importance on the values of the Insurer providing the benefits plan, looking to ensure that they will work well together.
Of course, the priorities and needs of each non-profit organization will vary. However, these are some of the common things that we’ve seen come up when non-profits begin discussions about their benefits plan.
Health Insurance Options for Non-Profits
Non-profits may operate a bit differently than regular organizations, but when it comes to benefits plan, they’re often after the same thing as everyone else: happy, healthy employees
Here’s a couple common ways of providing health insurance for non-profits:
- Extended Health Care (EHC)
- Health Care Spending Account (HCSA)
Let’s take a closer look.
#1. Extended Health Care (EHC)
Extended Health Care (EHC) is the most common method of providing employees with health insurance. EHC is designed to supplement provincial health care plans by covering expenses not usually covered by the province, such as drug coverage, vision care, and emergency travel.
Group Health Insurance 101: What is Extended Health Care (EHC)?
This is a good option for non-profits looking for consistent costs month-to-month. However, this type of coverage is subject to an annual renewal, which can affect the cost of the plan, based on employee’s usage.
Bonus: Our own EHC provider, Green Shield Canada (GSC), is a not-for-profit benefits provider! Talk about company values aligning.
#2. Tight Budget? Try a Health Care Spending Account (HCSA)
Many non-profits operate on strict budgets that are set well in advance, including dollars allocated for an employee benefits plan. To ensure that the annual cost is consistent each year, consider a Health Care Spending Account (HCSA).
Everything You Need to Know About a Health Care Spending Account (HCSA)
Employers set a dollar amount per employee for them to spend on eligible health expenses. Employers can set up different classes and types of employees, which can have different amounts made available to them (such as employees vs. volunteers). Importantly, HCSAs are “pay-as-you-go”, so employers only pay for claims that are actually incurred. Plus, they’re a tax-deductible benefit and the benefits are received by employees tax-free, making it extremely efficient!
Budgeting an HCSA in Action
Let’s do a quick example to showcase how easy you can budget an HCSA:
If you have 10 employees, each with a maximum of $500, then your maximum spend on allocations would be $5,000*. Since employers only pay for what is actually used, it’s likely that you’ll pay even less than that. There are additional taxes and administration fees, but even these can be accounted for, allowing non-profits to accurately budget their annual benefits cost.
To be eligible for coverage under an HCSA, employees must be earning T4 income. As a result, volunteers who are not earning T4 income will not be eligible. In cases where a non-profit is seeking coverage for volunteers, Extended Health Care (EHC) may be a more viable option.
*Plus applicable taxes and/or administration fees.
Health Insurance Options for Non-Profits
There are many options for non-profit health insurance, but finding the right one isn’t always easy. Benefits by Design (BBD) Inc. has a number of options for non-profits, from health insurance, to Employee Assistance Programs (EAP)s for mental health, and more!