Non-profit employers can assess group health insurance for eligible participants and an employer Health Spending Account (HSA) for eligible medical reimbursements. The actual policy or plan determines coverage; unpaid volunteers do not automatically qualify as employees.
Compare insurance with an HSA allowance
Extended health insurance covers specified services under the policy’s limits, exclusions and participant rules. Premiums and renewal terms depend on the insurer’s agreement.
An HSA defines a reimbursement allowance rather than transferring unlimited medical risk to an insurer. Budget for reimbursements, administration, applicable taxes and other actual obligations.
Under Wellbytes’ current Pay-As-You-Use model, administration is 10% of eligible reimbursements plus applicable taxes. The employer also funds the reimbursements.
Separate employees from volunteers
Document eligible participants and employee classes. A volunteer does not become an employee merely by being assigned a benefit class, and a T4 slip alone does not establish PHSP qualification. Ask the insurer about separate volunteer coverage where needed.
Apply the organization’s tax rules
Non-profit organizations and registered charities have different tax and reporting rules. Income-tax exemption depends on the applicable conditions, and other filing obligations can remain.
Qualifying Private Health Services Plan (PHSP) benefits are generally non-taxable federally to employees; Québec has separate provincial rules. A tax-exempt employer should not assume an income-tax deduction produces a cash saving.
Build a complete benefits budget
Illustration: ten employees with a $100 maximum benefit each create a $1,000 reimbursement ceiling for that period. Full use at a 10% administration rate adds $100 before applicable taxes and other agreed charges. Actual use may be lower, but that is not guaranteed.
Compare written quotes and plan documents against the organization’s funding, employment commitments and participant needs.
