Is Health Insurance Coverage for Non-Profit businesses possible?

Non-profit organizations operate a little differently than most businesses. These differences necessitate specific considerations when devising an employee benefits plan. Non-profits organizations don’t pay taxes, but they have to show their finances to the public so donors can see how their money is used. These differences bring along specific considerations when it comes to providing an employee benefits plan.

Typical Priorities for Insurance Benefits in Non-Profit Organizations

Generally, Non-Profit organizations are operated by dedicated employees and volunteers who are looking for the same things as other working Canadians: insurance coverage. Choosing an insurance package for employees also requires a lot of consideration to suit the particularities of this organization:

Cost optimization: In non-profit organizations, where a big chunk of the money comes from government grants and donations, it’s super important to keep a lid on costs, especially when it comes to stuff like employee benefits. So, controlling how much these benefits cost is a big deal for them. For non-profit organizations, costs going up and down, can be difficult to manage, particularly if your non-profit budget relies on government grants or donations. A stable plan to control cost over the long term is a must.

Ability to provide insurance for volunteers: Numerous non-profit entities rely on dedicated volunteers whom they aim to include in their coverage plans.

Alignment of company values: Many non-profits prioritize the compatibility of the insurer’s values with their own, seeking assurance that their partnership will be harmonious.

Certainly, the priorities and requirements of each non-profit organization may differ. However, these are among the typical considerations that arise when non-profits initiate conversations about their benefits package.

For Nonprofits Beginning Development of a Health Insurance Package

There are 2 common ways of providing health insurance for non-profits:

Extended Health Care (EHC)

Health Spending Account (HSA)

1. Extended Health Care (EHC)

Extended Health Care (EHC) is the most common method of providing employees with health insurance. EHC coverage reimburses medical expenses and treatments for plan members and their dependents that aren’t covered by their provincial health care plan. such as drug coverage, vision care and travel.

This is a favorable choice for non-profits looking for stable costs on a monthly basis. This coverage typically undergoes an annual renewal process, where the cost of the plan may be influenced by the usage of employees.

2. Health Spending Account (HSA)

Most non-profits operate limited budgets, which make it difficult to choose an insurance package. To ensure that the annual cost is consistent each year, consider a Health Spending Account (HSA) at Wellbytes.

By HSA, employers set a money 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, HSAs are “pay-as-usage”, 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!

HSA in Action

Let’s do a quick example to showcase how easy you can budget an HSA:

If you have 10 employees, each with a maximum of $100, then your maximum spend on allocations would be $1,000*. 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 HSA, 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.