Health insurance, life insurance, retirement accounts, paid time off and other employee benefits are offered by many modern businesses; however, research shows that these benefits are not as common in the nonprofit sector. According to a Nonprofit Benefits Benchmarking Study published by the BDO Institute for Nonprofit Excellence, 50 percent of responding nonprofits reported that they do not offer any employee benefits.
Nonprofit organizations generally operate on a tight budget making it more challenging to provide employees with competitive compensation and a full benefits package. Some nonprofits still rely heavily on volunteers to further their cause but few find long-term success with this method due to a shrinking talent pool.
Many nonprofit organizations are able to offer many of the same employee benefits as their for-profit counterparts and must also meet many of the same legal rules and regulations. Before deciding to build a competitive employee benefits package, it is important to understand how the Affordable Care Act (ACA) impacts nonprofit organizations, the various types of benefits and how to select a group benefits provider.
Importance of Establishing Employee Benefits
Businesses offer benefits to employees for a wide range of reasons. Benefits show employees that the organization is invested in both their health and future. In turn, better overall health helps reduce absenteeism in the workplace.
Benefits can also help an organization differentiate from its competitors. A strong employee benefits package can attract and retain top talent. According to the American Institute of CPAs (AICPA), 80 percent of employees reported that they would keep a job with benefits rather than accept a new job that offered more pay but no benefits.
How the ACA Affects Nonprofits that Offer Health Insurance
Like all other employers in the U.S., nonprofit organizations are directly affected by the Affordable Care Act. However, the size of the organization dictates which provisions of the ACA the nonprofit must follow. The ACA does not require nonprofits to provide healthcare coverage if the business has fewer than 50 full-time equivalent (FTE) employees. To be considered FTE, an employee must work 30 hours or more per week or a minimum of 130 hours per month.
Employers with 50 or more FTE employees must offer medical coverage to workers or risk hefty fines and other penalties. If a business offers health insurance to employees, it must offer it to all eligible workers. The Affordable Care Act requires most employers to provide notice to employees explaining available options for health insurance. Employers with more than 50 employees must report certain coverage details to both employees and the Internal Revenue Service (IRS).
Types of Employee Benefits Offered by Nonprofits
Salary is not the only important component of an employee compensation package. Nonprofit organizations that want to compete for the best talent must also consider building a comprehensive benefits package that will attract new candidates and retain existing workers. Some of the top incentives that nonprofits may offer to employees include:
Group Health Insurance
Group health insurance is one of the most common employee benefits offered by businesses. A standard group health insurance plan provides employees with health insurance coverage at a lower price as health insurers experience less of a risk if the cost is spread across all members of the group health plan.
Paid Time Off
Paid time off (PTO) is used to provide employees with compensation for personal time off, federal holidays, vacation days, sick leave and maternity and paternity leave. Employees often appreciate the flexibility that PTO provides, and human resources (HR) saves time by only having to track PTO hours rather than tracking sick, vacation and personal days separately.
Retirement benefits can help employees save for their future using tax-advantaged accounts. There are many types of retirement plans, such as IRAs, 401(k)s, 403(b)s, profit-sharing and defined benefit plans. Employers can also choose to make contributions towards their employees’ retirement. Contributions may be matched to the employee’s contribution or be set up as a specified percentage.
Incentives and Bonuses
Some nonprofits choose to provide other incentives or bonuses to employees to increase job satisfaction and motivation. These “extras” encourage employees to work towards a goal, whether it is a monetary reward or incentives such as additional vacation days. Workplace incentives could also include stock options, profit sharing opportunities, raises or signing bonuses.
Other Employee Benefits
There are also types of employee benefits that should not be overlooked when building an employee benefits package. Life insurance policies, dental coverage, vision coverage, college grants and scholarships, remote work flexibility, covered travel expenses, investment opportunities, specialist services, student loan repayments and similar benefits can be highly attractive incentives for both job candidates and employees.
Open Enrollment for Nonprofit Health Insurance
Open enrollment refers to the annual period in which a business can enroll in a nonprofit health insurance plan. During the open enrollment period, employees have the option to change their medical coverage. Coverage starts on a set date following open enrollment and generally runs for one full year. Many businesses have open enrollment in the fall, and health coverage is effective starting January 1 and runs through December 31.
Although a nonprofit can enroll in a group health insurance plan at any point during the year, the open enrollment period serves as an optimal time to reevaluate existing healthcare coverage benefits or begin offering these benefits to employees. The open enrollment period for health insurance coverage generally runs from November 1 to December 15.
Speak With An Employee Benefits Consultant
A nonprofit organization’s employees are their greatest assets. Businesses in the nonprofit sector can show their appreciation by offering an attractive employee benefits package that includes a range of incentives, such as medical insurance, retirement benefits, PTO and various discounts and bonuses.
When choosing benefits and selecting a group benefits provider, it is important to make strategic decisions that will help in the growth of the organization. A licensed and experienced benefits consultant can help nonprofits navigate the complex world of employee benefits. For more information or to speak with a qualified consultant, contact Business Benefits Group by phone at (844) 201-3612 or request a consultation online today.