Each year, directors sit down with their boards to review the annual budget of the nonprofit. Projections are made for revenue and the financing and spending significant increases from last year are discussed. Too often, which includes health increases by 10 percent, 20 percent or more.
To get control over the budget of the health care nonprofit, many nonprofit management teams offer a switch of coverage of group health insurance to a section 105 Plan reimbursement of medical expenses. Section 105 Plans are the basis for individual health insurance reimbursement.
Why the switch? Individual reimbursement of health insurance is a smart way to control costs while providing employees with a benefit for the valuable and appreciated health. Small nonprofits work hard for every penny the organization raises. This approach allows healthcare dollars go further.
This brings us to where you are today. Your management team is ready to make the switch, but how do you explain a plan to the Board of Article 105? Here are eight quick topics to start the conversation
Note -. This article is from our new eBook, The Nonprofit Guide for individual health insurance reimbursement. To download the complete resource here.
1. A plan of Article 105 is a benefit to the formal health
Using a map of the Article 105, the organization offers a formal provision of tax-efficient employee health. But, it works a little different than offering traditional health insurance coverage.
Instead of contributing to a group health insurance policy, the association uses a Plan Section 105 to give employees an allowance to spend on health insurance. Employees buy their own health and are reimbursed by the Section 105 Plan.
2. Employees have access to quality assurance of health
The employees of medical and financial needs. A one-size-fits-all health insurance policy does not always meet the unique needs of your workforce. With a repayment program, employees choose a plan and choose their carrier, physicians, and the level of coverage.
The use of a plane of section 105, the association gives employees a "budget" to spend on health. Insurance
Related: How individual health insurance work of redemption for nonprofits [FAQs]
3. health care costs are reduced by 20 to 60 percent
with a plan of Article 105, the organization of games and control the amount of the contribution and, average individual costs of health insurance up to 60 percent less than group health insurance in every state
These two factors create cost savings and predictability of costs non-profit organizations
related: .. insurance cost comparison tool
4. the costs are controllable and predictable
with a rebate program, there are no unpredictable annual increases and no minimum requirements of assessment. Any budget increase or decreases are in the hands of the organization.
This type of model provides cost predictability and accountability.
5. Employee costs are lower, too
On average, employees will pay less out of pocket for the same coverage. As mentioned earlier, individual health insurance costs less, and eligible employees can receive federal grants to reduce their premium more.
6. The advantages can be adapted to support HR objectives of the organization
The association may adapt the plan of Article 105 to meet the hiring and retention of organizational objectives. For example, the association may design the plane of section 105 to provide different amounts of allocation by category of employees and / or family status
Related :. Section 105 of the sample Plan reimbursement of medical expenses
7. Using a map to Article 105, the repayments are tax
As for contributions to a group insurance plan, repayments through a section 105 plan are not taxable.
8. Software facilitates administration and compliant
Nonprofits use Article 105 Software (as PeopleKeep) to administer the health care by 5 to 10 minutes per month.
Software also automates compliance with the ACA and other federal requirements (ERISA, HIPAA, COBRA and IRS if applicable)
Tip -. This eBook can also help the committee or board members understand the concept. Download the free PDF here.
Conclusion
As nonprofits move anyone reimbursement of health insurance, it is common for leadership, board of directors, and employees have questions about what a Section 105 Plan is and how it works.
What additional questions do you have? Leave a question below.
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