Health benefits for religious nonprofit organizations

Whether you run a church, mosque, synagogue, or other religious nonprofit, your staff’s health and happiness are top priorities. That’s why taking the necessary steps to attract motivated workers and retain them for years to come is crucial. Learn how to build an enticing health benefits package that serves the needs of your place of worship in this complete guide.

Learn how PeopleKeep can help you build an affordable and attractive health benefits package for your religious nonprofit organization.

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ATTRACT AND RETAIN WORKERS

Support your staff’s health and well-being with customized perks

No two nonprofits are the same. And religious organizations are no exception. But, like all businesses, offering comprehensive benefits is an excellent way to attract talented individuals to your organization.

For your religious professionals to provide the best spiritual and moral guidance to your organization’s members, they must be healthy and feel supported by you. Since nonprofits hire people of all ages, offering personalized benefits is vital to your company’s success. You may think this isn’t feasible, especially as a small nonprofit. But thankfully, you don’t need a large budget to offer your staff employee benefits at your faith-based organization.

By taking advantage of personalized benefits, you can support all your employees’ needs—regardless of their age or your company’s budget. Tailoring your benefits package to your staff's needs will highlight your commitment to their overall health and well-being and increase your retention rate.

WHY OFFER BENEFITS?

Why should religious nonprofit organizations offer health benefits?

As a religious institution, you likely focus on your mission and taking care of others. But are you doing enough to care for your staff?

Religious organizations employ almost 1.12 million individuals in the U.S. Even though the federal government doesn’t require small businesses to offer health insurance if you have fewer than 50 full-time equivalent employees (FTEs), that doesn’t mean it isn’t a good idea. If there are many faith-based companies in your area, you must offer competitive healthcare coverage to maintain an edge in a tight labor market.

You may feel you can’t offer a robust health benefit without a big budget. But actually, there are more affordable options than ever before. Allocating a portion of your company’s budget toward health benefits lets job seekers know you care about employee well-being. It also gives them peace of mind knowing they’ll have access to health insurance coverage when needed.

Plus, it’s worth it. Our 2024 Employee Benefits Survey found that 81% of employees said an employer’s benefits package is an important consideration when deciding whether to accept a new job. Employees ranked health benefits as the most important perk, with 92% of employees valuing them.

With nonprofits' 19% turnover rate—higher than any other industry—providing health benefits is a great way to improve satisfaction, engagement, and retention.

HEALTH BENEFIT OPTIONS

Health benefit options for religious nonprofit organizations

Running a small faith-based nonprofit can be challenging due to a tight budget, limited resources, and a potentially small staff size. But you can still support your religious professionals in the best way possible, so they’ll be in great shape to care for your members.

Luckily, many church health plan options can provide comprehensive coverage within your budget. Below, we’ll explore your options for offering your church employees a health benefit.

Health reimbursement arrangements (HRAs) for faith-based nonprofits

Health reimbursement arrangements (HRAs) are customizable health benefits that offer the best value for your nonprofit. With an HRA, church leaders of all sizes can reimburse their employees tax-free for qualified out-of-pocket medical expenses. Examples of eligible expenses include prescription drugs, over-the-counter medicine, emergency care, individual health insurance premiums, and more.

Setting up an HRA is simple. You set a monthly allowance that your eligible employees can spend on healthcare items and services. Once employees make an approved purchase, you reimburse them tax-free up to their allowance amount. For added flexibility, you can even choose what medical expenses are eligible for reimbursement.

Because they’re customizable, offering an HRA instead of group health insurance is an excellent way to better attract and retain employees to your faith-based nonprofit—no matter your staff size, budget, or location.

The following are three common types of HRAs that church leaders can offer at their nonprofits:

  • Qualified small employer HRA (QSEHRA): The QSEHRA is for employers with fewer than 50 full-time equivalent employees (FTEs) who don’t offer any type of group plan. The QSEHRA has maximum annual contribution limits but no minimum limits. If your employee’s QSEHRA allowance is unaffordable, it can also coordinate with premium tax credits. Employees must have a health plan with minimum essential coverage (MEC) to participate in the benefit.
  • Individual coverage HRA (ICHRA): An ICHRA is for nonprofit organizations of all sizes. It has no maximum contribution limits and allows you to vary allowance amounts by employee class. Suppose you’re an applicable large employer (ALE). In that case, an ICHRA can help you satisfy the Affordable Care Act (ACA)'s employer mandate as long as your allowance is affordable and your employees have a qualifying form of individual health insurance coverage. The ICHRA also allows employees to opt in or out based on affordability.
  • Group coverage HRA (GCHRA): If you’re already offering group health coverage, you can keep your policy and supplement it with a GCHRA. Also known as an integrated HRA, employers of all sizes can reimburse their employees for out-of-pocket healthcare costs their group plan doesn’t fully cover, like coinsurance and copays. Only employees enrolled in your group health can participate. However, they have no maximum contribution limits.

It’s also important to keep in mind that those in a healthcare sharing ministry aren’t eligible to participate in an HRA, as the federal government doesn’t consider it MEC.

You don’t have to self-administer your HRA to save time and money. With benefits administration software like PeopleKeep, we can help you manage complicated tasks, like creating plan documents, following compliance regulations, and reviewing employee reimbursement requests.

With a simple user interface and an award-winning customer support team, we’re eager to assist you in your endeavor to offer your staff affordable and comprehensive health benefits so you can spend more time managing your religious nonprofit.

Traditional group health insurance

Traditional group health insurance, also known as an employer-sponsored health plan, covers almost 153 million Americans, making it a familiar health insurance option for most individuals. With this type of health benefit, nonprofit business owners purchase group health policies for their company either through an insurance company, a broker, or an agent. Employees can then enroll in the plan at a reduced premium rate.

There are many types of group health insurance plans available for faith-based organizations, including:

If you’re a small nonprofit owner and live in a covered state, you can use the Small Business Health Options Program (SHOP) marketplace to find a health plan. You may also qualify for the small business health care tax credit to reduce your premium costs.

While group plans are popular, they’re not your only choice. Traditional group health insurance can have plan limitations, and most have minimum participation rates. They also have expensive premiums and annual rate hikes. Because of these complications, many small nonprofits don’t find group plans feasible.

Religious nonprofits may have better results with an alternative to expensive group health insurance, like HRAs. But let’s briefly examine a couple more customizable options in the sections below.

Self-funded insurance plans

A self-funded insurance plan is another health benefit option for churches to avoid the costly premiums and restrictions of group policies. With a self-funded plan, church leaders take on the financial risk of providing medical care to their staff. This means you’ll pay for each employee's claims for healthcare expenses instead of paying a monthly premium to an insurance provider.

You can achieve this by setting up a trust fund to which you and your employees contribute to pay claims. You estimate the maximum annual liability of your employees’ claims that you’re comfortable taking on, typically ranging from $100,000 to $2 million. You can also pair the trust fund with a stop-loss policy to limit your risk.

While self-funded plans have personalization options, they have potential drawbacks that may not meet your organization’s needs. They can be complex to administer, require third-party management services, and have unexpectedly large claims, making them a hassle long-term.

Health stipends

If you have few employees and want a more informal health benefit, you can consider a health stipend. With a stipend, organizations can offer their religious professionals a fixed amount of money that they can spend on insurance premiums and other out-of-pocket healthcare costs.

The stipend is essentially extra money added to your staff’s paycheck for them to use however they like. While this makes the administration process easy, it also means stipend money counts as taxable income for employees, and employers are also subject to payroll taxes.

On the upside, employees can participate in your nonprofit’s health stipend and collect their full premium tax credit without subsidy reduction or compliance issues. However, a stipend won't satisfy the employer mandate if your faith-based organization has 50 or more FTEs. So, you’d need to offer a group health insurance plan or an ICHRA to comply with federal law.

HRA SOFTWARE FOR RELIGIOUS NONPROFITS

Learn more about PeopleKeep's HRA administration software

QSEHRA

Qualified small employer HRA

A powerful alternative to group health insurance made specifically for small employers.

 

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ICHRA

Individual coverage HRA

A health benefit that enables employers to cover the individual insurance plans their employees choose.

 

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Group coverage

HRA

A health benefit that employers can use to help employees with their out-of-pocket expenses, like deductibles.

 

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More helpful resources for religious nonprofit organizations

CASE STUDY

Customer case study: Nonprofit Megaphone

 

SEE CASE STUDY

GUIDE

The nonprofit's guide to health benefits

 

DOWNLOAD GUIDE

CASE STUDY

Customer case study: Coastal Community Church

 

SEE CASE STUDY

FAQs

What’s the best health insurance option for pastors and small churches?

While traditional group health plans are popular, health reimbursement arrangements (HRAs) offer the best value for pastors and small churches. HRAs are flexible, budget-friendly, and customizable so they can work for every church’s needs.

While the qualified small employer HRA (QSEHRA) is only for organizations with fewer than 50 full-time equivalent employees (FTEs), an individual coverage HRA (ICHRA) is for businesses of all sizes. So, no matter your clergy size, there's an HRA that works for you.

What are the church health insurance requirements?

Like other types of businesses, churches must only offer their employees affordable health insurance that provides minimum value if they have at 50 or more FTEs. If a church has fewer than 50 FTEs, the law doesn’t require them to offer their staff health insurance of any kind.

How does an HRA work for churches?

With an HRA, church leaders of all sizes can reimburse their employees tax-free for qualified out-of-pocket medical expenses, like prescription drugs, emergency care, individual health insurance premiums, and more.

With an HRA, you set a monthly allowance that your eligible employees can spend on healthcare. Once employees make an approved purchase, you reimburse them tax-free up to their allowance amount. Individuals in a healthcare sharing ministry aren’t eligible to participate in an HRA, as the federal government doesn’t consider it minimum essential coverage (MEC).

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Offer a personalized health benefit with PeopleKeep for a satisfied and productive team

PeopleKeep’s HRA software makes offering a health benefit simple, quick, and affordable. So, let us help you build a benefits package that your team will love! Schedule a call with one of our HRA specialists to learn more about how PeopleKeep serves small businesses and nonprofits, or book a live demo of our platform.