Nonprofit Employee Benefits - A Guide for Nonprofits

Written by: AEIS

Nonprofit employees smile while working because they have Nonprofit Employee Benefits

At AEIS, we fully understand that all organizations are unique unto themselves - which means that there is truly no "one size fits all" approach when it comes to putting together an employee benefits package. You need to carefully consider the needs and preferences of your employees when coming up with options that have their best interests at heart. What people are concerned about in a manufacturing environment can vary wildly from what workers in a retail or even corporate environment might desire, and vice versa - which is why you always need to start with the employees and work your way back to the benefits packages that meet their needs and exceed their expectations. Case in point: nonprofit employee benefits.

The main thing that our team of professionals has observed over the years is that, while a nonprofit may not be able to offer the highest salary to those that they employ, they do tend to offer more competitive benefits plans than their for-profit counterparts. It is more common than not to see small group nonprofits offering Platinum or Gold tiers as the base plans whereas many similarly sized corporations and LLCs are more likely to have their base plan set at the Silver or, occasionally, Gold tier. This is because employee benefits for nonprofits are not only a way to address the needs of workers - they are also a way to remain competitive as well. Workers with lower salaries, which can be customary for nonprofits, are comforted when they have better health coverage that keeps their out-of-pocket costs lower.

All in all, employee benefits for nonprofits are an important topic that requires you to keep a few key things in mind.

Are Employee Benefits Different For Nonprofits?

One of the biggest mistakes that a lot of people make involves assuming that nonprofits do not offer benefits at all. Many believe that these organizations instead rely exclusively on volunteers to help with their larger mission - people who are not getting anything in the way of compensation and who are instead only acting out of the kindness of their hearts.

Nonprofit employees working together, they smile because they have Nonprofit Employee Benefits

Oftentimes, this is not the case, even though it may be true for some types of nonprofits. Instead, most have legitimate employees who receive not only traditional compensation but a full nonprofit employee benefits package as well.

The key difference between a nonprofit and a "traditional" business is that many that fall into the former category operate on an incredibly tight budget. Having said that, this does not mean that it is impossible for them to offer employee benefits - but rather, they often have to go about it in a slightly different way. Not only do a lot of nonprofits offer many of the same benefits that for-profit organizations do, but they are also often subject to the same types of rules and regulations governing them as well.

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Affordable Care Act (ACA) Compliance for Nonprofits

Concerning the Affordable Care Act (known as the ACA for short), understand that this legislation does not mandate that nonprofit organizations offer medical coverage to their employees provided that they employ fewer than 50 Full Time Equivalent (FTE) employees. If an employer does have 50 or more full-time equivalent employees, then they are known as an Applicable Large Employer (ALE), and they must offer medical coverage - nonprofit organizations are not an exception to this.

Of course, there are a few distinct advantages that nonprofits can unlock by going above and beyond when it comes to benefits. For example, say that a nonprofit organization has 25 or fewer full-time equivalent employees (with the average employee salary being about $56,000 per year or less), and is paying for at least 50% of the health insurance premiums of those individuals. In that case, the organization itself may qualify for a special type of small business healthcare tax credit if they get benefits through the state’s health benefits exchange (e.g. Covered CA for Small Business in the state of CA).

Non-profits must otherwise still adhere to many of the same healthcare compliance rules and regulations as their for-profit counterparts such as Federal COBRA administration, providing required ERISA notices and disclosures, Section 125 non-discrimination testing, and many others. Since non-profits do not always have the resources to hire someone solely to manage and administer benefits, it makes it even more important for them to work with a broker who can streamline administration and take a lot of this off their plate.

Common Employee Benefits for Nonprofit Organizations

Nonprofit employees work diligently collecting donations

By far, one of the most common types of employee benefits for nonprofit organizations takes the form of group health insurance. This can offer high-quality health insurance to employees at a far lower cost compared to if those employees went out and purchased their own individual plans.

Another common employee benefit that nonprofit organizations often embrace has to do with paid time off. Also referred to as PTO for short, paid time off gives someone compensation for not only personal time like vacations but sick days as well. While it is true that PTO is not required under the Fair Labor Standards Act, it is still a good idea to help employees maintain their much-needed work/life balance.

As stated, these types of benefits are often a way for nonprofit organizations to remain competitive that go above and beyond simple base salary. If someone has a choice on their hands of working for a nonprofit that they passionately believe in versus a for-profit business that offers a very high salary, this in and of itself is a battle that the nonprofit is likely not going to win. But thankfully, people are willing to look beyond a straightforward salary and nonprofit leaders need to as well.

In addition to offering Platinum small group health plans, we at AEIS have also observed nonprofits offer a full complement of additional, quality benefits such as dental, vision, STD, LTD, and life plans as well.

If you would like to find out more information about the importance of nonprofit employee benefits and how they can help achieve success for your non-profit organization, or if you would just like to start the process of putting together your own benefits plans but do not know where to begin, please do not delay - contact the team at AEIS today.

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