How Minnesota Nonprofit CFOs Can Save with ICHRAs

Minnesota's nonprofit sector, a cornerstone of the state's social fabric, faces a growing challenge: rising healthcare costs. Traditional group health insurance plans, once a mainstay of employee benefits, are becoming increasingly expensive and unpredictable.

As a non-profit CFO, this puts immense pressure on you to balance offering competitive benefits with maintaining fiscal responsibility.

The Individual Coverage Health Reimbursement Arrangement (ICHRA) presents an innovative solution that can help your organization save money, improve employee satisfaction, and maintain regulatory compliance.

The Individual Coverage Health Reimbursement Arrangement (ICHRA) presents an innovative solution that can help your nonprofit save money.

The Problem: Unsustainable Healthcare Costs Burdening Minnesota Nonprofits

A recent Wall Street Journal report highlights the stark reality: 2024 healthcare costs are experiencing their biggest jump in years. And according to a recent study conducted by the Urban Institute, approximately 20% of nonprofit workers in the United States lack access to employer-sponsored health insurance.

This burden falls squarely on the shoulders of non-profit CFOs, impacting budgeting, recruitment, and overall financial sustainability. Traditional group health plans often lock organizations into one-size-fits-all options, leaving employers vulnerable to:

• Year-over-year premium hikes – 78% of CFOs nationwide agree that rising healthcare costs are unsustainable for their businesses.
• Limited control over costs – Employers have little control over premium increases or the overall health of the employee pool, both of which significantly impact costs.
• Employee dissatisfaction with limited options – Traditional plans may not cater to the diverse needs of a non-profit workforce.

The Solution: ICHRAs - Putting Control Back in Your Hands

ICHRAs offer a modern, cost-effective alternative to traditional group health plans, empowering Minnesota nonprofits to:

• Reduce healthcare costs (Our clients see an average of 30% savings when switching to ICHRA)
• Break free from the cycle of annual renewals and unpredictable rate hikes
• Empower employees with personalized health coverage options
• Gain control over budgeting and cost forecasting
• Boost recruitment and retention efforts

What is ICHRA?

ICHRA allows employers to reimburse employees tax-free for individual health insurance premiums and medical expenses. Unlike traditional group health insurance plans, ICHRA offers flexibility and cost control, making it an attractive option for nonprofits. By allocating a specific amount of money for each employee, nonprofits enable their staff to purchase health insurance that best suits their individual needs.

To learn more about ICHRA, read our guide: ICHRA Guide: All About Individual Coverage HRAs.

Here's how they work:

1. Employers set a fixed budget – Instead of being at the mercy of insurance carriers, you establish a clear budget for employee health benefits.
2. Employees choose individual plans – Employees receive a tax-free allowance to purchase individual health insurance plans on the Minnesota marketplace.
3. Employers reimburse expenses – Employers reimburse employees for qualified medical expenses incurred with their individual plans, up to the allocated budget.

The Benefits for Minnesota Nonprofits: A Win-Win for Everyone

We see that nonprofits in particular have high ICHRA adoption rates. In addition to cost control and flexibility, ICHRA helps nonprofits diversify their hiring. For nonprofits that currently don’t offer benefits, ICHRA expands recruiting beyond people who have the privilege of being on a spouse’s plan or can afford to pay for it on their own.

Furthermore, ICHRA helps nonprofits be more inclusive with their benefits strategy. With a group plan, only a portion of employees typically use it (others are still on parents plan or on a spouse’s plan or can’t afford the employee contribution portion of the premium). So what ends up happening is nonprofits have a benefit that isn’t benefiting everyone in a fair way.

Here are a few more reasons why nonprofits gravitate towards ICHRA.

Why CFOs Like ICHRA:

• Predictable budgeting – ICHRAs eliminate annual renewals and price hikes, allowing for accurate budgeting and cost forecasting.
• Reduced healthcare costs – Nonprofits can typically save an average of 30% on healthcare costs compared to traditional group plans.
• Improved control – ICHRAs empower CFOs to set budgets and control overall health benefit spending.

Why Employees Like ICHRA:

• Personalized coverage options – Employees have more choices because they can choose from multiple individual plans that best suit their needs and budget.
• Increased flexibility – More employees can enjoy coverage because ICHRAs offer greater flexibility for remote, part-time, and even seasonal workers.
• Tax-advantaged benefits – Employees have more spending power because the employer’s contribution towards ICHRAs is tax-free

The Health Insurance Landscape for Minnesota Nonprofits

One of the strongest individual markets in the country, Minnesota offers a competitive health insurance market with various options for both small businesses and individuals. The state exchange for individual and family plans is called MNsure, and it is where individuals and families can shop for, compare, and enroll in health insurance plans offered in the state.

As of 2024, five different health insurance companies are approved to sell individual health coverage in Minnesota, offering a total of 22 networks, according to the MN Department of Health. Seventeen of these networks are available on MNsure–Minnesota’s state exchange for individual and family plans. According to the Minnesota Department of Health, 3% to 5% of Minnesotans have been covered by MNsure over the last decade.

For more data and statistics as well as information on individual and family plans offered in Minnesota, visit the Minnesota Department of Health’s website.

How to Implement an ICHRA in Your Nonprofit

ICHRA allows nonprofits to leverage the competitive individual health insurance market in Minnesota. By reimbursing employees for individual health insurance premiums, nonprofits can provide flexible and cost-effective health benefits.

This approach not only saves money but also empowers employees to choose the coverage that best suits their needs. Here are the basic steps to implementing and ICHRA for your nonprofit:

1. Assess the Needs of Your Employees
   
   Evaluate the healthcare needs of your employees to determine an appropriate budget for health benefit reimbursements. Understanding their preferences and requirements will help you set a realistic budget that meets their needs.
   
   
2. Select an HRA Administration Platform
   
   Choose a reliable HRA administration platform to manage the arrangement. Partnering with a platform that offers support and tools will streamline the implementation process and ensure compliance with regulatory requirements.
   
   
3. Communicate with Your Employees
   
   Clear communication is crucial for the successful implementation of ICHRA. Educate your employees about the benefits and processes associated with ICHRA. Provide resources and support to help them select their individual health insurance plans.
   
   
4. Monitor and Adjust
   
   Continuously review the arrangement to ensure it meets the needs of both the organization and its employees. Monitor employee satisfaction and make adjustments as necessary to optimize the benefits strategy.

Minnesota Nonprofits Can No Longer Afford to be Held Hostage by Rising Healthcare Costs

As a CFO, managing health insurance costs while providing quality benefits to your employees is a top priority. ICHRA offers a modern, flexible, and cost-effective solution that can transform your nonprofit's health benefits strategy.

By implementing ICHRA, you can achieve cost control, improve employee satisfaction, and maintain regulatory compliance. Embrace this innovative approach to health benefits and take command of your insurance costs today.

ICHRA brings unprecedented personalization and choice for employees while also providing savings and efficiency for a CFO’s bottom line. Everybody benefits.

Taking Command of Your Health Benefits: Partner with Take Command

Take Command is the leading ICHRA administration platform in the U.S., with a proven track record of helping over 6,000 companies take control of their health benefits.

We offer:

• A user-friendly online platform for seamless ICHRA administration and employee enrollment.
• A dedicated team of experts to guide you through the ICHRA implementation process.
• Access to a vast insurance marketplace with a wide range of individual health insurance plans for your employees to choose from.