Nonprofits face a constant balancing act: providing meaningful employee benefits while keeping resources focused on the people and communities they serve. Individual Coverage Health Reimbursement Arrangements (ICHRAs) are quickly becoming a go-to solution, offering a cost-effective, flexible alternative to traditional group health insurance.
ICHRAs let nonprofits offer employees tax-free reimbursements for individual health insurance premiums and qualified medical expenses—without the high costs or administrative headaches of group plans. Most importantly, they allow organizations to support their teams while staying true to their mission.
What is an ICHRA?
In short, an ICHRA is an employer-funded benefit that reimburses employees for individual health insurance premiums and other qualified medical expenses.
Introduced in 2020, ICHRAs give organizations the flexibility to design benefits that fit their budget and meet the diverse needs of their workforce.
Why nonprofits should consider ICHRAs
Nonprofits often operate on tight budgets, with versatile teams and full schedules, all while striving to maximize their impact. ICHRAs make it possible to provide meaningful health benefits without pulling resources away from the mission. Key advantages include:
1. Cost control and budget predictability
Traditional group plans can strain a nonprofit’s budget with rising, unpredictable premiums. ICHRAs allow organizations to set fixed monthly reimbursements, making it easier to plan finances and dedicate more to programs and services.
2. Flexible benefits for diverse teams
Nonprofits often have a mix of full-time, part-time, seasonal, and remote staff. ICHRAs let organizations tailor benefits to 11 approved employee classes, ensuring everyone on the team has access to coverage that meets their needs.
3. Attracting and retaining mission-driven talent
Competitive benefits help nonprofits recruit and retain top talent. ICHRAs make it possible to support employees’ well-being while staying within budget.
4. Streamlined administration for busy staff
Nonprofit teams are often stretched thin. ICHRA platforms like Zorro simplify compliance, reporting, and reimbursements, freeing staff to focus on their mission instead of paperwork.
ICHRA in real life: Client spotlight
Here’s a real-world example of how ICHRAs can make a difference for nonprofits. One nonprofit with about XY employees was struggling with rising group health insurance costs, which were eating into the funds they could dedicate to their programs.
After switching to an ICHRA with Zorro:
- They saved over $XYZ a year on health benefits.
- Employees could pick coverage that truly fit their needs, boosting satisfaction and engagement.
- HR spent less time managing benefits, freeing up staff to focus on the nonprofit’s mission.
This example shows that even resource-conscious nonprofits can provide competitive, flexible benefits without stretching their budgets or losing focus on the people they serve.
How to implement an ICHRA in your nonprofit
Getting started doesn’t have to be complicated. Even small, resource-conscious teams can roll out ICHRAs successfully by following these steps:
- Assess your organization’s needs. Look at your budget, team size, and employee health coverage needs. Determine how much you can allocate toward reimbursements without impacting your core programs (don’t worry, we can help!).
- Choose a supportive ICHRA administrator. Partner with a platform that understands nonprofits’ unique challenges. A strong administrator balances technology with service, saving your team time and reducing headaches.
- Design custom reimbursement amounts. Set equitable reimbursement levels that align with your budget and take into account different plan pricing across different geographies and age brackets (our specialty!).
- Communicate clearly with employees. Explain how the ICHRA works, how and when to enroll, and where to access training materials or resources. Clear communication helps employees feel confident and supported.
- Monitor and adjust as needed. Collect feedback and review the program regularly. Adjust reimbursement amounts or employee classes as your team grows or budgets change, ensuring the ICHRA continues to meet staff and organizational needs.
In conclusion
ICHRAs give nonprofits a modern, flexible way to provide meaningful health benefits without the financial strain of traditional group plans. By offering budget control, customizable coverage, and simplified administration, they empower nonprofits to focus on their mission while supporting the well-being of their teams.
Curious how an ICHRA could work for your nonprofit? Book a demo with Zorro today for a personalized walkthrough.
