Rising Healthcare Costs: A Challenge for Non-Profits
By Makayla Alton, Benefits Consultant at The Partners Group
Healthcare costs are climbing, and for non-profits, the impact can be especially tough. With tight budgets and a mission-first focus, rising expenses threaten not just your finances but your ability to serve the community.
Financial Strain
Too often, we see non-profits diverting funds from crucial programs to cover increasing healthcare costs, especially for small employers. For instance, the Idaho Department of Insurance has proposed a 9% average increase in 2025 small group rates, with some renewals hitting 20%. Nationally, PwC’s Health Research Institute states healthcare costs are growing at their fastest rate in 13 years and this trend isn’t going away. This financial pressure can affect your ability to maintain or expand services, risking the impact you have on your community.
Retention and Recruitment Challenges
Competitive benefits are key to attracting and retaining top talent. But as healthcare costs rise, non-profits struggle to match the packages offered by for-profits, leading to higher turnover and recruitment difficulties. The Bureau of Labor Statistics notes that turnover rates in non-profits are up to 20% higher than in the private sector, undermining your organization’s stability and effectiveness.
Impact on Employee Well-being
Your employees may accept lower salaries to work for a cause they believe in, but rising healthcare costs can strain their personal finances and well-being. A 2024 study from The Employee Benefit Research Institute, found that 45% of employees experience financial stress due to healthcare costs, leading to reduced job satisfaction, higher absenteeism, and increased burnout—all of which affect your organization’s productivity.
Strategies for Mitigation
To combat these challenges, consider:
Level-Funding Plans: Offering predictable monthly payments and potential savings.
High Deductible Health Plan (HDHP) with HSA
These plans typically result in over 30% lower utilization compared to standard PPO plans, offering significant cost savings.
Health Savings Accounts (HSAs): Empower employees with tax benefits and greater control over their healthcare spending.
Preventive Care and Wellness Programs: Reducing long-term costs and promoting a healthier workforce.
Telehealth Services: Offering cost-effective, convenient medical care.
Taking Action
Rising healthcare costs are a significant challenge, but with the right strategies, your non-profit can navigate this landscape. By adopting cost-efficient benefits solutions, you can protect your financial health, retain your talent, and continue fulfilling your mission.
Don’t miss this online event!
Don’t miss Makayla’s appearance on the Nonprofit Success Lab on September 12th, where she will be sharing more about what nonprofits need to know about employee benefits! Register HERE!
Citations:
Idaho Department of Insurance. (n.d.). Small Group Rate Increases. [Data on small group rate increases may require direct contact or consultation of recent reports from the department].
PricewaterhouseCoopers Health Research Institute. (2023). Medical Cost Trends: Behind the Numbers 2024. [Report]. Retrieved from PwC Health Research Institute
Kaiser Family Foundation. (2024). 2024 Employer Health Benefits Survey. Retrieved from KFF Employer Health Benefits Survey
U.S. Bureau of Labor Statistics. (n.d.). Employment Situation Summary [Data on turnover rates in the non-profit sector may require specific searches within BLS reports]. Retrieved from BLS Employment Situation
Employee Benefit Research Institute. (2024). The Impact of Health Care Costs on Employees' Financial Stress (EBRI Issue Brief No. 548). Retrieved from EBRI Publications