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PeopleKeep report finds QSEHRA provides nonprofit organizations affordable option for offering health benefits

Salt Lake City—PeopleKeep, the leader in personalized benefits for small and midsize organizations, today announced a new national report showing qualified small employer health reimbursement arrangements (QSEHRAs) provide nonprofit organizations an affordable way to offer health benefits to their employees.

According to a survey and data from nonprofit organizations that use QSEHRAs, before offering a plan, 67 percent of nonprofits didn’t provide any health insurance. Most organizations said that before offering a QSEHRA, they couldn’t afford group health insurance (56 percent), were looking for a more flexible benefit that better fit all employees’ needs (25 percent), or needed solutions for employees in multiple states (9 percent).

A QSEHRA is a formal, IRS-approved health benefit allowing small businesses with fewer than 50 full-time equivalent employees to offer a tax-free reimbursement to employees for their health insurance premiums and other qualifying health expenses.

“While many nonprofits consider group health insurance the optimal benefits solution, the cost and complexity of these plans are leading nonprofits to offer nothing at all,” said Victoria Glickman Hodgkins, PeopleKeep CEO. “So, there’s an urgent need to educate nonprofit employers about alternative benefit solutions, like QSEHRAs, that may be a much better fit, which is why we are sharing this report and analysis.”

More experience, more benefit

The longer an organization offers a QSEHRA, the more allowance they give. Nonprofits that are new with QSEHRA benefits provide a monthly allowance of $420, whereas organizations with 3+ years of experience give almost $500 on average.

Small size does not mean small allowance
The size of a nonprofit does not necessarily mean less of an allowance. Organizations with 1-4 employees offer a sizable monthly allowance of $483, while nonprofits with 20-49 employees provide $580 in allowance.

Nonprofits offer more than many small businesses
As the first company to deliver cloud-based QSEHRA administration, PeopleKeep has gathered and reported data on the benefit since it was available in 2017. The company reports on small businesses and nonprofit organizations. Many of the same trends hold true for both groups—the smallest organizations offer substantial benefits, and the longer an organization uses QSEHRAs, the more allowance they offer. However, nonprofits provide more of an allowance than their small business counterparts. The average monthly allowance for all nonprofit organizations was $466 compared to $412 for small businesses. See the small business QSEHRA report for more details.

“QSEHRAs give nonprofits a better chance to compete in today’s labor market,” said Hodgkins. “Many times, the salaries they offer can be lower than the private sector, or the job requires more out of each employee than other positions. Having a compensation package that includes a health benefit is vital.”

PeopleKeep’s QSEHRA report outlines how nonprofit organizations used QSEHRAs in 2022, including the average allowance amounts offered, the average amounts reimbursed, plan design choices and more.

View the full PeopleKeep 2023 Nonprofit QSEHRA Annual Report here.

About PeopleKeep

PeopleKeep helps organizations take care of their employees with hassle-free benefits. As the leader in personalized benefits, PeopleKeep has learned what the thousands of employers who use our software want: a seamless employee experience, easy-to-use software, and automated compliance. Visit www.peoplekeep.com for more information.

Contact: [email protected]