Maximizing Impact: Embracing Flexible Benefits for Not-for-Profit Organizations

In a world where adaptability and empowerment are key, not-for-profit organizations continually seek innovative strategies to attract and retain top talent while maximizing their budgets. Among these strategies, flexible benefits have emerged as a powerful tool that not-for-profits can use to support their mission-driven work and support their staff.

Understanding Flexible Benefits

Flexible benefits, such as Health Spending Accounts (HSA) or Wellness plans (WSA), represent a customizable self-insured approach to employee benefits. Rather than just offering a one-size-fits-all benefits package with rigid plan designs, organizations supplement coverage with flexible options that better fit individual needs and priorities while also reducing the organization’s long-term costs. Unlike traditional benefits, flexible benefits are a monthly or annual allowance that the employee and their families can choose how to spend rather than having set annual maximums for each benefit category. 

Health Spending Accounts (HSA)

HSAs are non-taxable allowances that employees and their families can use for CRA-approved health and dental expenses. For example, an employee might use their Health Spending Account (HSA) for prescription glasses and massage therapy, whereas another employee might use their HSA for medication and dental aligners. With an HSA, employees are in control of their coverage and employers don’t have to worry about costly insurance renewals.

Wellness Accounts (WSA)

Wellness accounts are the taxable counterpart to Health Spending Accounts. WSAs help promote healthier lifestyles and employee satisfaction. Wellness Accounts are taxable so they are extremely flexible. The only governing body over eligible items in the program is the employer. A Wellness Spending Account will typically encompass what the company believes are items that reward and incentivize their staff. There are many standard Wellness items such as: daycare, gym memberships, vitamins, personal training, etc. With a WSA, organizations can be as creative as they want when building a plan. When companies invest in the health of their employees, people tend to be happier and more productive. Studies have shown wellness programs provide increased levels of physical activity, and lower levels of absenteeism and risky health behaviors.

Advantages for Not-for-Profit Organizations

1. Enhanced Employee Engagement and Retention:

By offering flexible benefits, employers give their employees more flexibility in how they use their benefits, as the scope of what can be reimbursed is much broader than what is typically offered under a traditional benefits plan. This can provide a wider appeal for diverse team demographics and family situations. 

2. Cost-Effectiveness and Resource Optimization:

Flexible benefits are a form of self-insurance and unlike most traditional insured benefits plans, costs are only incurred when claims are made. Administration costs for flex plans are generally much less as an insurer isn’t retaining the risk that claims will exceed premiums in a plan year. Depending on the size of an organization, administration fees can be up to 50% lower. 

Programs such as Health Spending Accounts (HSA) are tax-free for employees. Therefore they can offer more value than a cash bonus.

Flex plans also have fixed cost ceilings for budgeting purposes and don’t experience rate fluctuations that insured programs often experience from annual rate renewals. 

3. Attraction of Diverse Talent:

In the competitive landscape for talent, offering flexible benefits can set not-for-profits apart as progressive and employee-centric organizations. It appeals to a wide range of candidates, including individuals seeking work-life balance, those valuing professional growth, or those with specific healthcare needs.

Implementing Flexible Benefits in Not-for-Profits

While flexible benefits are a great tool for many not-for-profit organizations, they must be well thought out before implementation. Flexible benefits such as a Health Spending Account (HSA) or Wellness Account (WSA) are a great supplemental tool, but we rarely recommend completely replacing traditional benefits plans. Flexible benefits are not insurance plans and at their core can’t replace catastrophic coverage for things such as high-cost medication and out-of-country coverage.