Understanding Health Insurance Options for Nonprofits: What You Need to Know in 2025

For nonprofit leaders, offering health insurance is about more than just checking a box. It’s a powerful way to show your staff that their well-being is a priority. But let’s face it—health insurance can be confusing. Rising costs, shifting regulations, and dozens of coverage types make it hard to know where to begin.

The good news is you don’t have to be an expert to make smart choices. Whether you’re exploring health coverage for the first time or reviewing your current plan, this guide will help you understand your options and feel more confident about your decisions in 2025.

Why Health Insurance Matters for Nonprofits

Some nonprofits delay offering benefits due to budget concerns. But in today’s job market, health insurance isn’t a luxury, it’s a must-have. Offering coverage can help you:

Attract top-tier employees, including those from the private sector.

Increase retention and reduce costly turnover.

Build a supportive workplace culture.

Demonstrate your values in action.

If your goal is to grow a mission-driven team, health benefits are one of the most effective ways to do it.

Key Health Insurance Options for Nonprofits

There’s no one-size-fits-all plan for nonprofit organizations. Each model below offers different levels of control, flexibility, and cost.

1. Group Health Insurance Plans

This is the most traditional way to offer coverage. Your organization selects a health insurance provider and offers a plan (or multiple plan choices) to employees.

Benefits:

Premiums are typically lower than individual plans.

Employers share the cost with employees.

Plans often include dental, vision, and supplemental coverage.

Considerations:

You may need a minimum percentage of eligible employees to enroll.

Small nonprofits may face higher per-person costs.

The plan may not offer much flexibility.

This option is ideal for organizations with more than a handful of full-time staff.

2. QSEHRA (Qualified Small Employer Health Reimbursement Arrangement)

QSEHRAs allow small nonprofits with fewer than 50 employees to reimburse employees for their own health insurance premiums and medical expenses. Reimbursements are tax-free for both the organization and the employee.

Benefits:

Simple and cost-controlled

Employees choose their own plans.

No group policy to administer.

Considerations:

There is a federal cap on how much you can reimburse.

Employees must purchase and maintain qualifying coverage.

QSEHRAs work well for nonprofits with tight budgets and a small team.

3. ICHRA (Individual Coverage Health Reimbursement Arrangement)

An ICHRA is a more flexible version of a QSEHRA and is available to nonprofits of any size. It allows employers to offer different reimbursement amounts to different employee groups (such as full-time vs. part-time).

Benefits:

More customizable

No cap on reimbursement amounts

Can be offered alongside a group plan.

Considerations:

Employees are responsible for shopping for their own insurance.

Slightly more complex to administer.

An ICHRA can be a great option for nonprofits with a mix of employee types or variable work hours.

4. Covered California for Small Business (CCSB)

This is California’s health exchange platform for small employers, including nonprofits. You can offer employees access to name-brand plans and potentially qualify for tax credits.

Benefits:

Competitive pricing and tax advantages

Access to multiple plans and providers

Designed specifically for small employers.

Considerations:

Eligibility depends on business size and other criteria.

Plan options are limited to the marketplace offerings.

CCSB is a practical option for California-based nonprofits looking for affordability and structure.

Additional Factors to Consider

Beyond choosing a model, here are a few other things to think about:

Cost-sharing:
Decide how much your organization will cover and how much employees will contribute. Consider whether you’ll also cover dependents.

Provider networks:
Make sure the plan you choose gives employees access to the doctors and hospitals they trust.

Supplemental benefits:
Adding dental, vision, life insurance, and mental health support can significantly increase your appeal to employees.

Employee communication:
Benefits are only effective if your team understands them. Plan for educational materials, info sessions, or Q&As.

How CalNonprofits Insurance Services Can Help

Finding the right health insurance plan can feel overwhelming, but you don’t have to figure it out on your own.

CalNonprofits Insurance Services is a nonprofit-owned brokerage that works exclusively with other nonprofits across California. Our team understands your budget constraints, staffing structure, and mission-driven focus.

We can help you:

Compare group plans, QSEHRA, ICHRA, and CCSB

Identify the best plan design for your unique workforce.

Educate employees about their options.

Navigate enrollment, renewals, and compliance.

Our goal is to make your job easier and your benefits program stronger.

Learn more about our Employee Benefits Solutions

Final Thoughts

Choosing the right health insurance solution is one of the most important decisions you’ll make as a nonprofit leader. It impacts on your staff’s well-being, your budget, and your ability to attract and retain talent.

Whether you’re starting from scratch or just overdue for a plan review, now is a great time to take a fresh look.

Contact CalNonprofits Insurance Services to schedule your personalized review. Let’s build a benefits package that works for your mission—and your team.

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