by Dr. Kevin Dean, President & CEO, Tennessee Nonprofit Network
Costs are rising for nonprofits everywhere. Tariffs, inflation, and declining consumer confidence are yet another blow for struggling nonprofits who are already facing federal grant cuts, flatlining individual giving, and lower volunteer rates. Even in this challenging climate, however, providing employee benefits is an important part of attracting and retaining talent in the nonprofit sector, as our wages are typically lower than our for-profit counterparts.
The ability to offer competitive benefits, especially comprehensive health insurance, is a key differentiator for nonprofits seeking to attract and retain skilled and dedicated staff. While salaries in the nonprofit sector often lag behind the private sector, a strong benefits package can help close that gap, demonstrating an organization’s commitment to its employees’ well-being. Investing in staff is about acknowledging that our people are our most valuable asset. A flourishing staff is better equipped to serve the community, fulfilling the mission with passion and purpose. Even in tough economic times, it’s a strategic imperative to prioritize the health and security of the people who make the mission possible.
The Big Beautiful Bill and Its Impact on Insurance Rates
Nonprofits need to be prepared for big changes in their insurance rates due to some new policies in the One Big Beautiful Bill Act (OBBBA), a law signed by President Donald Trump on July 4, 2025. This law is projected to have a significant and complex impact on insurance rates, with analyses from various organizations suggesting it will generally increase costs for many Americans.
The OBBBA is expected to affect insurance rates in several key ways:
Increases in Health Insurance Costs and Premiums
- Expiration of Enhanced ACA Premium Tax Credits: The law does not extend the enhanced premium tax credits for Affordable Care Act (ACA) marketplace plans beyond 2025. This is expected to cause out-of-pocket premium payments for ACA enrollees to increase substantially, on average by over 75%, and in some cases, more than double. This will directly impact nonprofit staff who purchase their insurance through the ACA marketplaces, as their costs will skyrocket.
- Reduced Premium Tax Credits: The OBBBA tightens eligibility rules for premium tax credits and reduces their value, which is projected to increase costs and cause millions of people to lose their ACA coverage.
- Higher Out-of-Pocket Costs: For families with employer-sponsored health insurance, the bill could lead to an increase in annual spending due to higher out-of-pocket maximums. This will increase the financial burden on nonprofit employees, even those with employer-provided plans.
Cuts to Public Health Programs
The OBBBA includes significant cuts to major public health programs, which will indirectly affect insurance costs and access to care.
- Medicaid: The law includes the largest cuts to Medicaid in the program’s history. These cuts are achieved through various measures, including implementing work reporting requirements for certain beneficiaries, requiring more frequent eligibility checks, and reducing federal funding to states. These changes are projected to lead to millions of people becoming uninsured, which could increase the number of uninsured patients seeking care at nonprofit clinics and hospitals, ultimately impacting the financial stability of these institutions.
- Medicare: The OBBBA makes changes to Medicare that could increase costs for beneficiaries. For example, it prevents improvements to Medicare Savings Programs that help low-income seniors with premiums and out-of-pocket costs and weakens Medicare’s ability to negotiate drug prices.
Other Impacts
- Fewer Insured People: The Congressional Budget Office (CBO) estimates that the OBBBA will result in at least 16 million more uninsured people by 2034, a significant reversal of the trend of declining uninsured rates since the implementation of the ACA.
- Reduced Access to Care: The increase in uninsured individuals and higher out-of-pocket costs for those who remain insured could lead to reduced access to care across the country.
Who is Most Affected?
- ACA Marketplace Enrollees: People who purchase insurance through the ACA marketplaces, especially those with lower and middle incomes, are expected to face significant premium increases due to the expiration of enhanced tax credits. This group includes many nonprofit staff members.
- Medicaid and Medicare Beneficiaries: Low-income families and seniors on Medicaid and Medicare are particularly vulnerable to increased costs and reduced coverage as a result of the cuts and policy changes.
- Immigrants: The law eliminates eligibility for subsidized ACA marketplace coverage for certain lawfully present immigrants and restricts Medicaid eligibility for others.
In the face of these increased costs and new challenges, it’s more important than ever for nonprofits to prioritize their staff. Even despite the increased costs in insurance, we have to keep providing insurance to our nonprofit staff not only as a way to attract and retain talent but to acknowledge their humanity and do what we can to make sure they flourish just like the people we are serving every day. Our mission begins at home, with the people who dedicate their lives to making a difference.