Healthcare costs have become one of the most significant financial pressures facing nonprofit organizations and show little sign of easing. Medical trend is projected at 7% to 8%, while pharmacy trend is expected to reach 13% to 15%. Pharmacy spending now represents approximately 30% of total healthcare costs, driven by specialty medications, expanding use of GLP-1 therapies, growing behavioral health demand and continued provider consolidation. [Aon Global Medical Trend Rates Report 2026]
For nonprofit leaders, these numbers carry implications far beyond annual renewal discussions. When benefits spending grows faster than revenue, the effects can be felt throughout the organization, influencing recruitment and retention, staffing plans, compensation strategies, reserves and program investment.
Why Traditional Cost Management Is Producing Smaller Returns
For years, many organizations managed rising healthcare costs through plan design changes. Deductibles increased. Employee contributions rose. Cost-sharing became more common.
Those approaches can provide short-term budget relief, but they have limited influence over the forces driving healthcare inflation today. Specialty pharmacy spending continues to outpace medical trend. New therapies enter the market at higher costs. Healthcare provider consolidation continues to affect pricing.
Many nonprofit leaders are now examining whether the way benefits are funded and purchased deserves the same level of strategic scrutiny applied to major investments, facilities planning and long-term financial management. That shift in thinking is driving interest in alternative funding structures that may offer greater predictability and purchasing power.
Exploring Available Options
Before evaluating any single structure, it helps to understand how many options exist, because headcount determines which market an organization buys into.
For nonprofits under 50 employees, which includes many Indiana organizations, the default is often a fully insured community-rated plan where premiums are driven largely by factors outside the organization’s control. Alternatives can include grandfathered plans, alternate funding arrangements, association plans and MEWAs, PEO arrangements, and exchange-based coverage through an Individual Coverage Health Reimbursement Arrangement (ICHRA). Each offers different levels of flexibility, administrative support and financial accountability.
Above 50 employees, the range expands to include level-funded and self-funded strategies such as captives, direct self-funding and reference-based pricing. The tradeoff typically becomes predictability versus control, with the right approach depending on claims experience, reserves and risk tolerance.
Yet many nonprofit leaders never see the full range of options presented side by side. As a result, organizations often renew within a narrow set of choices while cost pressures continue to build. One of those broader options is now available in Indiana for the first time.
A Different Model for Indiana Nonprofits
One structural option Indiana nonprofits now have is the Indiana Nonprofit Benefits Trust, the state’s first Multiple Employer Welfare Arrangement (MEWA) built exclusively for nonprofit organizations.
The Employee Retirement Income Security Act (ERISA) defines a MEWA as an arrangement that allows employers outside the same control group to participate in a pooled health plan, provided they share a work-related common bond. For this Trust, that bond is nonprofit status and membership in the Indiana Philanthropy Alliance. Participating organizations join a single pooled arrangement rather than purchasing coverage as individual small groups.
Pooling changes the rating conversation. Small employers in the traditional market are frequently community rated, with premiums driven by age bands and factors outside their control. Inside the Trust, organizations are rated as part of a larger group with stable pricing that is not age-banded. Claims volatility is spread across the pool, so a single high-cost year at one organization does not land entirely on that organization’s renewal.
The Indiana Department of Insurance approved the Trust in late 2025 following an 18-month collaboration among Welborn, NFP, Indiana Philanthropy Alliance and a founding group of nonprofit organizations. Those organizations helped shape and test the structure before launching, ensuring it reflected the realities of nonprofit budgets and operations.
Underneath the mechanics sits a straightforward observation. Indiana nonprofits face remarkably similar workforce and healthcare pressures, including the challenge of offering competitive benefits to attract and retain talented employees, and most have been absorbing those pressures independently.
Why the Partnership Matters
The collaboration that produced the Trust should look familiar to anyone working in this sector. Shared services, collective funding and coalition advocacy exist because certain problems respond better to collective effort. Employee benefits may be becoming another area where collaboration can create value.
What that collaboration produced is a network, not just a rate. IPA membership is a condition of joining, and the requirement was intentional. As Indiana’s statewide network for philanthropy, IPA advocates at the state and federal levels on issues affecting the sector and brings organizations together around shared challenges and opportunities. Nonprofit members participating in the Trust can also take part in select IPA convenings and resources relevant to their work, creating opportunities to connect with others across Indiana’s philanthropic and nonprofit communities.
Those opportunities acknowledge something experienced nonprofit leaders already understand: workforce challenges are rarely solved through benefits alone. Sustainable solutions often require organizations to examine leadership, culture, financial strategy and employee experience together.
The plan itself is built the same way, with support for the people who administer it and the people who use it, including online enrollment, dedicated member support, pharmacy savings programs, virtual care and wellbeing resources. For organizations that have spent several renewals managing costs through reductions or increased employee cost-sharing, access to additional services and support can help shift the benefits conversation.
What Leaders Should Be Thinking About Next
A collective purchasing model will not be the right answer for every nonprofit. Workforce demographics, organizational size, claims experience, financial objectives and risk tolerance all point in different directions, and the appropriate structure depends on facts specific to each organization.
Nonprofit organizations have more options than many realize, and the Indiana Nonprofit Benefits Trust represents one Indiana-based response to rising healthcare costs. More broadly, it reflects what the nonprofit sector has long done well: working together to address shared challenges in ways that can strengthen individual organizations and the sector as a whole.
At NFP, we believe leaders make stronger decisions when they understand the full range of available strategies. Whether that means a MEWA, a fully insured plan or another approach, the objective remains the same: helping Indiana employers support and retain the people who carry out their missions while protecting the financial resources that make that work possible.
If this article sparked questions about your organization’s benefits strategy, we’d welcome a conversation. Reach out to Anna Beaty (anna.beaty@nfp.com) or email INnonprofittrust@nfp.com for more information.
