It is safe to say that navigating the shark-infested waters of healthcare has been difficult in recent years, especially since the current administration “fixed” our system with their “Affordable Care Act.” Our church has had some tough times financially over the last 5 or 6 years. We stretched ourselves to the breaking point just before the economy broke! In recent years we have cut every bit of fat out of our budget, and a little bit of lean. If it were not for the astronomically escalating healthcare costs over the last 5 years, our budget would be significantly reduced. Every penny of budget increase is due to rising healthcare costs. To the credit of our Administrative Team, our leaders have done all they can to continue to bear the full costs of healthcare for the three pastors.
We have had monthly meetings of confusion and frustration trying to figure out Obamacare and its ramifications. This is not a group of rubes. Our team leader is a lawyer who specializes in personnel issues. One other member was a lady who with her husband runs a tax accounting firm. She attended several conferences trying to figure out exactly how to handle the every-changing dictates of Obamacare’s fluid rules. We had a medical doctor, a pharmacist, an accountant turned farmer, and an optometrist with several employees. And the conclusion of our meetings month after month was, “we have no idea what they want!” Every month the rules changed.
And there was some frustration with Guidestone because we wanted to get all three of our pastors on a common plan. Two of us are on Guidestone and one was on another plan (the reasons for that are long, complicated and not germane to the discussion). But we were not able to put him on Guidestone because they had closed enrollment. I begged, pleaded, and tried to affect a tear or two. I fell short of threatening to write a nasty post – I don’t think the nice people (relentlessly cheerful and polite) who work the phones at Guidestone have ever heard of SBC Voices. I’m not sure whether OS Hawkins has! But their rules were firm. I understood. Their reasoning made sense.
We don’t know what Obamacare is going to demand next and so writing new policies is simply too risky until the picture clears up.
Hard to get too upset with them about this, as much as it frustrated us.
A Current Insurance Crisis
But recently, we got word that things had changed and that change affected us. It may affect you. If it affects you, this is not something to ignore. Our third pastor had private insurance that was not group coverage. Previously, the church could pay for that coverage. It can no longer do that. Previously, if the pastor paid for that himself, he could then deduct the costs of that insurance on taxes. That is gone. Basically, as I understand it, you pretty much have to be on a group plan under the new system if a) the church is going to pay for it or b) you are going to get any tax break on it.
I’m not an expert on these issues. This is just my understanding.
That’s where Guidestone comes in.
Years ago, in my previous church, we had some conflict over financial policies. We studied Hammar (recognized expert) and consulted a local man (a friend who traveled the country working with non-profits on tax and accounting policy matters). After all of that, what we found out was that the information in Guidestone’s annual publications (I think they were still the Annuity Board at the time) was the most reliable and current. Their information on how to structure pastors’ compensation is THE BEST. Their tax guide is unsurpassed. (It’s free, too.) Guidestone has the best, up-to-date, reliable information on tax, insurance and other such issues that you can find anywhere!
Now, they have stepped in again – like superheroes at the last moment, just as the timer on the bomb ticked to zero. On July 1, the new policies go into place. If you still have a personal policy (not a group policy) you are going to lose tax benefits. Your church CANNOT pay a personal policy for you. If they continue to pay a personal policy for you, there is the potential of a large penalty being imposed.
If the information I am giving is in any way incorrect, please correct me. But from what I’ve been told from several sources, this is the case.
The Facts (As of July 1-as I understand it)
- Your church cannot pay for a personal health insurance plan for you. ( If you are in need of some emergency health coverage, apply here and make sure you qualify.
- You cannot deduct the costs of a personal plan any longer.
- You need to be on a group plan!
- If your church continues to pay for your personal health insurance plan after July 1, it risks draconic, crippling fines. (Will they actually impose these? I would not tempt this administration!)
The Solution
Many of you are in single staff churches with only one pastor, one employee. I don’t know what the solution is for you. I do not know if Guidestone has opened enrollment for it’s plans generally. Call them. All of Guidestone’s plans are group plans, so if you have Guidestone insurance, you are okay.
But Guidestone has made a significant change that has greatly helped my church and may be a godsend to other churches like mine. They have now allowed churches to set up group plans with as few as 2 employees. There are several requirements.
- All eligible employees (working over 20 hours – leaves most of us bloggers out) must be covered with group healthcare.
- The church has to pay it 100%.
- Minimum of 2 employees.
If you currently are on a personal (not group) health insurance plan, do not delay, do not pass go, do not collect $200. Call Guidestone. Find out the facts. Get the full story. Whether they have a solution for you or not, you will know that the information they give you will be solid, accurate and sound.
And for churches like mine, Guidestone has provided a solution that has bailed us out of a very difficult situation. Thank you, Guidestone.
Hey Dave,
What’s yellow and dangerous?
I don’t know. What’s yellow and dangerous?
Shark infested mustard. Sorry its my sons favorite joke. And you mentioned shark infested
Wow.
Nerd.
Go to Missouri. Do not pass go…
As I understand the changes, churches that have only 1 employee are NOT affected by the July 1 changes.
Is that right? Good.
My understanding is the same as Bob’s. We have done some checking with our state Guidestone rep. and Guidestone. We have also done some additional checking to confirm this. If we are wrong, it certainly isn’t for a lack of trying to be on top of it.
Can a church continue to pay the insurance?
Church could only “pay” the insurance if it was a group plan before. They could “reimburse” before, and still can for single employee situations. That is my understanding.
The question is, if they reimburse, can you deduct that?
The issue is taxes.
In a single pastor situation, the church can reimburse you, and that reimbursement is non-taxable. Otherwise, the church can no longer reimburse whether taxable or otherwise. Again with the disclaimer: that is my understanding of it.
Good
Adam,
Same here. Basically as I understand it the new regulations do not affect single employee situations at all. The old regulations are unchanged for a church that pays the pastor’s insurance or reimburses him for it. That is not required to be reported as income. The rules change if there are 2 or more full-time employees.
Too much not known here.
If 2 employees qualify for a group do the employees have to pass underwriting? Or, is enrollment open now for middle-aged, diabetic ministers with a health history GS wouldn’t touch previously? IOW, is GS going to load up with older expensive enrolees that will be subsidized by younger, healthier people whose rate will increase? Does Obamacare require private insurers now to take all applicants?
I have always liked GS but wish they would talk to us more. If they were genuinely responsive, they would have a spokesperson respond here to Dave’s article.
Guidestone has been VERY responsive. They have made public announcements and worked with state conventions. Our state reps were the ones who made us aware of this. Guidestone dealt with them and they dealt with us.
Guidestone is not under any obligation to read or respond on blogs.
I did not contact anyone at Guidestone about this (the blog), but if someone at Guidestone DOES want to respond, I’d love it. I just talked to them this AM (about our church situation – not the blog) and wanted to pass on the info I got.
Call them and ask a question if you have one.
We’re exploring it now. Single staff church on me on a private plan. My insurance is minimal but I have a feeling it’s gone July 1
OK, here’s GS press release on the July 1 deadline:
http://www.guidestone.org/NewsRoom/NewsReleases/2015/HealthcareReimbursementTax
Organizations that offer GuideStone health plans are not at risk of these penalties. GuideStone’s health plans — both its Personal and Group Plans — are church health plans and are considered group health plans under federal law and thus are not affected by these penalties.
From the press release: “Fortunately, GuideStone health plan participants and the churches and ministries that employ them can rest assured that they can continue to pay for coverage as they have in the past and meet the guidelines under the current law,” said Donna Lively, managing director of insurance plans at GuideStone Financial Resources. “Organizations that don’t utilize GuideStone should consult with their legal and tax advisors to determine how to comply with the letter of the law.”
_____________
I still don’t know what changed about the group and the 2 people group stuff that Dave wrote about but I see that anyone can enroll with GS within 60 days of new employment. Whether or not GS can offer competitive rates under the new ACA rules about underwriting, I don’t know. I’d depend on one of my single staff pastor brethren to tell me how their GS rates will be looking when GS puts out renewal stuff this fall.
No, Guidestone’s plans have always been group plans. The danger is in people who have NOT had Guidestone, but personal, non-group plans of their own.
Previously, churches like ours were too small to make up our own groups, but now we can. That is the significant change.
GS rates used to be LOTS higher, but in recent years, from our studies, the difference has narrowed.
Was told by our state Guidestone rep today their rates are increasing by 22% for the coming year, so competitive??????
Have you checked others?
I’m not with Guidestone but knew he could answer some of the questions you posed in the OP. He told me substantial rate hikes with every insurer to be expected. And we still don’t know how this Supreme Court ruling will effect things
GuideStone is honored to be an advocate for SBC churches of all sizes. For helpful resources that address the topics discussed in this blog, please visit GuideStone.org/HealthReform. If you have specific questions, call 1-888-98-GUIDE (1-888-984-8433) Monday through Friday, 7 a.m. to 6 p.m. CST to speak with a customer relations specialist.
I’m willing to wager my spleen that the representative will be pleasant and helpful too!
I’d be careful putting that “spleen” in the kitty until after you speak with the representative.
I’m sure there is some penalty for gambling body parts under Obamacare.
PS–Try a kidney-you have two of those.
Just a side note: I heard a news report that Insurance Companies last year lost millions, if not billions because of Obama Care. The end result: some of the major players are contemplating up to 45% increases in healthcare–45% over the present increases.
This of course would have a ripple down affect as these costs are passed on to everyone in the congregation–not just the issue with staff.
I live in one of the richest towns in the U.S. Still, the money crunch is getting worse.
Sorry, no solutions, but they say, “to be forewarned is to be forearmed.”
PS–Should Hillary get elected, she will likely make Obama look like a conservative. Right now, the Republican party looks like a bad version of “how many clowns can fit into a VW?”
Hillary will complete the transition to single payer unless the insurance companies give billions to the Clinton foundation… (Only half jest.)
And if you are a pastor or church staff member and are not contributing to a GuideStone Retirement, call them today.
They now even have personal investment accounts.
If you or your church are already contributing to your GuideStone Retirement, contribute just a little bit more! Don’t worry; if you end up with too much retirement, you can always increase your giving.
David R. Brumbelow
David Brumbelow, as the moderator, I’m going to go back and make a small correction to your previous comment, which is what I’m sure you meant.
After “increase your giving” I’m sure you meant “…to the Dave Miller fund.” Right?
I can make that change.
Dave,
Sorry, I left that part out.
David R. Brumbelow
Two issues:
1. The self employed can still as far as I know deduct payments for healthcare. I did so last year. I am not sure whether you can claim this if you have even one employee (I suspect not), but it appears to extend to partners in an LLC under certain circumstances.
2. A church can increase compensation to cover the cost. It just cannot directly recompense the healthcare premiums and will be responsible for payroll taxes on the additional compensation.
But the warning is well noted. We’re facing it at our startup as well and there are about to be some surprised people…
#2 is a good point, which I failed to mention earlier. Thanks.
I need to be more specific: the self-employed can deduct for healthcare INSURANCE. I left the INSURANCE out earlier.
Relevant sections from IRS Publication 517
“Health Insurance Costs of Self-Employed Ministers
Individual (shared) responsibility payments. If for any month in 2014, you, your spouse (if filing jointly), or your dependents did not have qualifying coverage (called minimum essential coverage) and did not qualify for a coverage exemption, then you must make a shared responsibility payment. See the instructions for line 61 in the Form 1040 instructions and Form 8965 for more information.
Minimum essential coverage. Minimum essential coverage is health coverage that satisfies the individual shared responsibility provision. Minimum essential coverage generally includes coverage under a government-sponsored program, coverage from your employer, a plan that you buy in the individual market, and certain other coverage. See the instructions for Form 8965 for more information on what qualifies as minimum essential coverage.
Premium tax credit. When figuring the amount of insurance premiums you can deduct on Schedule A, do not include any amount of advance payments of the premium tax credit made or the amount of premium tax credit you are claiming on Form 1040.
If advance payments of the premium tax credit were made, or you think you may be eligible to claim a premium tax credit, fill out Form 8962 before filling out Schedule A.
Self-employed ministers. If you are self-employed, you may be able to deduct the amount you paid in 2014 for medical and dental insurance and qualified long-term care insurance for you, your spouse, your dependents, and any child you may have who, as of the end of the tax year, had not attained age 27.
For purposes of this deduction, your child must be an individual who is your son, daughter, stepson, stepdaughter, or eligible foster child. An individual who has been legally adopted by you (or placed with you for adoption) will be treated as your child.
If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. See the Instructions for Form 1040 to figure your deduction.
The following special rules apply to the self-employed health insurance deduction.
You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction.
You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse’s) employer.
The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church.
More information. For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535.
Deduction for SE Tax
You can deduct one-half of your SE tax in figuring adjusted gross income. This is an income tax deduction only, on Form 1040, line 27.”
Do an in-window, browser search on the subheading “Health Insurance Costs of Self-Employed Ministers” (without quotes.)
I have serious questions about whether ministers can qualify as self-employed for tax purposes under IRS guidelines. We are self-employed for SS purposes but not for tax.
That is true. You could qualify on income outside of that paid by the church but the deduction would be limited to actual income. Guidestone addresses this situation.
I think part of the a problem is that taking about ObamaCare “requirements” is like trying to hit a moving target, or nailing jello to a tree.
The whole mess is well, just a mess. I have talked with lawyers who have trouble making sense of it. It is not a coherent system and one part may contradict another part.
Also, I’m not sure anybody even knows what all the parts are.
It is just awful. A Single-payer HillaryCare may solve some of this confusion, but the cure will likely be worse than the disease.
“The whole mess is well, just a mess. I have talked with lawyers who have trouble making sense of it. It is not a coherent system and one part may contradict another part.”
remember all those poor people who were going to get health insurance for free? Obamacare changed all the categories for income to higher brackets to include the working poor with an age limit. That means the 60 year old with a decent retirement pension pays less than a working couple in their thirties with two children making an average wage.
Those types are getting creamed with huge deductibles and high premiums.
I am still in shock that this country is allowing the IRS to be involved in health insurance/care.
It is not working.