Churches ‘under the law’ with health care regulationscomment (0)
July 4, 2013
By Jennifer Davis Rash
Church administrators across the state face some tough decisions as the new health care law begins taking effect.
If they have 50 or more full-time equivalent employees, then they must provide minimum essential and affordable health insurance to the full-time staff by Jan. 1, 2014, or face tax penalties. If they have fewer than 50 full-time equivalents, then they do not have to provide health insurance.
“Most of our churches have too few employees to be required to provide health insurance,” said state missionary Lee Wright, who works in the church compensation services office of the Alabama Baptist State Board of Missions. “But some will because of the extra ministries with paid employees they have connected to the church, such as day cares or food banks.”
A Birmingham-area church administrator agreed.
“It’s a dilemma,” he said. “We don’t know what to do yet.”
The church’s ministry and support staff plus the staff of the church’s day care/preschool ministry equals 85 employees with around 60 being full-time.
“How can we be legal without hurting the employees?” he asked, noting the church’s options are to lay people off, reduce the hours of existing employees, dissolve the school or take the penalty. Providing health insurance for all employees is not an option financially, he explained.
A second concern relates to tax credits.
Beginning in 2014, premium tax credits will be made available to eligible individuals who purchase their health coverage from commercial health care exchanges, but those credits will not be available to pastors and others who get their health care coverage from church health plans.
Legislation has been introduced in the U.S. Senate (Senate Bill 1164) to remedy this, but currently there is a discrepancy, according to GuideStone Financial Resources.
Pastors should not have to choose between tax credits available to other Americans and proven health care plans designed with the unique needs of ministers and other church employees in mind, GuideStone officials said.
A third issue deals with self-funded church plans and the unique benefit of being able to “discriminate” among employees.
Many churches in the less than 50 full-time equivalents category (not forced to provide insurance) will still offer health insurance to their ministers, but most in this category can’t provide it to support staff.
“The (existing) law says we are supposed to treat everyone alike. If we are providing insurance, then we should provide it for all our employees,” Wright said. “But we as a church are not under the penalty of that provision of the law, so we can continue to do what we’ve been doing — provide insurance for ministers and not for support staff (in the under 50 full-time equivalents category).”
Noting that churches might want to consider moving toward a more balanced approach with health insurance for all employees, Wright confirmed it is not illegal to provide it only for the ministers if the church has less than 50 full-time equivalents.
He did warn that business people sitting on church committees dealing with these questions might not understand the church exemption for this particular penalty because the penalty does exist in the business world.
GuideStone attorneys have concluded the health plans offered through GuideStone fall within the law and can be organized by class (ministerial and nonministerial), but it is unclear how all of this works if a church goes with another type of plan.
The deadline to work out health insurance for employees is marked as Jan. 1, 2014, but several who are researching the law noted that other required aspects of the law are falling behind schedule and could possibly impact this deadline. And even if the deadline stays the same, some are questioning how it will be enforced.
Church administrators are encouraged to stay informed and pay attention to the development of the health care law. Talking with insurance consultants and payroll and benefits specialists is one way to stay informed. Another helpful resource can be found at www.guidestone.org (click on Health Care Reform to the right just below center and read the “featured provisions” information).
Wright also will deal with the topic in his church financial workshops taking place across the state beginning in July. For more information, visit www.alsbom.org or call 1-800-264-1225.
Contraceptive concern still on radar of church leaders
The Patient Protection and Affordable Care Act (new health care law) expands the preventative health services provided for women. One of those services — contraceptives — has been hotly debated by faith-minded organizations because the definition of this term in the law included abortions and abortion-inducing drugs.
An exemption to the law is now in place for religious organizations that object to the contraceptives mandate on religious grounds. Religious employers are defined as organizations that operate as a nonprofit entity and are referred to as “churches, their integrate auxiliaries and conventions or associations of churches.”
But it is unclear whether the exemption is for abortions and the drugs that could cause an abortion or if it is an “all or nothing” type exemption for all forms of contraceptives.
GuideStone Financial Resources also is working with legislators and regulators on a separate accommodation rather than an exemption for “eligible organizations.” The details on this proposal are unclear, but more information will be provided as regulations are clarified.
Calculating what 50 or more means
Does your church have 50 or more full-time equivalent employees?
If so, it is required by law to provide minimum essential and affordable health insurance by Jan. 1, 2014, or face a tax penalty.
Full-time employee — works 30 hours or more. Each full-time employee counts as one equivalent.
Equivalent — The hours of part-time employees (those working less than 30 hours per week) are to be added together. Divide the total of part-time hours worked in a month by 130. Then add this number to the number of full-time employees to determine the total amount of equivalents working for the church (or business).
With a law as big in scale and scope as health care reform, things are always changing. Regulations, additional guidance and the like are continually being issued. To stay up to date on individual provisions and the latest news, visit www.guidestone.org/healthreform and sign up for the email updates.