Turns out there are lots of church plant health insurance options. It’s still a little complicated, but you have more options than ever to choose from. Here’s an overview as a springboard to your research.
If you’re a new church hiring staff or an established church that’s never offered health insurance before, you have two basic paths to choose from: offer nothing (but pay employees well enough that they can get an individual plan), or offer an employer plan to church employees.
Individual Plan Options (Church Offers No Plan)
Small businesses with fewer that 50 employees are not required to offer health insurance. So in lieu of a group plan, the church could increase employees’ pay up front to offset the burden. You just don’t get to stipulate that it must be spent on health insurance. And it is taxable income to them.
In all of these scenarios, church employees would have to arrange for their own insurance.
Employees’ options include:
1. Get Insurance through an Obamacare Exchange
Start at healthcare.gov It will help you find your state’s exchange or direct you to the federal exchange if your state doesn’t have one. You’ll have lots of options to choose from. Bonus: ministerial housing allowance does not count as income for Obamacare, so you’re more likely to get a government subsidy to help pay your premiums.
2. Join a Clergy Group Plan
Many church tribes started group plans years ago when it was too expensive for each church to offer a group plan. Instead of the “group” being your church’s employees, the group is all the participating clergy in your tribe. Ask around with your denomination or church network.
Some of these group plans have opened up membership to include clergy generally, not just those from their tribe of origin.
- GuideStone Insurance for Ministers and Church Employees
3. Join a Medical Cost-Sharing Ministry
This isn’t health insurance in the traditional sense, but it satisfies the ACA requirements for coverage. The basic idea is that instead of paying premiums to an insurance company, you pay your “share” directly to another member who is experiencing a significant medical expense.
The top 4 ministries as listed by pastorswallet.com are:
4. Use Spouse or Family Member’s Coverage
If your spouse works in corporate America, education, government, etc. they may have access to a fantastic group plan that covers them and their immediate family (you).
Employer Plan Options
If your church wants to do something formal for all of its employees, here are some church plant health insurance options to consider. They each have their pros & cons.
Note that many have a 70%+ enrollment requirement: no more than 30% of your employees can opt out of coverage. “I’m going on my spouse’s insurance” typically doesn’t count as an opt out, but other reasons may.
And generally you must offer insurance to an entire class: all employees, or all ministers, or all full-time employees, etc. (you can’t just say Joe gets insurance but Jane doesn’t).
Employers’ options include:
5. Set Up a Solo-Employee HRA
If the church has only one employee, they can pay the employee’s premium directly or reimburse them. It’s called a Healthcare Reimbursement Arrangement (HRA), and it gets reported as pre-tax income to the employee.
This would be used in conjunction with the employee finding his or her own individual plan option (above).
Unfortunately, an HRA may reduce or eliminate the tax credit/subsidy the employee might otherwise receive. So the church would functionally be paying the tax credit instead of the IRS and incurring minimal administration costs.
6. Set up a QSEHRA
This is basically a group HRA. The church can include an amount specifically for healthcare in the employees’ pay. QSEHRA payments are pre-tax income to the employee.
And it likewise reduces or eliminates the their tax subsidy. It also creates a small administrative burden on the church to manage it all.
7. Offer a Traditional Group Plan
Go to an insurance carrier or broker and set up a group plan for your employees. They will assess the risk based on your employees’ health information and charge you accordingly. Are all of your employees healthy, unmarried 25-year olds? You’ll pay less. Are they forty-somethings, married with kids and have preexisting health conditions? You’ll pay more.
The church can pay some or all of the premiums and offer a cafeteria of choices to the the employees: different carriers, good/better/best coverage, etc.
8. Join another Group’s Group Plan
Some of the denominational plans (#2 above) offer employer-based plans for churches. Again, ask around your tribe, and also check for plans that are open to churches from other tribes joining in.
One of my church planters years ago discovered that he could join his local Chamber of Commerce group plan. They made it available to local small businesses and had a group rate that was better than a traditional plan. I’m sure that’s not available in every market, but there may be things like that in your neck of the woods.
- GuideStone Employee health coverage
- Chamber of Commerce
9. Contract with a PEO
A Professional Employer Organization (PEO) is a way to outsource the church’s HR and benefits. The church employees would be co-employed by the PEO, so the risk pool would be bigger for cheaper premiums. The PEO administers benefits, often including payroll processing, and the church would pay the PEO. But you’d be paying for the insurance premiums and the service itself.
I have more than once been co-employed this way.
I found lots of options and tons of paid ads when I searched online for church PEO.
10. Offer a Plan through Obamacare’s SHOP Program
Similar to setting up a traditional plan (#7 above), a SHOP plan offers the church employees a cafeteria of choices. It’s just done through your state or the federal insurance exchange.
There may still be tax subsidies for your employees similar to if they had gone to Obamacare for an individual plan.
11. Join an Employer Medical Cost-Sharing Ministry
Several companies have taken the cost sharing idea (#3 above) to the next level and created employer plans. Now as a church, you can offer an official, ACA-compliant plan to your staff through cost-sharing.
Remember that I am not a lawyer or tax professional. This is my guy-in-the-trenches-like-you personal research.
And the descriptions for the church plant health insurance options only skim the surface. You’ll have to do some research to find the option that’s best for your church. But at least now you know where to start!