Although the annual double-digit medical inflation experienced by individuals and employers slowed during the COVID pandemic, medical premiums continue to rise to pre-pandemic levels. The Kaiser Family Foundation reports that the average annual premium for employer-sponsored health insurance for 2022 was $7,911 for single coverage and $22,463 for family coverage.1
Like other employers, churches are not exempt from the Affordable Care Act (ACA) and are faced with the need to provide benefits for staff. Larger organizations (50 or more full-time employees) are required to offer at least minimum essential coverage (MEC). Employers with fewer than 50 full-time employees (which includes the vast majority of PCA churches) have several options for coverage. The church and the individual employees must make decisions based on factors including access to quality care, the desire to reduce tax liability, and affordability.
While many ministries would love to be able to provide full family coverage to their employees, the cost of medical insurance is increasingly expensive. At Geneva we talk daily with churches and ministries wrestling with questions such as: Should we offer health insurance? What is the most tax-efficient way to provide coverage? How will we (our church or our employees) afford this? The answers to these questions are not easy. Health care benefits are expensive and navigating them can be complex. But the process can be managed with guidance and support. Here are some options churches may consider.
- Provide group benefits through an insurance agent
This allows churches to provide benefits that are tax-efficient, as affordable as possible, and which satisfy their employees’ needs. Any employer with two or more full-time employees (working more than 30 hours a week) may use a group agent to provide health insurance coverage for employees.
- Allow employees to choose a plan
Smaller organizations can allow individual employees to choose their own health plan. This is less tax efficient, but much easier for the organization. Some churches find that an Individual Choice Health Reimbursement Arrangement (ICHRA) through a provider like Remodel Health offers more tax efficient solutions with administrative guidance.
- Consider a sharing ministry option
While sharing ministries are not insurance, they can be a great way to reduce expenses on the group or the individual side. On the group side, there are vendors who combine a MEC plan with a Sharing Ministry overlay. This allows a blend of both insurance and sharing but may not work for all due to pre-existing conditions, complexity, availability in the local market, and expense.
If one is enrolled in sharing ministry plan, there is no tax penalty for not having insurance. Since these are not insurance plans, they are exempt from most state and federal laws. This vastly reduces costs but it also reduces legal protections. Sharing plans are largely unregulated. They can do what some insurance plans used to do (e.g., laser coverage, restrict coverage, have higher or different limits, terminate coverage at any time, etc.). This means these plans are far cheaper (often 1/3 the price) of standard, “comparable” medical insurance. Geneva Benefits Group does not offer a recommendation either way on these plans. We know many within the PCA and throughout the Christian community use these plans. They remain a valid consideration, but we strongly encourage you to compare the benefits against the limitations before purchasing one.
- Select a plan through the Affordable Care Act (ACA) marketplace
For many small organizations, individual use of the ACA marketplace will work well. In ACA plans, tax credits accrue based on modified adjusted gross income. Since ordained ministers can exclude a housing allowance from their modified adjusted gross income, many will qualify for higher tax credits.
- Establish a qualified small employer health reimbursement arrangement (QSEHRA)
Mid-sized organizations often find this option workable. The QSEHRA provides a way to provide employer payments for health insurance without increasing income taxes. However, the QSEHRA has several caveats, including strict dollar limitations, a requirement of uniform access and applicability for all employees at the organization, and no ability to obtain ACA premium tax credits if the QSEHRA is used to purchase an ACA marketplace plan. An employer would need to speak with a local tax advisor to ensure this is setup appropriately.
- Explore additional options like Medicare, COBRA, or a spousal plan
There are additional individual options other than the ACA marketplace and Sharing Ministries. These include Medicare, COBRA (from a prior employer), and coverage through a spouse’s employer. Each of these options have eligibility guidelines and caveats but could work for ministry staff.
Geneva understands the challenges ministries face in providing health insurance and benefits to their staff. We are currently exploring a partially self-funded option in partnership with a few peer agencies and committees for consideration in wider use throughout the denomination. Regardless of the size of the organization, we are here to guide ministry staff through the complexities of financial planning and benefits so that they can live generously in every season of ministry.
We have listed a few decisions and options into categories, with links to resources. These have been vetted for quality, but are not endorsed by Geneva Benefits Group. However, the decisions are still complex and could depend on administrative capabilities (knowledge, time, resources, etc.) in your church or in your household. We recommend individuals consult with a personal tax advisor to work through these options.
Fully Insured vs Self-Insured Health Plans
Potential Vendors: Insurance (individual and group options)
Health Insurance Marketplace® | HealthCare.gov
Take Command | QSEHRA + ICHRA Administration Software
Geneva Benefits Group serves those who serve others, providing practical support for the financial, physical, and mental wellbeing of people who work in full-time ministry.