The news continues to bring updates on health care reform initiatives under the U.S. Patient Protection and Affordable Care Act (PPACA). The state/federal insurance exchanges, now being called “marketplaces”, are scheduled to be available this fall and it seems everyone has questions about how these will be structured and what it means for individual coverage. You might wonder how PPACA will affect the benefits provided for your church staff.
What is the “marketplace”?
As part of the Patient Protection and Affordable Care Act, new health insurance marketplaces are being created where anyone can purchase coverage for themselves and their families. A marketplace is like an online insurance mega-mall. Based on where they live, participants will get insurance options to compare, and the marketplace will ensure insurance companies compete under fairly strict rules. These marketplaces will have open enrollment in October 2013, with coverage beginning January 1, 2014. Additional information regarding each state can be found at the Kaiser Health website http://kff.org/health-reform
If our church provides coverage for our staff through a group plan, could an individual staff still go to the marketplace to purchase coverage?
Yes, although the individual will not be eligible for any subsidy if the group plan offered through your church meets essential benefit and affordability guidelines. The answer would be no, if your church is providing group health coverage through the CRC denomination because the church signs an agreement to provide the denomination offered coverage for all eligible church staff.
If our church decides they will not provide insurance coverage will our staff be eligible for subsidies in the state/federal marketplace?
Yes, based on household income. Individuals and families with household adjusted gross income below 400% of the federal poverty level will qualify for subsidies that will decrease the cost of health insurance coverage.
Can the church send employees to the marketplace to purchase coverage and pay their premium directly?
No. The employee must be the purchaser of insurance through the marketplace.
Can a church reimburse a staff member who purchases coverage in the marketplace?
Yes, however, this “reimbursement” must be provided as taxable income, which will increase household income and could therefore impact that individual’s eligibility for the individual subsidy.
How would an individual find out what level of subsidy they would qualify for?
The Kaiser Family Foundation has developed a health reform subsidy calculator based on estimates of premiums prepared by the Congressional Budget Office; access the calculator at the Kaiser Family Foundation website http://kff.org/interactive/subsidy-calculator/. This tool allows you to enter expected income in 2014 and see an estimate of the tax credit available.
Has your church decided whether or not to continue offering health insurance for your full time staff?
What questions is your church council asking about the changing landscape of health insurance?
Comments
Good suggestion, John. We've altered the headline accordingly.
Thanks for the timely posting of this important topic. Our church(3rd CRC), located in Lynden, WA, is just beginning to start the annual review of our group health care coverage to our full time employees. We, like many others, feel like there currently are so many unknowns in this arena that it it is even difficult to know which questions to ask, and which to ask first. We have been the recipeint of the small employer health care rebates which has somewhat eased our medical insurance costs and has kept our church from pursuing individual plan options.
Some questions: Has the small employer health care rebate program expired? I've never heard definitively.
Within the old health care system, a church employee could have the church pay directly (pre-tax ) all/part of his/her health care coverage even if was the employee was covered under his/hers spouse's policy. Does this continue under the new system?
I have other questions too, but better stop here and get back to work!
Thanks!
Here's a link with some information about the small business tax credit. I have not heard that it will be eliminated.
http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-Questions-and-Answers:-Who-Gets-the-Tax-Credit
In terms of your second question - if a church purchases health insurance and pays the insurance company (or broker) directly then they are providing a benefit for the employee and the premium paid on their behalf is not taxable.
If the church pays the employee to purchase their own insurance, or provides some payment in lieu of the insurance, e.g. an opt out payment because they are covered by a spouse, these amounts must be considered taxable income for the employee.
Michelle - thanks for your answers. I would like to clarify my last question which wasn't stated very clearly. I was referring to a situation where an employer (our church is this case) pays a 3rd party (Lynden Christian School) for the church employee's health care premium which is under the spouse's group policy at the school. This is still considered non-taxable if the church requires proof of insurance. I refer to the 2013 Church & Clergy Tax Guide, pg.200- where it states " Church employee's health insurance premiums paid directly to employees are excludable from the employee's gross income for federal tax reporting purposes if the church requires proof that the employee paid the premium themselves. In other words, the church treats this arrangement like an accountable business expense reimbursement arrangement and only reimburses those expenses for which it receives adequate substantiation." I hope this clarifies what I was referring to.
This is for churches in USA only. Should country specific issues be in a separate administrative forum?
How will this affect retired ministers who are presently covered by BCBS of Michigan with Medicare PLUS Blue Group PPO?
Thanks,
Larry
Larry
At this point we are not aware of any changes to the Medicare Advantage plans, other than new taxes that likely will be added in to the premiums charged by insurance companies.
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