Health Insurance Options for Pastors and Clergy
Churches want to take care of their pastors and staff but often struggle with options when it comes to benefits. Group plans may not be affordable or qualified enough in the eyes of churches that need a long-term solution that is also financially viable.
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What are the Options for Pastors?
To understand health insurance needs for pastors, it is important to differentiate between denominational and independent churches. A denominational church belongs to a large international organization with a centralized central office. On the other hand, an independent church operates independently or in loose affiliation with other churches of similar faith but is not part of any hierarchical structure. Many pastors have trouble knowing where their congregation stands on this issue. Because there isn’t just one answer as some churches fall into both categories depending on what type of meetings they host (like a service vs retreat).
It is important to note that most denominations provide health insurance coverage for their pastors through a group policy bought by the denomination’s headquarters. However, some are dropping this benefit entirely in recent years.
Independent and many denominational churches are typically left to find their own healthcare for faculty, clergy, and staff.
Some of the Primary Health Insurance Options Available to Pastors
A traditional group health insurance policy
The first available option for pastors and clergy is to get a health insurance policy through a broker. These are traditional plans that often cost more than the smaller churches that only want one or two employees covered. Group health policies may not be ideal or affordable, which we’ll discuss in detail below.
Reimburse the pastor for individual health insurance
One option is a reimbursement plan like the QSEHRA, which lets churches reimbursing their pastors for individual/family health insurance. The process for reimbursing a pastor for such coverage is:
- The church sets the maximum amount that they contribute to health insurance, usually up to the federally defined annual caps of $5,250 for single employees and $10,600 for employees with a family.
- The church sets up a QSEHRA account for eligible employees, which provides monthly allowances (for example, $150/month for the pastor).
- The pastor and other employees purchase individual health insurance and are reimbursed up to their monthly allowance, tax-free. This only applies if healthcare sharing is not the ministry’s chosen group coverage option. However, the out-of-pocket cost for healthcare sharing membership is not tax-free unless the employee also purchases MEC. Proposed legislation may change this, but it has not yet passed.
- There are no minimum contribution requirements at all, so the church can offer an allowance that will work with their budget. There’s also no requirement for participants to make it worthwhile- they’ll give you money as long as there is one pastor on staff or less than 50 full-time employees in total!
FAQ: Do Pastors Qualify for Premium Tax Credits?
The Affordable Care Act (ACA) provides two health insurance options for pastors, depending on their income:
-Premium tax credits to lower the cost of individual health insurance purchased through the ACA marketplace or state exchanges.
Medicaid if they make less than 400% Federal Poverty Level.
If a pastor qualifies for and participates in a QSEHRA, they must reduce their HEAP by the monthly amount of their HRA.
After reading this article, you should be able to find affordable health insurance for clergy in your denomination. We hope that these tips will help make finding the right coverage easier so you can focus on what’s really important – serving God and helping people in need!