Churches can now help their employees with their healthcare needs! Providing health insurance reimbursements for employees was a routine practice utilized for nearly 50 years, until the Affordable Care Act made the practice illegal. Many churches have struggled to help their employees with their health care needs since the law changed. Fortunately for many, new rules went into effect January 1, 2020, allowing these benefit practices to begin once again.
Churches may now, partially or fully, either reimburse premium expenses paid by employees or directly pay premiums for an individual health insurance policy covering an employee.
How could my church do this?
There are two ways to approach covering health care premiums: Individual Coverage HRA (ICHRA) and Qualified Small-Employer Health Reimbursement Arrangement (QSEHRA).
Due to the simpler nature, the option most churches opted to cover healthcare costs for employees in the past was an Individual Coverage HRA (ICHRA). An ICHRA allows churches to partially or fully help cover health insurance premium costs. Church can do this by either reimbursing employees for premium expenses incurred for an individual health insurance policy or by paying premiums directly for their employee’s individual health insurance policy.
Churches offering an ICHRA to their employees are required to offer the same terms to all individuals in the same class of employees. The only exception being the church can choose to offer an increased amount for older workers and workers with more dependents. An ICHRA cannot be offered to an employee who receives a traditional group health plan.
Another option would be to use a Qualified Small-Employer Health Reimbursement Arrangement (QSEHRA). A QSEHRA is not a group health plan, but instead is an arrangement where a church either pays or reimburses employee medical expenses. After an employee provides proof of minimum essential coverage, the church pays or reimburses medical expenses of employees and their eligible family members, up to a defined limit set each year by the IRS; the defined payment limits for 2020 are $5,250 annually for individual employees and $10,600 annually for employees with eligible family members.
A QSEHRA provides the same terms to all eligible employees of a church and is funded only by the church, with no salary reduction contributions by employees. A QSEHRA may be used only if:
A church is not considered a large employer. A larger employer is defined as a company that employs 50 or more full time and full-time equivalent employees in the prior year.
A church does not offer a group health plan to any employees.
In addition to the QSEHRA and ICHRA, an Excepted Benefit HRA (EBHRA) is a linked benefit that allows churches to reimburse for additional insurance plans and expenses. These additional plans and expenses can include items such as: dental, vision, long-term care, COBRA, cost of copays, cost of deductibles, and other expenses not covered in the primary plan. An EBHRA can be used even if an employee declines to enroll in the offered group health plan.
Why is this important?
Churches can feel at ease to bless their staff with their health care needs once again. If you are looking for additional ways to bless and support your pastor and church staff, this is an answer for your church!
Call Wisdom to implement any of these benefits for your church staff in 2020. Your staff will thank you!
