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Health Insurance and the Church

Health Insurance and the Church

Preparing for Obamacare Insurance Reform

As of fourth quarter 2013, churches that provide health benefits to their employees, as well as organizations that handle the administration of these programs, are busy addressing how to handle implementation of Year Four of the Patient Protection and Affordable Care Act (a.k.a., "ObamaCare," "PPACA," or "ACA"), the set of health insurance reforms that started in 2010.

At press time, there were several important new features of ACA set for rollout in 2014. These are led by coverage and income-based premium subsidies, both of which begin January 1, for individuals buying policies in the Health Insurance Marketplaces (often called "exchanges"). Also beginning on that date, individuals are required to either purchase or be provided (by an employer) "minimum essential coverage" in order to avoid the "individual mandate" penalty.

Meanwhile, employers with fewer than 25 full-time equivalent employees making an average of about $50,000 a year or less can qualify for a tax credit worth up to 50% (or up to 35% for tax-exempt employers) of contributions toward employees’ health insurance premium costs, if that coverage is purchased through the Small Business Health Options Program (SHOP).

"What do I have to do?"

A complex law, political partisanship, the unique character of church benefit plans, and honest differences of opinion have combined to create a number of issues for churches as they attempt to comply with the provisions of ACA.

"This is a very complicated piece of legislation," notes Jim Sargent, director of The Unitarian Universalist Association (UUA) Health Plan based in Boston. "And usually, with legislation this complex, there are attempts to adjust it before it goes into effectbut those efforts have died."

Sargent's office has been working with 350 Unitarian Universalist congregations in implementing ACA at the local level.

"Each of our congregations in an independent 501(c) (3) organization that controls its own destiny," says Sargent. "And a lot of them are small enough that they have only a minister and a part-time administratorand they don't have time for much of anything other than congregational life, and the business side of the church is a burden for them."

The primary concerns of these ministries revolve around how ACA affects them, and what are the specific tasks they have to do to get into compliance, says Sargent. He, in turn, works to provide them with "very explicit directions on what they have to do."

In addition, the UUA has been providing online and email updates through its "Health Care Reform Alerts" web page (http://www.uua.org/careers/compensation/health/284597.shtml).

Addressing church needs

Dallas-based GuideStone Financial Resources, a financial services provider serving the Southern Baptist and wider evangelical Christian community, also provides online updates on its "Health Care Reform" web page (http://www.guidestone.org/HealthReform), as well as serving as an advocate for health plans whose provisions are in line with the values of its clientele.

"GuideStone is as committed as ever in its advocacy for church health plans that reflect Biblical convictions," says Tim Head, the company's executive officer of Denominational & Public Relations Services.

According to a recent statement from GuideStone, "The health care reform law, itself more than 2,000 pages in length, has spawned to date more than 20,000 pages of regulatory guidance." Adding that, "For the most part, the unique needs of churches and other ministry organizations are not addressed."

GuideStone is working with what it calls "a broad coalition of denominations" to help pastors and other ministry workers that want to keep their coverage with church health plans but, thanks to the way the law was written, are excluded from getting the premium-based subsidies available in the Health Insurance Marketplaces.

To that end, GuideStone and other church benefits boards support Senate Bill 1164, "The Church Health Plan Act of 2013," which is legislation introduced in the Senate that would amend ACA to treat self-insured plans in the same fashion as the "qualified health plans" found in the Health Insurance Marketplaces.

The bill, currently stuck in the Senate Finance committee, has the backing of benefits organizations for the Southern Baptist Convention, the Episcopal Church, the Presbyterian Church (USA) as well as the Church Alliance, a coalition of chief executives of 38 church benefit programs. It calls for amending the ACA to treat church health plans as equivalent to the "qualified health plans" offered in the marketplaces, enabling clergy and lay church employees to qualify for the same premium subsidies while retaining coverage under their church plans.

"This would mean that clergy could remain covered in their denomination's health planoften tailored in benefits, contribution structure and portability to accommodate the needs of the clergy workforceand receive the same federal assistance that they could receive if their church ceased providing the church plan, and urged them to purchase exchange [i.e., Health Insurance Marketplace] coverage," reports Andrew Q. Hendren, associate general counsel of the General Board of Pension and Health Benefits of the United Methodist Church (UMC) based in Glenview, Ill.

This not-for-profit administrative agency supervises and administers the church's retirement plans, investment funds, and health and welfare benefit plans. Its health care reform information web page is:

http://www.gbophb.org/health_welfare/healthcarereform/index.asp.

The applicability of ACA's "Employer Shared Responsibility Payment" (a.k.a. "pay or play" provisions slated to go into effect January 2015) to church health plans is also an issue in need of clarification.

This part of the law requires many employers of 50 or more full-time equivalent employees to offer minimum essential coverage, or pay a penalty. And when it comes to the clergy of many religious denominations (including the UMC), determining their employers is not as simple a task as it is in the secular world, according to Hendren.

"Federal law treats UMC clergy as self-employed for employment tax purposes," says Hendren. "Courts have held, however, that UMC clergy are employees' for income tax and employee benefits purposes, but they have not determined which organization (the local church or regional conference) is that employer." The final determination, he says, will have to be made by the IRS.

Given the uncertainties surrounding the implementation of ACA, Hendren foresees most UMC conferences taking what he calls a "status quo" approach to 2014.

"However, we do expect some local churches and regional conferences to take initial steps to test out the ACA exchanges' by encouraging part-time employees and spouses and dependents to seek coverage options through the exchanges," says Hendren. He adds, "If the system works for those groups in 2014, then we expect to see UMC churches and conferences take bolder steps toward reliance on the exchanges in 2015."

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