How the new healthcare reform act may affect congregations

By David Middlebrook and Robert W. Rucker

President Obama signed into law the Patient Protection and Affordable Care Act On March 23, 2010, with a follow-up signing of the Health Care and Education Affordability Act of 2010 a week later. This new legislation represents one of the most sweeping overhauls for health care coverage and insurance in United States history.  As the requirements of the new law are implemented through 2014, it is estimated that 95 per cent of the American population will have some form of basic health coverage.

But, the question remains as to whether or not the average business can afford to provide the new mandated coverage and still maintain their normal operations.

Many churches, which are after all, businesses who have employees, are concerned that this new legislation will make it even more difficult to stay within budgets and are considering further staff layoffs rather than having to pay the anticipated higher costs.  Many churches are already struggling with budget issues as their members have been laid off, had pay reductions, or been transferred or had to move during this current economic recession.

We’ve spoken with these church administrators on a daily basis and their concern is very real. The Congressional Budget Office has indicated that these new policies would add more than $9.7 trillion to the national debt over the next decade.  President Obama and other proponents of the bill have been quoted as saying that the new debt would be paid for by raising taxes only on high-income individuals.

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However, in other countries where social programs were to be paid for by the wealthy, such as in England, research showed that these persons found ways to avoid the higher taxation, thus pushing the burden back to the middle class.

The churches that tend to rely upon contributions from a broad-based middle class stand to be directly affected. The church is facing the “double-whammy” prospect of receiving fewer donations to support it while having greater costs associated with paying for the new health care coverage for its employees. There is still great uncertainty as to how the new law may affect flexible benefit plans such as health savings accounts that are popular with many churches.

Until there is further guidance and interpretation from the government, it remains unclear whether the employer contribution to an employee’s health savings plan will count toward the total value of coverage that an employer will be required to offer under the new law.

The law appears to place a limit on deductibles, but the question remains as to whether or not it would apply only to small employers or whether large employers could be affected as well.

David Middlebrook is a partner and Robert W. Rucker is an attorney with Anthony and Middlebrook P.C., The Church Law Group, Grapevine, TX.
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