By Roy Hayhurst
When it comes to health care coverage, churches and ministry organizations find themselves in the same boat as other employers. If a church has 50 or more full-time and full-time-equivalent employees, it must generally offer affordable minimum essential health care coverage to them and their dependents, or face federally mandated payments imposed upon employers. These payments are often referred to as “pay or play” penalties.
Donna Lively, director of insurance marketing at Dallas-based GuideStone Financial Resources, says churches need to determine if they have 50 or more full-time and full-time-equivalent employees. If so, as “applicable large employers,” they’re required to offer coverage to employees working 30 hours or more per week. This is an important step, and the regulations provide very detailed rules regarding how to count full-time and full-time-equivalent employees.
“Many churches will be surprised to learn they’re subject to these rules,” Lively says. For example, if a church controls a Mother’s Day Out, preschool, K–12 school, sports program or other ministry with staff, it may be a “controlled organization” whose employees may count toward the total employee count. If those other ministries of the church operate under the same Employee Identification Number (EIN), it could be a clear indicator that the ministry is a controlled organization of the church.
“Even for ministries who have separate EINs, they may still be a controlled organization if the church has control, provides significant funding, or is overseen by the same trustees or boards,” Lively explains. “In that situation, all employees are considered for purposes of determining applicable large-employer status.”
To help in the employee-counting process, GuideStone has made available a free calculator on its website (www.GuideStone.org/healthreform) for any church or ministry that wants to determine if it has 50 or more full-time and full-time-equivalent employees. It’s available at no cost, whether a church uses GuideStone as its health insurance provider or not. In addition to calculating employees, the calculator estimates the amount of the penalty that could be assessed if a church or ministry organization opts not to provide affordable minimum essential coverage to all employees working 30 or more hours per week.
“All providers of health care — from insurance companies, to self-insured church plans such as GuideStone’s — are trying to keep their customers apprised of the impact of the health care regulations, and the steps they need to take,” Lively says.
How to get proactive
While concerned with the practical implications of the law, GuideStone (along with other church health plan providers) is continuing to diligently advocate through legislative and regulatory efforts designed to protect and preserve health care coverage for pastors and others in ministry. The new federal law poses numerous issues, and the coalition of health plan providers is aggressively seeking various forms of technical relief through legislative and regulatory avenues, which are beyond the scope of what a particular court can provide. GuideStone, for example, is committed to protecting religious liberty through legislative and regulatory channels; others are addressing these matters through litigation. This multipronged approach is critical as Christians join in seeking to safeguard religious liberty.
The avalanche of new regulations under the health care law accelerated after President Obama’s re-election. The new regulations can create a daunting challenge for church financial leaders seeking to make decisions for 2014 and beyond. On the same website (www.GuideStone.org/healthreform), churches and ministries — can sign up for prompt email alerts on new regulations and other developments of interest.
The government’s health care reform website (www.healthcare.gov), the Department of Labor website (www.dol.gov/ebsa/healthreform) and the IRS website (www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions) all have good information for employers, as well.
As the year progresses, it’s likely there’ll be more reports of some for-profit companies considering the advantages of paying penalties rather than providing health insurance. While not providing health care coverage may appear to be more financially advantageous, Lively doesn’t expect many churches and ministries will opt for dismantling their employer-sponsored health care benefits.
“In my experience, the ministry organizations we’re blessed to serve care about their employees in a way that many secular organizations may not,” she explains. “So, I think not providing health care would be a very, very difficult decision.”
Even so, as Lively points out, the budget impact of expanding coverage is real. “Churches must carefully consider the impact health care reform will have on their fiscal health and employee morale as they make their 2014 medical coverage decisions,” she cautions. There are many questions within the health care industry and among health plans regarding various elements of health care reform. As such, certain information may change, to some extent, over time. However, we hope our communications will provide churches a useful frame of reference as they endeavor to carry out their responsibilities and serve their employees.
Roy Hayhurst is senior manager of editorial services at Dallas-based GuideStone Financial Resources. He may be reached at email@example.com.