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Regulations Concerning Health Insurance Paid by the Church

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JayroeWhat are the current regulations concerning health insurance being paid for by the Church?


Small employers/churches may need to change healthcare policy to avoid excise tax. Notice 2015-17 gave small employers (less than 50 employees) an extension to comply with the requirements of the Affordable Care Act; however, that extension is about to expire. Employers need to begin taking steps to be in compliance with the new requirements.

Effective June 30, 2015, small employers (less than 50 employees) will be subject to a $100 per day per employee penalty if they pay or reimburse individual health insurance premiums. To avoid the penalty, employers must stop paying or reimbursing individual health care payments or reimbursement arrangements.

Small employers have a few options if they would like to provide health care coverage.  They can offer a bona fide group health plan with an employer payment plan.

Alternatively, they can simply increase the employee’s salary as long as the employee is not required to use the increase solely for healthcare insurance.

Employers with only one employee are exempt from these requirements and may continue reimbursing health care premiums on a pretax basis. Also, small employers are not mandated (less than 50 employees) to provide healthcare coverage, so another option is to simply not provide insurance or reimbursements.

You need to contact your health insurance administrator or tax preparer to ensure you are meeting these new regulations.

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