Health care for Ministers/Churches Current Climate (an Overview)

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1 Health care for Ministers/Churches Current Climate (an Overview) Know the Basics

2 The Affordable Care Act (ACA) Arrived Prior to the Affordable Care Act (ACA), it was a common practice for churches to reimburse staff for the cost of health insurance coverage purchased on the individual market on a pre-tax basis. ACA restricts the ability of churches to continue to make such reimbursements. Now what?

3 HEALTH INSURANCE BENEFITS Current Climate Through P&B resources, here is a list of possible options: Small group market Individual Exchange marketplace Individual Off-exchange Guidestone Bi-vocational work to have insurance Spouse works to have insurance Not a lot of great choices.

4 HEALTH INSURANCE BENEFITS Current Climate (Cont.) Nationwide many carriers are exiting the Exchange marketplace, those who remain are increasing rates significantly. Michigan Specific: Rate increases approved between 3.2% and 39.2% with an average of 16.7%.

5 Small Business Health Options Program (SHOP) Let s start with the Small Group market: Blue Care Network of Michigan Blue Cross Blue Shield of Michigan McLaren Health Plan Community If you have 50 or fewer full-time equivalent employees (FTEs), you may qualify to purchase group health care coverage for your employees through the SHOP. If you have fewer than 25 FTEs, you may qualify for tax credits if you purchase insurance through the SHOP.

6 SHOP (Cont.) You must offer coverage to all of your FTEs. FTEs are generally those who work an average of 30 hours or more per week. Note that two part-time employees generally equal one FTE. Each state is different so you will want to do your research on the option previously provided. CAUTION: Underwriting is age rated based upon state filed rates. We are seeing increases from 40%-200% as age rates are established. Some states may even require ER s to provide coverage to EE s dependents.

7 SHOP Premium Payments Premium Payments can be Pre-Tax Your church may pay for all or a portion of the cost of SHOP coverage on a pre-tax basis. If you want employees to share in the cost of coverage, your church may use a cafeteria plan, as described in Section 125 of the Internal Revenue Code of 1986, as amended (the Code ), to allow employees to pay their portion of the SHOP premiums with pre-tax dollars.

8 SHOP Considerations Your church can enroll in coverage at any time during the year. If you enroll by the 15th of the month, coverage can usually begin by the 1st of the following month. Employers with only one employee, such as solo pastor churches, can utilize the SHOP.

9 SHOP Considerations (Cont.) Most states require at least 70% of your FTEs to enroll in your SHOP plan (excluding dependents). For example, if you have 10 FTEs, you must offer coverage to all 10 and at least 7 of them must enroll in the plan. Some states may require a higher enrollment percentage, while others may require a lower percentage. If you don t reach the minimum participation rate, you can withdraw your offer of coverage.

10 SHOP Considerations (Cont.) Employees who have health coverage through another job, their spouse s job, Medicare, Medicaid, TRICARE or the Department of Veteran s Affairs do not count for purposes of an employer s minimum participation requirement. Employees with other types of individual health insurance coverage, such are coverage purchased on the Health Insurance Marketplace or through an individual health insurance policy (see below), do count towards this requirement.

11 SHOP Considerations (Cont.) The minimum participation requirement is waived if you enroll in SHOP coverage between November 15 and December 15 of each calendar year.

12 Marketplace/Exchange Coverage Employees may apply for health insurance coverage directly through the Health Insurance Marketplace, also known as the Exchange or On - Exchange What is an Exchange? A health insurance exchange is an online portal containing information, plan choices and enrollment capability for health insurance.

13 Marketplace/Exchange Coverage (Cont.) What are the Exchange Types? There are two main types of exchanges public (On-Exchange) and private (Off-Exchange). A public exchange is sponsored and run by a government entity, such as healthcare.gov. A private exchange is sponsored and run by a private entity or business On-exchange - If you qualify for a subsidy, and choose to use it on your health plan, then shopping on-exchange is your best option.

14 Marketplace/Exchange Coverage (Cont.) Michigan Specific Public Exchanges: Blue Care Network of Michigan Blue Cross Blue Shield of Michigan Health Alliance Plan Humana Medical Plan of Michigan, Inc. McLaren Health Plan Community Meridian Health Plan of Michigan, Inc. Molina Health Plan of Michigan, Inc. Physicians Health Plan Priority Health Total Health Care USA

15 Marketplace/Exchange Coverage (Cont.) Off-exchange - The number 1 benefit of shopping off-exchange is greater plan choice. If you don't qualify for a subsidy, the advantages of shopping off-exchange is substantial. Michigan Specific Off-Exchanges: Aetna Life Insurance Company Alliance Health and Life Insurance Company Freedom Life Insurance Company of America Harbor Health Plan

16 Marketplace/Exchange Coverage Premium Payments Employees must pay for this coverage on an aftertax basis. Beginning in 2014, your church may not provide its employees with a pre-tax reimbursement for the cost of coverage obtained through the Exchange. However, you may increase an employee s wages by an amount equal to the cost of that coverage.

17 Marketplace/Exchange Coverage Considerations Any increase in wages for the cost of Exchange coverage must be included as income on the employee s annual Form W-2 and is subject to federal and state income taxes. You may gross up the amount of the increase to offset the taxes due. Your church cannot use a health reimbursement arrangement ( HRA ) or an employer payment plan to reimburse premiums on a pre-tax basis.

18 Exceptions to ACA Market Reforms One-participant health plans See definition below Accident-only coverage Disability income Certain limited-scope dental and vision benefits Certain long-term care benefits Benefits under an employee assistance program - if the program does not provide significant benefits in the nature of medical care treatment.

19 Exceptions to ACA market reforms Per the IRS, a one-participant health plan exception applies to any group health plan for any plan year if, on the first day of such plan year, such plan has less than 2 participants who are current employees. Notice It is understood that this Notice would apply for purposes of arrangements under which any type of employer (for-profit or nonprofit) paid or reimbursed the cost of individual insurance premiums.

20 Exceptions to ACA market Reforms In addition, an employer with more than one employee that limits coverage under the reimbursement arrangement to only one employee may violate certain nondiscrimination requirements applicable to group health plans, so that premium reimbursements are taxable.

21 GuideStone The partnered with GuideStone following the passage of the ACA to offer churches access to the group health insurance programs offered by that organization. GuideStone is the benefit board serving Southern Baptist and select evangelical ministries. Participants must be full-time employees. The required number of participants for a group is 2.

22 GuideStone (Cont.) Of course, not everyone will be accepted as there is an underwriting process but P&B encourages our pastors and churches to investigate the options now available to them through this partnership. For requirements, underwriting guidelines, and an application, contact GuideStone at

23 GuideStone (Cont.) Churches have an opportunity to avoid onerous penalties for noncompliance while taking advantage of healthcare options from a faithbased organization with years of experience in the insurance business to the group health insurance programs nes

24 Are You Medicare Ready? Enrolling in Medicare is an important part of your overall retirement planning. Understanding what Medicare covers and what it doesn't will help determine any gaps in coverage and how much more you may need for health care in retirement. As eligibility age approaches, here are three questions to get you thinking about Medicare: 1. How does Social Security affect my enrollment?

25 Are You Medicare Ready? (Cont.) 2. What if I'm still working at 65 and have my employer's health insurance? 3. What if I leave my job and miss the enrollment period? Good news! P&B has an excellent resource. If you are no longer eligible for your employer s plan and have reached Medicare eligibility, you can talk to a licensed benefits representative at Towers Watson's OneExchange for FREE

26 Are You Medicare Ready? (Cont.) Simply call toll-free at and indicate that you would like to review medical and/or prescription drug plans that relate to Medicare. Or you can visit OneExchange at their website as follows: medicare.oneexchange.com/fao or medicare.oneexchange.com/for

27 Medicare and Employer Health Plans Active employees approaching age 65: They may need some hand-holding on whether or not to enroll in Medicare when first eligible For contributor components (Parts B and D), special enrollment periods allow individuals to defer coverage without penalty until actual retirement. Coordination of Benefits with Medicare: ER health plans must properly coordinate benefits with EE s who are also covered by Medicare

28 Medicare and Employer Health Plans (Cont.) Entitlement to Medicare = covered by Medicare Coverage under Part A = entitled Even if a person does not enroll in Parts B and D Do not get confused; this distinction is important!

29 Medicare How to Qualify Persons can qualify for Medicare coverage three different ways: 1. Age: Attain age 65 and qualify for Social Security (SS) retirement benefits Automatically get Part A if receive SS benefits; otherwise, must file an application Not possible get SS benefits and waive Part A! Six month enrollment period: Coverage retroactive to first month of eligibility if file application within six months of initial eligibility date

30 Medicare How to Qualify (Cont.) Persons can qualify for Medicare coverage three different ways: 2. Disability: Receive SS retirement benefits for 24 months (after a fivemonth waiting period 3. End-State Renal Disease (ESRD): Have permanent kidney failure that requires dialysis or transplant

31 Medicare Coverage - Components Part A: Hospitalization Coverage is free if you qualify for SS retirement benefits Part B: Outpatient Services (voluntary) Premium is income based. Will likely change yearly Limited ability to later add coverage if you waive Part B when first eligible, and premium surcharge could apply Part C: Medicare Advantage Plans (voluntary) Plans offered by private insurance companies to Medicare enrollees Replaces traditional Medicare coverage under Parts A and B

32 Medicare Coverage Components (cont.) Part D: Outpatient Prescription Drug (voluntary) Like Part B, limited ability to later add coverage if you waive Part D when first eligible and premium surcharge can apply

33 Serving Those Who Serve (If English is not your language of choice, please don t hesitate to call P&B representatives who have access to a service that allows ministers to have conversations interpreted in real time in their fluent language).