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Small Business Employee Benefits and HR Blog

A Better Health Insurance Option for Religious Institutions

religious_institutionThe Affordable Care Act (ACA) has made individual health insurance easier to obtain and less expensive. This is great news for religious institutions who are wanting to provide healthcare benefits for their spiritual or religious leaders. When it comes to offering healthcare to clergy members, many religious institutions may feel like they don’t have any options. While they want to take care of their religious leaders and clergy members, many are unable to afford traditional group health insurance, or cannot meet the minimum participation requirements.

Thanks to the changes to the individual health insurance market, religious institutions can finally afford to take care of their valued staff. Instead of providing expensive traditional group health insurance, many religious institutions are helping their employees by reimbursing their individual health insurance premiums. Here’s why employer-funded individual health insurance is a better option for religious institutions of all kinds.

Employees Are Well-Taken Care Of

Many religious institutions express a high moral obligation to take care of their leaders and other clergy members who are employed there. Healthcare benefits are a vital part of compensation packages offered to staff. Instead of offering pricy group health insurance, many religious institutions are offering tax-free healthcare allowances as part of their compensation packages to recruit the cleric of their choice.

With this type of arrangement, employees have more choice of coverage and doctors to best fit their family’s needs. Individual health insurance offers more choice and control to employees by allowing them to choose a plan that fits their own needs, including coverage level and network. Employees can choose their own plans to work with their budget. These plans can be customized to individual circumstances and age.

For example, if a young employee is relatively healthy and on a tight budget, a plan with a lower premium and higher deductible may be the right choice. On the other hand, for older employees or employees with more healthcare needs, a plan with a higher premium and lower deductible may be the better plan.

The Religious Institution Controls the Costs of Healthcare Benefits

By setting an allowance, the religious institution has complete control over the cost of the healthcare benefits they provide to employees. This is vital, as most religious institutions are non-profit organizations that run on tight budgets. Creating predictability in the health benefits budget leaves more money for community outreach and helping members of the institution. For example, by reimbursing employees’ individual health insurance premiums:

  • There are no minimum or maximum contribution amounts. The religious institution determines the healthcare allowance.

  • No actual costs are incurred until the employees receive their reimbursements. The institution does not need to pre-fund third-party bank accounts-- the institution directly reimburses the employees.

  • The institution gets to keep unused funds at the end of the plan year.

Fill out this worksheet to perform a cost analysis and see the potential savings.

Minimal Administration for the Religious Institution

With premium reimbursement software, health benefits are easy and inexpensive for the institution to administer. Some institutions consider reimbursing their employees without a formal plan or compliant software. However, remaining in compliance with federal regulations and health reform can be costly, time-consuming, and an administrative hassle for employers.

A credible software provider eliminates the time, costs, and administrative hassle of offering health benefits. Religious institutions who select a reimbursement software provider can expect to:

  • Spend less than five minutes per month administering their reimbursement plan

  • Have access to their reimbursement plan online 24/7

  • Incorporate reimbursements with their existing payroll system and HR processes

Premium Reimbursement Software Ensures Compliance

The IRS allows this type of tax-free individual health insurance reimbursement only if legal plan documents are in place, and it is administered in accordance with federal guidelines and regulations. By using reimbursement software, the religious institution ensures compliance with:

  • ACA Requirements

  • ERISA

  • IRS

  • COBRA

  • HIPAA

Do you have any questions on how to provide better benefits for your spiritual or religious leader and their staff? Leave a comment below.

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