In the confusion of tax laws and changing health-care choices, Kurt and Karen Hettinga are incredibly grateful that someone understood all the options and could guide them step-by-step toward a huge financial reimbursement.
The Hettingas unwittingly got into hot water in 2014. That’s when they enrolled in new health insurance under the Affordable Care Act.
The premiums would normally be large—more than $16,000/year—but healthcare marketplace subsidies helped cut premiums in half because of Kurt’s age (60) and taxable salary level. Yet when the Hettingas prepared their taxes last February, they were in for a surprise.
“We discovered too late,” Kurt says,” that in the new arrangement under the Affordable Care Act, the money our church had given us toward our healthcare premiums had become taxable income. In all of our previous years with the church, our healthcare premiums were excluded as taxable income.”
This news, plus an unforeseen financial gain during the year, had boosted their total taxable income just beyond the threshold of coverage. The result? The Hettingas owed the IRS approximately $9,000. “And, of course, the IRS wanted it all back.”
Fortunately, Kurt and Karen were able to pay the money back, but for 2015 they wanted to safeguard against something similar happening again. That’s when they turned to a financial consultant.
After asking a few questions, their consultant learned that Bethany Evangelical Free Church had been paying into an FCMM retirement account for Kurt for all 23 years he’d been there. The consultant did some research, made some phone calls to FCMM on their behalf, and came away very impressed with the office’s knowledge of the intricacies of clergy tax law. He encouraged the Hettingas to meet with FCMM staff.
When Kurt and Karen sat down with two individuals from FCMM, “they had a gleam in their eyes,” Kurt remembers. “They had done their homework and had something up their sleeve.”
After confirming that Kurt was the only full-time employee at the church, they were able to inform the Hettingas of an exception clause in the tax law: A full-time pastor of a church with only one full-time employee is exempt from the health-care premiums being treated as taxable income.
Kurt and Karen were stunned. And their FCMM colleagues were smiling. “We had to re-do our taxes,” Kurt says, “but we should get everything back and then some. That was some very, very welcoming news.
“It really seemed to matter to them, too,” he adds about his FCMM advisors. “They’re ministry people. They cared and rejoiced with us. No one else we had talked to in the tax world had known of this all-important exception clause.
“Taxes and health care are so complicated now; pastors don’t know where to turn. I’m sure I’m not the only one who’s gotten into trouble. That whole thing is a different language—to make it understandable, that’s a gift.”