Since January 2014, FCMM has been advising churches of new restrictions on health reimbursement arrangements (employer reimbursing or directly paying individual health insurance premiums) that indicate such payments may no longer be made as non-taxed benefits. Only employer-paid group health insurance still qualifies for pre-tax treatment. However, new IRS guidance issued in November, 2014, indicates that any premium payment, including after-tax arrangement, violates the health reform law.
Therefore, employers are no longer permitted to reimburse employees or pay insurers for individual health insurance policies. An employer may add a salary bonus or increase the employee’s pay, but the employer may not do so under an arrangement that requires the amount to be used for health insurance. The IRS, Department of Labor, and Department of Health and Human Services deem any arrangement for paying individual premiums to not comply with ACA.
In summary, if a church wishes to assist staff members with the cost of individual health insurance premiums, the church should do so only as a salary bonus which is not related to the individual obtaining health insurance. Additional information and links may be found in articles FCMM has posted throughout the year in News & Perspectives.
