A new tax rule in conjunction with the Patient Protection and Affordable Care Act may affect many churches that pay or reimburse individual health insurance premiums, and imposes daily fines beginning June 30 for those not in compliance.
GuideStone Financial Resources health plan participants should notice no impact as a result of the rule known as IRS Notice 2015-17, GuideStone said in a March 2 press release, but other churches with between two and 49 employees could be affected.
“GuideStone health plan participants, and the organizations that employ them, can continue to pay for coverage as they have in the past and meet the guidelines under current law,” said Harold R. Loftin Jr., GuideStone general counsel. “For churches and ministries that use other providers, it’s important for them to review the IRS Notice, as well as work with their legal and accounting advisors to ensure they are compliant by the end of the grace period on June 30, 2015.”
The IRS notice clarifies guidance on the one-employee health plan exception from the market reform provisions of the Affordable Care Act, also known as Obamacare, as well as reimbursement arrangements for Medicare and TRICARE. The notice also provides relief for small business employers that had maintained premium reimbursement arrangements in 2014 and during the first half of 2015. Prior to the notice and its provision of this transition relief, some organizations could have been subject to penalties up to $36,500 per year, per participant, per violation, GuideStone said.
GuideStone’s health plans, including the personal plans, are considered group coverage for purposes of federal law, and organizations that offer GuideStone’s health plans were never at risk of penalties imposed by the Affordable Care Act.
The Evangelical Council for Financial Accountability (ECFA) points out a viable option for churches affected by the rule, which is to increase employees’ overall taxable compensation without requiring that the additional income be used to purchase health coverage. Employees would then have the option of using the funds to purchase coverage, the ECFA said in a March 9 press release.
Some noncompliant reimbursements will still not be granted any relief from tax penalties, the ECFA said.
“For example, the transition rules do not apply to employers with 50 or more full-time equivalent employees or to reimbursements of out-of-pocket medical expenses made through noncompliant, stand-alone health reimbursement arrangements (HRAs) — regardless of employer size,” according to the ECFA release.
GuideStone has made available resources on its website to help churches and ministries understand the Affordable Care Act and its requirements on employers and employees. More information can be found at www.GuideStone.org/healthreform.