Wednesday, May 23, 2018
Hey Fletch … Thanks again for such a great XP-Seminar. It is truly run with excellence and is so helpful to me. Here’s a quick question for you or whoever you may refer me. The question is regarding full-time employees who are eligible, but do not need or engage in the medical benefits offered by our church. What is your opinion and how do most churches handle this situation regarding additional compensation? The three most common solutions of which I am familiar: 1) Stipend, 2) Covering the additional premium for the employee on their spouses policy, and 3) No additional compensation with a “thank you.” At the moment we opt for number 3, but are curious how other churches handle this.
DRF—I’m so glad that you were at the Seminar. We didn’t get much chance to talk this year, but what a wonderful time everyone had. It was so good. As to your question … Let me answer them in order.
Solution #1—The stipend is money given to encourage people to get their insurance through their spouse. At one church that I was at, they gave $1,000 to each staff person who took the medical insurance offered at their spouse’s place of work. I inherited that system and didn’t change it. This made good economic sense to the church. The church gave a bonus of $1,000 to the employee and saved $7,500 in medical insurance premiums. The humor of it is that the church is giving a bonus to folks who have two incomes.
Solution #2—I haven’t heard of a church paying the premium for an employee on their spouse’s policy. You would need to talk to a CPA or medical insurance specialist to see if this is tax-exempt. The amount that the church pays may be considered a bonus and taxable to the employee. I suspect that there will be lots of fine-print in the answer.
Solution #3—Many churches give no additional compensation. As you said, the church just says, “thanks for saving us $7,500 or more in insurance premiums.” If the two plans are similar, there is little financial incentive for the employee to be on their spouse’s plan. I knew of a family who chose to be on the church plan because “it saved them $500 a year in premiums.” The church should have paid them $500 in a bonus and saved multiple thousands in medical insurance premiums.
Let me ask Jordan Pushos (CFP) at GuideStone Financial Resources and see if he can help.
Jordan—In regards to “a church paying the premium for an employee on their spouse’s policy,” this is a bit of a grey area in the industry due to the many circumstances that can surround a reimbursement of this type. An employer can reimburse premiums for an employee participating in a spouse’s medical plan if the medical plan is considered a group policy. However, many times an employer is not aware of whether or not the medical plan is a group policy. Additionally, an employer must remember what they do for one employee they must do for others; otherwise you could end up in different types of discrimination issues. Because of these issues, many employers steer away from these types of reimbursements.