There’s a reason we count more churches and other religious institutions as a major sector among our clients.
Churches face unique obstacles when it comes to providing healthcare benefits for their employees. Striking a balance between delivering value to their teams and maintaining financial sustainability requires innovative solutions. In this comprehensive guide, we will delve into the ever-evolving realm of health coverage for churches, shedding light on the advantages of Health Reimbursement Arrangements (HRAs), which include Individual Coverage HRAs (ICHRAs) and Qualified Small Employer HRAs (QSEHRAs).
Discover the unique challenges faced by churches and religious institutions, including limited budgets and low salaries. Join us as we explore effective strategies to overcome these obstacles while maintaining responsible financial management.
This guide includes:
For the stability and wellbeing of a church community, it's critical to provide health insurance for pastors and employee benefits for church staff.
One such solution gaining traction is Health Reimbursement Arrangements (HRAs). HRAs offer flexibility and cost control, allowing nonprofits to allocate their limited resources efficiently while attracting and retaining top talent.
In a report published by the Society for Human Resource Management (SHRM), it was found that employers with comprehensive employee benefits, including health coverage, experience higher employee satisfaction and increased productivity. This demonstrates the importance of investing in employee well-being and the positive impact it can have on a church's mission.
These statistics and real-world examples underscore the significance of exploring innovative approaches to health benefits in the church world. HRAs provide a strategic tool for nonprofits to deliver valuable health coverage, overcome budgetary constraints, and attract and retain talented individuals dedicated to advancing their church's mission.
Join us as we delve into the world of health benefits for churches, examining the advantages of HRAs and how they can help churches strike a balance between financial sustainability, honoring the mission, and prioritizing employee well-being.
As a church, the core focus is undoubtedly on advancing the mission, taking care of your congregation and team, and making a positive impact. However, it's essential to acknowledge the challenges that come with limited budgets, typically low salaries, and the need to be good stewards of the funds. In this guide, we'll delve into these pain points and discuss strategies for churches to navigate these challenges effectively.
Churches understand the significance of directing funds towards their mission rather than overhead expenses. It's crucial to optimize the allocation of resources to ensure maximum impact. However, certain operational costs, such as employee benefits, cannot be overlooked. Health benefits, in particular, play a vital role in attracting and retaining top talent, which is essential for church success. Striking the right balance between minimizing overhead and providing competitive health benefits becomes a crucial consideration.
Churches have a responsibility to be good stewards of the funds they raise through tithes and fundraising. Church members want to see their contributions utilized wisely and effectively. This means carefully evaluating expenditures and making strategic decisions. While it may be tempting to minimize costs across the board, it's essential to remember that investing in employee benefits, including health coverage, is an investment in the organization's long-term sustainability and success.
Limited budgets and typically low salaries present challenges for churches in various ways. One of the most significant pain points is attracting and retaining talented individuals who can contribute to the organization's mission. Churches often compete with for-profit entities that can offer more substantial compensation packages. As a result, finding and retaining skilled employees can be an ongoing struggle. Limited budgets can make it challenging to offer competitive benefits, further adding to the difficulty of attracting and retaining top talent.
While the pain points may seem daunting, there are strategies churches can employ to overcome these challenges and thrive:
By employing these strategies and prioritizing the effective utilization of resources, churches can overcome the pain points associated with limited budgets, low salaries, and the need for stewardship.
By providing competitive health benefits while being mindful of costs, churches can attract and retain talented individuals who share their vision and contribute to the organization's mission-driven success.
You could start reimbursing your employees tax-free sooner than you think.
Health Benefit Challenges in NonprofitsChurches and religious institutions, with their distinctive mission and structural frameworks, often confront unique challenges when it comes to delivering health benefits to their employees. As these organizations strive to maximize their resources towards mission-centric activities, they are often in search of efficient, cost-effective solutions to provide robust health benefits.
Employee health benefits are an integral component of their overall compensation package, and their significance cannot be overstated. However, due to the distinct financial and structural intricacies of churches, conventional group health insurance plans may not always be the most viable or effective means to offer these benefits.
Enter HRAs – this category of employer-funded plans allows organizations to reimburse employees for out-of-pocket medical expenses and individual health insurance premiums on a tax-advantaged basis. Within the HRA universe, two specific types – the Individual Coverage HRA ( ICHRA ) and the Qualified Small Employer HRA ( QSEHRA ) – have emerged as particularly valuable tools for churches.
ICHRA and QSEHRA empower churches to effectively manage expenses while prioritizing the well-being of their employees. With their adaptable and scalable nature, ICHRAs are an ideal fit for larger organizations, while QSEHRAs provide a straightforward and cost-effective solution for smaller churches.
Health benefits are a key factor in recruiting and retaining top-tier talent in any organization, including churches. But traditional health insurance plans may not always be the most cost-effective or flexible solution for these organizations. HRAs are a unique tool that could potentially transform the way churches approach health benefits.
Health Reimbursement Arrangements, or HRAs, are employer-funded health benefit plans that reimburse employees for out-of-pocket medical expenses, as well as premiums for individual health insurance policies. HRAs are not health insurance plans themselves; rather, they are a means for employers, including churches and other religious institutions, to help their employees pay for healthcare costs.
There are technically two "flavors" of HRAs that churches need to know about.
1. The Individual Coverage Health Reimbursement Arrangement, or ICHRA, is a type of HRA that allows employers to reimburse employees for individual health insurance premiums and eligible medical expenses on a pre-tax basis. Unlike the QSEHRA, ICHRA has no annual contribution limits, and employers can offer ICHRAs to different classes of employees, with varying contribution amounts.
2. A Qualified Small Employer HRA (QSEHRA) is a specific type of HRA designed for small employers with fewer than 50 employees who do not offer a group health insurance plan. QSEHRA allows these employers to provide a set amount of tax-free money to their employees each year. Employees can use this money to purchase individual health insurance and cover other qualifying healthcare expenses.
HRAs serve as a robust solution for churches navigating the complex landscape of health benefits.
Leveraging HRAs' cost-efficiency, flexibility, and tax benefits, churches can build a robust health benefits strategy. With Take Command’s expert guidance, churches can effectively manage HRAs, aligning their health benefits with their mission, ensuring employee wellness, and financial sustainability.
Which HRA is the best fit for your religious institution?
case studyNew Britain ROOTS, a small nonprofit based in Connecticut, promotes food security and empowered eating choices through local advocacy and education initiatives. While it's not a church, it shares many of the same pain points as churches and the solution is positioned for nonprofits and churches alike.
With a tight-knit team and financial constraints, New Britain ROOTS was confronted with a daunting obstacle: how to offer cost-effective healthcare benefits for their dedicated staff.
Joey Listro, the Executive Director, faced the harsh reality of expensive group health insurance plans. Recognizing the need for a competitive benefits package to attract and retain skilled employees, the growing organization grappled with the challenge of achieving this without breaking their budget.
After exploring multiple alternatives, Joey serendipitously discovered the QSEHRA. As the sole full-time team member, the exorbitant cost of traditional employer plans, which were nearly five times higher than QSEHRA, posed a significant obstacle.
However, the lack of familiarity with QSEHRA posed its own challenges. Joey faced the task of introducing this unknown concept to his board of directors, who were unsure about its legal implications. As a nonprofit organization, obtaining the board's approval was essential, requiring Joey to provide accurate information to align everyone's understanding.
That's where Take Command stepped in, offering guidance and educational resources about QSEHRA. With this support, Joey was able to clarify the benefits of QSEHRA to his board, gaining their approval to move forward with the setup.
Take Command’s team continued to assist Joey throughout the setup process, providing a simple, user-friendly platform for managing the QSEHRA. As a result, New Britain ROOTS successfully implemented their QSEHRA in January, currently reimbursing premiums only.
Joey shares, "The setup was quick and simple, and reporting and reimbursements are easy as well."
By implementing QSEHRA, New Britain ROOTS was able to offer affordable healthcare benefits to its dedicated staff, ensuring their well-being and satisfaction. This decision not only enabled them to attract and retain skilled employees but also positioned them competitively in the job market, setting the stage for their future expansion plans.
This case study serves as a prime example of how nonprofits, despite facing limited resources, can harness the power of QSEHRA to offer cost-effective and long-lasting health benefits to their team, ultimately bolstering their mission and fostering growth.
Small churches have an HRA designed specifically for them. It's called a Qualified Small Employer HRA and it's for churches with less than 50 full time equivalent employees.
Great question. Church health insurance offered through an HRA can be set at whatever budget the church can afford. There isn't restrictions on the limit. We recommend assessing the local insurance market, the needs of the pastor and team, and working with an HRA administrator like Take Command to custom fit an HRA to your budget and team.
Yes! Absolutely. Churches want to take care of their pastors, and an HRA is an excellent way to do that. The pastor can choose the plan he wants that works best for his family, and he will get reimbursed on his paycheck.
If the church has more than 50 employees, it's likely that they have to offer health insurance to their staff. However, most churches are small than that. Even though offering health insurance to pastors and staff aren't required, it's an investment in the quality and long-term stability of a church to keep great ministerial talent around.
This is a great question. Health insurance allowance for ministers really depends on a few factors - where the church is located, what the local health insurance market looks like, what the pastors family is comprised of, and what their needs are. By looking at the costs of local plan premiums, it's easy to pinpoint a range that would be comfortable. If you want to reimburse for medical expenses on top of an HRA to just cover the premium, that's an added bonus for the pastor.
We get it! Church employees are busy! Luckily, HRAs are hands off and easy to manage. Take Command's platform handles all the heavy lifting and most of our clients spend less than an hour a month administering their benefits.
Churches comprise roughly 10% of our clients.
Churches are well suited for HRAs and HRAs are strategically positioned to address common church pain points when it comes to benefits and budget.
Take Command's HRA ManagementBy partnering with Take Command, small churches can overcome the limitations and effortlessly implement and manage a QSEHRA. Our comprehensive HRA administration service simplifies compliance, setup, and ongoing management, enabling churches to offer competitive health benefits despite limited resources. These benefits not only boost employee satisfaction and talent retention but also contribute to the long-term success of the church.
No more one-size fits all plans! HRA plans for churches can be customized and designed to achieve your church’s goals.
Take Command simplifies the process by automatically generating the essential documents required by your church employees. Additionally, it assists them in effortlessly searching for and enrolling in a suitable plan online.
80% of our small business clients are net new to benefits. An HRA is an affordable, simple way to offer scalable benefits to your church team on your budget.
Making the choiceWhen it comes to selecting the best health benefits plan for your church, several factors should be taken into consideration. By carefully evaluating these factors, you can make an informed decision that aligns with your church's size, financial capacity, and the specific needs of your employees.
By carefully considering these factors and following these guidelines, churches can choose the health benefits plan that best suits their organization's size, financial capacity, and the specific needs of their employees. Making an informed decision ensures that your church can provide valuable, competitive health benefits that support your employees' wellbeing while aligning with your mission and financial goals.
Churches are not generally required by law to offer benefits to their employees. However, there are certain requirements and exemptions to consider in the context of nonprofit organizations and their employee benefits. Let's explore these aspects further:
Churches are not mandated to provide employee benefits, such as health insurance, by federal law. Unlike many for-profit companies subject to the Affordable Care Act's employer mandate, nonprofits are generally exempt from this requirement. However, it's important to note that state laws and regulations may vary, so churches should consult local regulations to ensure compliance.
Churches may qualify for certain exemptions and alternatives when it comes to employee benefits. For example, some religiously affiliated nonprofits may be exempt from certain contraceptive coverage requirements based on religious objections. It's crucial for churches to understand their legal obligations and any exemptions that may apply to their specific circumstances.
While churches may not be subject to the same tax credit programs as for-profit businesses, there are tax incentives and credits available to help offset costs associated with employee benefits. For instance, the Small Business Health Care Tax Credit is available for eligible small employers, including nonprofits, that provide health insurance coverage to their employees. Churches should consult with tax professionals or benefits advisors to explore potential tax credits and incentives specific to their organization.
To successfully navigate the intricate legal landscape and meet the specific requirements and exemptions related to employee benefits, it is crucial for churches to exercise caution. Seeking the guidance of legal and tax advisors who specialize in churches can provide invaluable assistance, ensuring compliance with relevant laws and regulations. Moreover, exploring tax credits and incentives can assist churches in mitigating the costs associated with providing employee benefits, thereby further supporting their financial sustainability and mission-driven objectives.
Providing health insurance for churches is a critical aspect of attracting and retaining top talent while promoting the wellbeing of employees. However, navigating the complexities of health benefits can be challenging for these organizations. In this article, we have explored the potential solutions offered by HRAs, including ICHRAs and QSEHRAs, for churches. HRAs provide several benefits for nonprofits, such as cost control, flexibility, and tax efficiency.
ICHRAs offer customization and scalability, while QSEHRAs are suitable for smaller organizations seeking simplicity. These HRAs empower churches to design personalized benefits that align with their financial capacity and the specific needs of their employees.
Throughout the decision-making process, churches should carefully evaluate their unique needs and circumstances. Factors such as organization size, financial capacity, and employee preferences should be considered when selecting a health benefits plan. Seeking guidance from experts in the field and leveraging trusted partners like Take Command can provide churches with the knowledge and support needed to make informed decisions.
Take Command offers comprehensive services to help churches navigate the complexities of HRAs, ensuring compliance, simplifying administration, and providing personalized guidance. With their expertise, churches can maximize the benefits of HRAs while mitigating potential drawbacks, enabling them to offer competitive health benefits that contribute to the overall success of their mission.
Our experienced and friendly team is ready to help you on your health benefits journey.
