Pulpit & Pew Finances
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|Posted on September 2, 2015 at 2:06 PM|
The ACA (Affordable Care Act)(Obamacare) has another impact on Pastors in 2015.
Many of you have previously (for 2014) had to go to the government exchange to get some insurance coverage, quite often subsidized by the government, based upon the income estimate you used when signing up for it. As a result, many have coverage (not necessarily care) for less that $200/month, and probably have a fairly high out-of-pocket deductible. Before telling you what is new as of July 1, 2015, let me comment here on some things to be aware of related to this 2014 procedure that many entered into to avoid paying penalties on your tax returns. And you received a 1095-A form with data for your tax return.
1. Hopefully the 1095-A form was correct. In the first year, many were not. You should have received a corrected one. If you had filed your tax return already, it may mean you need to file an amended return.
2. If your actual income was more than the estimate you used when signing up for the coverage, you likely had to pay back some of the subsidy you received if your return was filed correctly. Reasons that estimates were bad include:
a. you didn't think carefully about a realistic estimate:
b. you unexpectedly got more income than you planned to have;
c. you cashed in an IRA or 401k to buy a car, or for house downpayment, etc. If you did this, and you are under 59 1/2 years old at the time you had to pay a 10% penalty tax on the amount withdrawn as well as the normal income tax on it...and it caused you to have to repay some subsidy amounts; AND, it was taxable for social security self-employment tax.
If you have not gotten insurance and paid the penalty, note that penalties will increase for 2015, and greatly increase after that.
If questions on any of this , please contact me.
As of July 1, 2015, any health insurance benefits, or health cost reimbursements that your church may be paying for you ARE NOW TAXABLE TO YOU, including social security taxes. This had previously been a non-taxed benefit for Pastors. And these had been allowed on a "discriminatory basis"; that is, the church could provide this benefit for the Pastor and not be required to offer it to all paid staff. This has ended, due to ACA and changes in IRS tax law involving churches and small businesses (under 50 employees). The options a church has are:
* Cease providing this benefit for the Pastor entirely;
* Establish your own administered health plan, offered to all employees, and be subject to considerable reporting and regulations thereon;
* Continue doing what you had been doing - except now that benefit becomes taxable to the Pastor. [This includes the likelihood of upsetting the estimated income used if in a state or federal exchange program.] The amounts would need to be added to the Box 1 income on the W-2 given to the Pastor at the end of 2015. Amounts included are for the period July 1 - Dec 31, 2015.
Since this is a reality now, you may want to look into one of the Christian health co-ops that are available with better coverage and relatively stable costs.