RitaB Posted January 20, 2015 Report Share Posted January 20, 2015 Church has five part time employees (fewer than 30 hours a week) and pastor (more than 30 hours a week). Church pays pastor's health insurance premiums (church pays the insurance company directly), but no one else's. My understanding is that the premiums paid for pastor's health insurance are not taxable to pastor (no change from 2013). Do I have that right? And I can include the premiums in Box 12 of his W-2 with Code DD. Correct? I suppose I could be asking this question about any small business, it wouldn't have to be a church. Yes? If I'm in left field, I'm not catching any balls out here, just to be clear. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 20, 2015 Report Share Posted January 20, 2015 Church has five part time employees (fewer than 30 hours a week) and pastor (more than 30 hours a week). Church pays pastor's health insurance premiums (church pays the insurance company directly), but no one else's. My understanding is that the premiums paid for pastor's health insurance are not taxable to pastor (no change from 2013). Do I have that right? And I can include the premiums in Box 12 of his W-2 with Code DD. Correct? I suppose I could be asking this question about any small business, it wouldn't have to be a church. Yes? If I'm in left field, I'm not catching any balls out here, just to be clear. You are NOT correct. Paying the premiums must be added to his W-2 as income. IF the church was providing group health insurance, then it would be different. No different than any other business. Unless it is a group policy, paying premiums for employees can no longer be pre-tax. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted January 20, 2015 Report Share Posted January 20, 2015 Rita, I am not as sure as Jack. If the pastor is the only one that qualifies as a FTE, then paying his insurance could be considered a group plan. However, if the policy he has is not MEC and/or was purchased on the exchange, I don't think it would qualify as a group plan no matter what. This article, http://smallbusiness.chron.com/can-employer-reimburse-employee-health-insurance-20554.html seems to say it is okay but this is not substantial authority and I just don't know. I am not nearly as worried about doing tax returns this year as I am about preparing W-2s. Fortunately, the one church that I do W-2s for does have group health through the conference. Can you even purchase a group plan if you only have one employee that qualifies? I know that you used to be required to have at least two employees that took insurance through the plan to be able to get group coverage. I would be inclined to give you at least a definite maybe. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 20, 2015 Report Share Posted January 20, 2015 Rita, I am not as sure as Jack. If the pastor is the only one that qualifies as a FTE, then paying his insurance could be considered a group plan. However, if the policy he has is not MEC and/or was purchased on the exchange, I don't think it would qualify as a group plan no matter what. This article, http://smallbusiness.chron.com/can-employer-reimburse-employee-health-insurance-20554.html seems to say it is okay but this is not substantial authority and I just don't know. I am not nearly as worried about doing tax returns this year as I am about preparing W-2s. Fortunately, the one church that I do W-2s for does have group health through the conference. Can you even purchase a group plan if you only have one employee that qualifies? I know that you used to be required to have at least two employees that took insurance through the plan to be able to get group coverage. I would be inclined to give you at least a definite maybe. Whose name is the purchaser of the policy. If the church, it will qualify as an employer provided plan. If it purchased by the pastor, my answer stands. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 20, 2015 Report Share Posted January 20, 2015 Rita, I am reading it as Jack does, that IF the church buys the policy, then it's treated like a group plan, not taxable to the employer. BUT if the pastor bought the plan, and the church is just reimbursing him for the premiums, it's taxable. 1 Quote Link to comment Share on other sites More sharing options...
RitaB Posted January 20, 2015 Author Report Share Posted January 20, 2015 Well, I am waiting on church admin to find out if pastor's insurance is part of a group policy or not. From what little I understand about ACA it does make sense (because it doesn't make sense) that ER has to overspend and get a group policy in order for the EE to avoid a taxable fringe benefit... Once again, small business takes one for the team, right? I don't think that word affordable means what they think it means. Sigh. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted January 20, 2015 Report Share Posted January 20, 2015 (edited) I think the purpose was to prevent employers from having their employees buy insurance on the workplace that was subsidized by taxpayers, and then reimburse them for that cheap insurance with tax free dollars. Or maybe they intended to make my head hurt. I get paranoid this time of year. Edited January 20, 2015 by Gail in Virginia Quote Link to comment Share on other sites More sharing options...
RitaB Posted January 20, 2015 Author Report Share Posted January 20, 2015 (edited) I think the purpose was to prevent employers from having their employees buy insurance on the workplace that was subsidized by taxpayers, and then reimburse them for that cheap insurance with tax free dollars. Or maybe they intended to make my head hurt. I get paranoid this time of year. Marketplace? Hahahahaha, my head hurts, too. I don't guess they could have just said, "You can't buy insurance on the marketplace..." The Preach is gonna have a cow. Edited January 20, 2015 by RitaB Quote Link to comment Share on other sites More sharing options...
Lion EA Posted January 20, 2015 Report Share Posted January 20, 2015 Wouldn't having a cow be a good thing in your area?! 3 Quote Link to comment Share on other sites More sharing options...
RitaB Posted January 20, 2015 Author Report Share Posted January 20, 2015 (edited) Well, I am waiting on church admin to find out if pastor's insurance is part of a group policy or not. Administrator's (reply to my e-mail: "Yes, his wife and kids are covered." Crying. Ok, let's try this again... Edited January 20, 2015 by RitaB 3 Quote Link to comment Share on other sites More sharing options...
RitaB Posted January 21, 2015 Author Report Share Posted January 21, 2015 Well, I looked up Notice 2013-54, and I gotta say, I am not smart enough to understand that notice. I did find somebody at Forbes that chewed it up and spit it out for me: http://www.forbes.com/sites/anthonyn...miums-in-2014/ "Mind you: the tax law didn’t change. It’s the insurance laws that changed." And I am sitting here with the voices in my head saying, "I can barely keep up with ONE of those..." and then it's just some whimpering. 1 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 21, 2015 Report Share Posted January 21, 2015 Well, I looked up Notice 2013-54, and I gotta say, I am not smart enough to understand that notice. I did find somebody at Forbes that chewed it up and spit it out for me: http://www.forbes.com/sites/anthonyn...miums-in-2014/ "Mind you: the tax law didn’t change. It’s the insurance laws that changed." And I am sitting here with the voices in my head saying, "I can barely keep up with ONE of those..." and then it's just some whimpering. O B A M A C A R E Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted January 21, 2015 Report Share Posted January 21, 2015 I love how they call these wordy, contradictory statements "guidance." I did notice this statement in the Forbes article: "The guidance makes clear that the penalty does not apply to a plan that has only one participating employee." Now I am not sure which guidance it refers to, but if the church's plan has only one participating employee (the pastor) and only one eligible employee (since everyone else works less than 30 hours per week), does that mean you are okay? I don't know. 1 Quote Link to comment Share on other sites More sharing options...
RitaB Posted January 21, 2015 Author Report Share Posted January 21, 2015 (edited) I love how they call these wordy, contradictory statements "guidance." I did notice this statement in the Forbes article: "The guidance makes clear that the penalty does not apply to a plan that has only one participating employee." Now I am not sure which guidance it refers to, but if the church's plan has only one participating employee (the pastor) and only one eligible employee (since everyone else works less than 30 hours per week), does that mean you are okay? I don't know. Exactly. I still don't know what to do, and I will look for more "guidance". And maybe a nice candy bar as big as my head. Edited January 21, 2015 by RitaB 1 Quote Link to comment Share on other sites More sharing options...
RitaB Posted January 21, 2015 Author Report Share Posted January 21, 2015 IRS is gonna offer "additional guidance". When, I don't know. http://www.usiaffinityex.com/pba-ind/medical/health-care-reform/content/downloadables/USIA-exchange/news/July_2014_HCR_Article.pdf Quote Link to comment Share on other sites More sharing options...
easytax Posted January 21, 2015 Report Share Posted January 21, 2015 AND as far as penalties, DOL trumps IRS (only because the feds get more money). So is the IRS guidance --- good or do you use the DOL guidance. Thanks Rita for the article --- I was groggy before BUT with that article, understand a bit better. 1 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 22, 2015 Report Share Posted January 22, 2015 It comes down to who is owner of the policy. The answer for this one is that simple. If the church is owner, group plan medical. If the pastor is owner, additional wages added to his W-2. Quote Link to comment Share on other sites More sharing options...
RitaB Posted January 22, 2015 Author Report Share Posted January 22, 2015 (edited) AND as far as penalties, DOL trumps IRS (only because the feds get more money). So is the IRS guidance --- good or do you use the DOL guidance. Thanks Rita for the article --- I was groggy before BUT with that article, understand a bit better. Here is another one: http://www.theihcc.com/en/communities/policy_legislation/guidelines-for-using-reimbursement-arrangements-un_hua4t5gc.html I still am hoping what Gail pointed out will save me here: "the [ACA] penalty does not apply to a plan that has only one participating employee". That would sure solve my problem, and a trusted person on another board is certain that applies to my situation here with one FT employee. I hope so. You know when something changes and it increases a person's tax liability, you're the bad guy, and you must be wrong. Edited January 22, 2015 by RitaB Quote Link to comment Share on other sites More sharing options...
easytax Posted January 22, 2015 Report Share Posted January 22, 2015 Here is another one: http://www.theihcc.com/en/communities/policy_legislation/guidelines-for-using-reimbursement-arrangements-un_hua4t5gc.html I will stick with the earlier article from Forbes (this one you mentioned above makes me "groggy" again. Also, the Forbes seems to be more recent and incorporates changes made since the "groggy article here" was written. Please let us know which way works out for you (I believe the one employee is correct but do not know if there is a "deemed" employee mandate under less than 50 employees based on total PT hours worked or not). 1 Quote Link to comment Share on other sites More sharing options...
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