Clergy Tax Services: The In’s and Out’s of Medical Insurance for Pastors

Medical insurance is an important topic for everyone, this includes those in the ministry as well. It has been cited as a major factor in most family’s financial health and pastors and clergymen are no exception to this. When it comes to clergy finances, medical insurance plays a big role. Fortunately, for pastors there are a number of alternatives available that allow pastors and their families to have affordable and quality medical coverage.

Here are a few options when it comes to medical insurance for pastors.

Group Coverage

Group coverage plans are often available for multi-staff and denominational churches and they are generally more affordable than individual policies. Group coverage usually covers medical conditions such as maternity, eye care and dental care. Rates for this type of coverage vary and depend on the size of the group being covered; however, group policies for pastors are tax free up to $50,000.

Health Savings Accounts

Also referred to as HSA’s, these are bank accounts that are maintained and/or provided by a church and are specifically designated to meet the needs of a pastor and his family. The funds that are acquired in these types of accounts can be used for individual medical expenses like doctor visits or medications. It can also be used to purchase health insurance that most benefits a pastor’s specific situation. These accounts provide convenience, flexibility and have clergy tax benefits as well.

Flexible Spending Accounts

FSA’s are similar to HSA’s except they are funded through a pastor’s payroll deductions rather than funds provided by a church. FSA contributions are deducted from a pastor’s pay before taxes which makes that portion of the pastor’s salary tax free. An FSA may be used for qualifying medical expenses similarly to an HSA.

Self-Employed Clergy

If a pastor is self-employed for tax reasons they must report any medical funds or reimbursements that they receive from their congregation as taxable income. They may deduct up to 60 percent of their health insurance premiums, with the remaining portion only eligible for up to a 7.5 percent deduction. Self-employed pastors may also participate in private insurance coverage programs or medical sharing.

Pastors taxes can often be quite difficult to determine, therefore it’s always recommended that pastors consult with clergy tax services to confirm insurance coverage exact qualifications and amounts.

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Sarah Wozniak

Staff Writer, Page1 Online Marketing