Allowable business reimbursement account - used for health costs

by Rhoda
(Lebanon, PA, USA)

One accountant stated that the allowable business reimbursement arrangement for the pastor could be used to cover medical expenses.

The church provides a health plan for the pastor, but has opted out of providing the same coverage for pastor's spouse due to the cost difference between medicare and the health plan.

I do not believe this is an allowable business expense reimbursement.

I do not believe the church qualifies for QSEHRA because the pastor is covered under a health plan.

With a health plan provided for the pastor, is there any way to reimburse other employees and the pastor's spouse without including the reimbursement in taxable income?

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Jan 22, 2022
Medical Reimbursement
by: Vickey

There are too many "variables" and "unknowns" for me to answer your I am not a benefit professional =) Hopefully someone that knows more about medical reimbursements will respond here and provide some direction.

My best advice is to consult a benefit professional such as Peoplekeep or Guidestone.

I couldn't tell from your post if the church pays the health insurance or reimburses the Pastor ...but you are right in making sure that the church is doing it correctly.

If you have it set up as tax free and it is not could potentially hurt your Pastor financially in back taxes and penalties.

I can tell you positively that at this time (there was legislation to change this, but got no where as of the end of 2021)...reimbursing a minister for health sharing "insurance" is completely taxable as the IRS does not consider "health sharing programs" to be actual insurance. I have had to break that bad news to many of my clients =(

I am sorry this probably doesn't answer your question, but I strongly encourage you to keep searching until you find the correct answers to all of your questions!

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If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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