Do you pay taxes on insurance reimbursements

Does the Pastor have to pay taxes if a small church gives an allowance to cover insurance premiums (health and life) ?

Thank you

Comments for Do you pay taxes on insurance reimbursements

Click here to add your own comments

Dec 16, 2019

Depends on how your QSEHRA is set up
by: Vickey

First of all....regulations regarding reimbursing your minister or employees for health insurance has changed in the last few years...so do NOT believe or act on all of the articles you will find when searching for the answer to this on the web!

You must have a "legal" HRA or QSEHRA set up in order for the church to legally reimburses the pastor for individual/family health insurance.

PeopleKeep is one business I know that does that (there are probably more, but I see their articles on the web and they seem to know what they are doing =)

https://www.peoplekeep.com/blog/health-insurance-for-pastors-and-clergy

One last thing...some churches reimburse their Pastors for payments on a medical sharing ministry. The payments for those at the writing of this post are not tax exempt and must be reported in box 1 of the Pastor's W-2.

Dec 17, 2019

Do you pay taxes on insurance reimbursements
by: Anonymous - MN

Vicky, thanks for your comments especially regarding the Medi Share medical coverage. I have been searching several places to see if our Church could set up a QSEHRA for our staff that use the Share programs. My understanding is the although the IRS accepts the Share programs as coverage, the IRS does not recognize the programs as insurance therefore a QSEHRA is not available to us.

Dec 17, 2019

IRS and Medi Share
by: Vickey

You are correct, Anonymous - MN. Even though participants in those programs were exempt from the ACA's mandate that was repealed as of Dec 31, 2018...the IRS does not recognize those programs as "health insurance".

So the cost to participate in those plans do not qualify as a medical expense and cannot be reimbursed through a QSEHRA.

The cost of participation is also not deductible by an individual on their personal income tax return as well =(

I participate in a medical sharing program...so I think that is terribly unfair too ...but ...for now ... it is the law =(

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Fringe Benefits.

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 =)

Share this page:

What’s this?

Facebook

Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

Click on the HTML link code below.
Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.