No doubt, you have heard a lot about Obamacare or, to use its official name, the Patient Protection and Affordable Care Act (PPACA). But most discussions I’ve heard have produced more heat than light! In our attempt to help churches prepare for the coming regulations about medical coverage of their staffs, I have asked Gary Skeen, president of the Church Benefits Board of the Cooperative Baptist Fellowship, to provide facts as they relate to churches. Skeen led a breakout session on the topic at the recent CBF General Assembly in Greensboro.
— Jim White, Executive Editor
As an indication of the desire for and need for accurate information on the subject, my presentation on the new healthcare reform laws turned our normally quiet and intimate General Assembly breakout session into a standing room only affair in Greensboro last month.
Gary Skeen
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Churches, non-profits and employers across the country — both faith-based and secular — are all concerned about what the new Patient Protection and Affordable Care Act (PPACA) means to their businesses and bottom lines. The frustrating thing is answers are still not complete. Still, we must begin having conversations about the impact, or we all risk being unprepared.
Employees, ministers and staff all have questions, like “How will I be covered?” “Can I be dropped from my current medical insurance?” or “Will the costs go up and, if so, how much?”
I believe, rhetoric aside, this is the main reason the Obama administration recently delayed enforcement and penalty provisions for employers with more than 50 employees until next year: there just isn’t enough time for everyone to learn the new rules and come into compliance.
The purpose of this article is to make you aware of what to watch for in the coming months. It is not intended as a detailed explanation of all facets of the law. For our purposes, PPACA has four major components:
• Individual mandates
• Health insurance exchanges
• Employer mandates
• Expanded Medicaid
Individual mandates require everyone over a minimum threshold of income level and filing status to purchase health insurance or pay a penalty tax. While there are some exceptions, for almost everyone health insurance will be required when the plan in implemented. It also establishes minimum coverage and affordability rules.
Health insurance exchanges are being created to help individuals obtain health insurance coverage through insurance companies. These exchanges will also enable participants to receive personal tax credits based upon individual or household income level of individual or household income.
One new effect for churches is that they will have to begin providing requested income information to the exchanges. They will also need to provide their employees’ information about eligibility for the exchange and coverage to determine if the individual can participate.
Exchanges may become a very cost effective way for church staff to obtain medical coverage. If so, it is coverage purchased by the individual through the exchange and is not eligible to be treated as a pretax benefit by the church employer. Churches will want to take this into account and adjust staff salaries to offset the out-of-pocket expense of medical coverage through the exchange. This may, then, require a change in the compensation procedures for many churches.
Most current health care providers will meet the government requirements for cost and coverage so employees will not be eligible for the exchange. Your health care provider will let you know if your coverage meets these criteria. However, since housing is not counted as salary and other church staff members tend to have lower compensation, church employees may qualify for tax credits/subsidies.
Low income individuals in our communities who have not had coverage will now need to buy coverage. This may have be a ministry opportunity as churches can help them navigate the new exchanges. The Church Benefits Board of the CBF will be happy to answer questions churches may have about the new health care opportunities.
Employer mandates have just been delayed to 2015 and for most churches this is not an issue. However, if your church and its related ministries have more than 50 full-time equivalent employees, you will need to be very careful and prepare now for implementation in 2015.
Because full-time equivalents (over 30 hours) are calculated as a combination of full-time and part-time employees, your church may have 25 full-time employees and 50 part-time employees, which would put you over the limit. Definitions used to calculate these categories are very broad, so if you are close to this number of employees your church may require very technical assistance. This is the category that has been called “play or pay” in press coverage. By this is meant that the rules require that employers provide coverage for their employees (play) or pay penalties if they do not.
Expanded Medicaid is governed by state eligibility and coverage limits. Church employees will not likely be affected, but it may be an area in which we could serve our communities by providing education.
We are still awaiting regulations and rates that are to be published in late September with enrollment beginning Oct. 1. I also want to alert you that a change in the way churches fill out W-2 forms for employees is also coming. The dollar value of employer-provided healthcare will need to be reported.
This brief overview is intended only to provide general information and not as a thorough explanation of the law. As time for the implementation gets closer and as details are clarified, I will provide additional information. But this will hopefully help you begin to see some of the potential implications for your ministry and staff.
Gary Skeen is president of the Church Benefits Board of the Cooperative Baptist Fellowship.