Clergy OptOut of Soc Sec

[Burke]

I have three young (mid-20's) recently ordained ministers for whom the question has come up about opting out of Social Security. My question is, if this is done, how does that affect them vis-a-vis Medicare eligibility? My understanding is, that if you are eligible for Soc Sec, Medicare is offered free (Part A) at age 65. I know also that a US citizen who has been out of the country their entire career and never qualifed for SS, can sign up for MC if they come back here to live (without late penalties.) They have to pay the premiums, however. Is this true for Clergy who opt-out?

[Nashville]

Keep Asking

Good question Burke. And the answer is:

I don't know.

I did have a good reason to post, however. Ministers who opt out of Social Security early in their careers often encounter the following:

1) They don't remain ministers all their working life. If they are in a faith that practices celibacy, invariably someone like Cindy Crawford will want to marry them, at least for awhile. (Maybe I should have started out being celibate -- no telling who would have wanted to marry me, probably Madeline Albright knowing my luck)
2) They DO remain ministers, but at some point they have to take an extra job. This is particularly true here in the South where there are lots of tiny churches who can't support a full-time preacher. The extra job outside of religious work will be subject to social security whether they have opted out or not.

Not sure what is necessary for a preacher to "opt back in" to social security once having made the election to "opt out." This is a very heavy decision, and it is a shame that it is forced upon young people in their 20s.

Mike Malody is one of our resident experts on preachers. He will post an answer if he knows one.

[JohnH]

Not sure this will directly address your question, but the decision to opt out of Social Security by a member of the clergy is supposed to be based on religious belief - "religious or conscientious opposition to the acceptance of any public insurance that makes payments for death, disability, old age, or retirement, or that makes payments for the cost of, or provides services for, medical care...".

To me, if a member of the clergy is trying to make this decision as a matter of picking & choosing which benefits they want to receive, they've already disqualified themselves from eligibility.

I'm not posting this lightly, nor as an attempt to stir anything up from a theoretical standpoint. I've had this very conversation with new ministers on at least two separate occasions.

[veritas]

So?

I'm not posting this lightly, nor as an attempt to stir anything up from a theoretical standpoint. I've had this very conversation with new ministers on at least two separate occasions.

Did they go for the bucks over principle?

[thomtax]

Yes

Quoting from Richard Hammer's Church & Clergy Tax Guide:

Question "Can ministers who have opted out of Social Security purchase Medicare insurance after they reach age 65?
Answer "Yes, they can. Ministers who have opted out of Social Security and who have less than 40 quarters of secular earnings (and whose spouse has less than 40 quarters of nonministerial earnings subject to Social Security and Medicare taxes) may be able to obtain Part A coverage by paying a Part A premium. The Part A monthly premium for 2008 is $423 for persons with less than 30 quarters of Social Security and Medicare coverage. For persons with 30-39 quarters of coverage, the Part A monthly premium is $233. The amounts are adjusted annually for inflation."

Just for additional information, there are six requirements for exemption.

LT

[JohnH]

Veritas: It was a mixed bag. As soon as I explained it, one of them immediately realized he had been given some erroneous info and volunteered that he really could not honestly opt out. At least one one of the others probably did meet the standard. As for a couple of others, we just had the conversation and that was the end of it. They never followed through with me and I don't have any way to know what happened.

I assume they followed their conscience, since they would be the ones explaining their decision to the boss when the time came, as will all of us.

[MAMalody]

From Richard Hammer:

...ministers who have opted out of Social Security can become eligible to receive retirement or Medicare benefits based on their spouse’s Social Security coverage. This makes sense.

A minister’s decision to opt out of Social Security is based on religious-based opposition to the acceptance of Social Security benefits payable [/B]as a result of services performed in the exercise of ministry.[/B] To the extent that a minister’s spouse is fully insured under Social Security as a result of nonministerial services, Social Security benefits the minister receives as a result of his or her spouse’s Social Security coverage are not based on services performed in the exercise of ministry and so are not precluded by the minister’s exemption.

[erchess]

Respectful Dissent from JohnH

When the law says that in order to do something I have to have a certain belief, that's abusive to me. If I outwardly qualify to make the election and if I want to I will. Any provision that says I have to believe this or be thinking that is just plain wrong and will not bind my conscience.

[JohnH]

Agreement is not required / dissent is encouraged ,
Actually I agree with your premise, but after all it is a sworn statement. So any clergyperson signing the statement is swearing under penalty of perjury that this is their belief. Not a pleasant situation, but as we often tell our clients, we don't make up the rules - we simply interpret them.

However, you've hit upon one of my favorite topics - how do we know what we really believe about anything? I maintain that our words convey our convictions, but our actions reveal what we actually believe.

[Burke]

Thanks for the responses and the answer to this question. I am not counseling these persons, but I am doing their tax returns. The question arose for my own edification when I read a recent eligible recipient's booklet on Medicare, which stated ...."Because you are entitled to Social Security retirement or disability benefits, you are automatically enrolled for Medicare (Part A) which is free, and Part B for which you pay a premium." (The person must opt out of MC or it is automatic.) So I became curious as to how that affected clergy who opted out of the system. Perhaps we won't have to worry about this since the morning papers have advised the trust fund will be out of money by 2017.