Church and Benefits

[S T]

Would anyone know this answer

Church pays for the Pastor's Health Insurance and also an HSA account - that covers both the Pastor and his wife.

New wrinkle - Pastor turned age 65 in Sept 2013 - finally after contacting Mcare/SSA in December 2013 - Mcare/SSA retro'd the Mcare back to Sept 2013 - however in the meantime we have been paying the full Medical Insurance premium and also making the HSA contribution - so that would be 4 months in 2013 - once a person reaches 65 and signs up on Mcare they are no longer eligible for HSA, as I understand it????

In the meantime, the medical insurance agent is adjusting the Medical Insurance Premiums - so we will have 4 months of credits for the Pastor - Wife is still covered. What about the adjustment for HSA?

All I see is a big mess on my W-2 form reporting for the Pastor on the medical insurance and the HSA contributory amount

Do I make a correcting entry and "suspense" those amounts - as I won't have the corrections until sometime in Jan or Feb 2014? Or does it matter?

Next question - As the Church/Board has agreed to pay the Pastor's wife Medical Insurance, is she still qualified (qualified medical plan of course) for the HSA contribution which will be reported on the Pastor's W-2 form in 2013/2014 ? Isn't that going to go tilt on the W-2 tracking for HSA

My head is spinning - and I do not know where to begin to look/research for this situation, and the insurance agent is of little assistance on the matter.

Any thoughts, or guidance would be really appreciated

Thanks

Sandy

[ATSMAN]

I think you can use the money in the HSA to reimburse yourself for Medicare part B and D premiums deducted from your benefits.

Obviously you can't make any new contributions after you signup for Medicare part A.

[S T]

Thanks Atsman - I do know that the HSA can not be funded for the Pastor over age 65 and that he can pay his mcare premiums with HSA accumulated funds.

My question (from the Church Board of Directors)

can the Church still pay the Pastor's wife Medical insurance premiums under the Church Group Medical, (Pastor's wife is under age 65)

and

Can the church still contribute to an HSA account for only the Pastor's wife

Pastor is the only person on Payroll and W-2 - Pastor's wife is not.

I am having difficulty with seeing how this will be reported on the Pastor's W-2 form?

Thanks

Sandy

[Gene V]

Sandy,
Not sure about the church rules on this matter, However, seems like an employer can contribute to an employee's spouse
HSA plan, the contribution would be added to the employee's wages.

From Notice 2008-59 and Pub. 969

Q-26. Are employer contributions to the HSA of an employee’s spouse (who is not an employee of this employer) excluded from the employee’s gross income and wages?

A-26. No. The exclusion under § 106(d)(1) is limited to contributions by an employer to the HSA of an employee who is an eligible individual. Any contribution by an employer to the HSA of a non-employee (e.g., a spouse of an employee or any other individual), including salary reduction amounts made through a § 125 cafeteria plan, must be included in the gross income and wages of the employee.

[MAMalody]

GeneV has hit it on the head.

[S T]

Thanks Gene and MaMalody - I believe that gives me what I need do the preliminary issues

However. I reserve the right to ask more questions on this subject



Sandy

[S T]

From the prior post it appears that the HSA amount for the non-emplyee spouse then will be added to the Pastor's W-2 Income - Box 1,

Would this also be true for the Medical Insurance Premiums for the non-employee spouse.

In the past both of these benefits were paid as a fringe benefit and were non-taxable.

Thanks

Sandy

[S T]

Okay guess no takers on this post - I really dislike some of the benefits and payroll issues when it involves Sect 125 - pe-tax

From what I am reading

HSA I have that taken care of, (No HSA for Spouse or add to Box 1 however, since the Pastor (employee) is no longer part of the Group Insurance under Sect 125/pre-tax (due to Medicare), and the Church will continue to pay for the Spouse (non-employee) it appears that for the Group Med for spouse is taxable, and added to Box 1 on W-2

Church as employer is planning on reimbursing the Mcare and Supplemental to the Pastor, and that is not a taxable event to the Pastor - just no deduction on Pastor's Schedule A

Does this seem correct?


Thanks

Sandy