Pastors Medical Deduction now taxable?

[Duane Anderson]

Is a Pastor's medical insurance paid directly to the insurance company on his behalf now included in his taxable income? The church has three employees and he is the only employee who has medical insurance. According to IRS 2015-17, is the medical insurance paid monthly now taxable income to the pastor.....This is one of the most confusing and unclear revenue rulings I have seen, which is effective July 1, 2015. IF taxable, is there any legitimate way to continue to have these payments not included in his taxable income?

Thanks,,,Duane Anderson

[MDEA]

Medical insurance

The way I read it they can not pay it at all. He must pay it for himself. Also it is discriminatory for them to only pay his.

[TaxGuyBill]

(1) Reimbursing ONE employee is still allowed.

(2) The ACA discrimination policy does not apply. It is a self-insured plan, and the ACA discrimination policy will not be enforced until further notice.

(3) HOWEVER the long-standing ERISA discrimination policy may apply. I am not familiar with the ERISA rules, but why do they only offer insurance for one employee? Are the other employees part time, and would not qualify for benefits? If that is the case, I think they can continue to reimburse the ONE employee. If the other employees are not part time, I would THINK it is discrimination.


If it would be discrimination (or more than one employee is reimbursed), as MDEA said, they can not reimburse the insurance AT ALL. They may choose to increase the taxable wages of the Pastor.

As a side point, the medical reimbursements would still be tax-free to the employee and employee, but the employer could be subject to gigantic fines ($100 per day per participant for ACA).

[jsamans]

(1) Reimbursing ONE employee is still allowed.

(2) The ACA discrimination policy does not apply. It is a self-insured plan, and the ACA discrimination policy will not be enforced until further notice.

(3) HOWEVER the long-standing ERISA discrimination policy may apply. I am not familiar with the ERISA rules, but why do they only offer insurance for one employee? Are the other employees part time, and would not qualify for benefits? If that is the case, I think they can continue to reimburse the ONE employee. If the other employees are not part time, I would THINK it is discrimination.

DOL says that ERISA doesn't generally apply to health plans established or maintained by churches for their employees.

[TaxGuyBill]

DOL says that ERISA doesn't generally apply to health plans established or maintained by churches for their employees.

Thanks, that's good to know.

In that case, I think it would be okay to still do it (assuming that is the ONLY reimbursement).