Clergy w-2

[TAX4US]

To all my clergy friends. Does the health ins paid by the church direct to the ins co show up on the W-2 at all? I have been asked to prepare some clergy W-2's. I have everything covered but this issue still gives me a problem. What do you say?

[kathyc2]

Is it a group plan or an individual plan?

[TAX4US]

My understanding is that the church belongs to a national group. The national group contracts for the insurance and passes the cost out accordingly. if this helps.

[kathyc2]

My understanding is that the church belongs to a national group. The national group contracts for the insurance and passes the cost out accordingly. if this helps.

If it's a group plan that qualifies as a non-taxable fringe benefit, I don't think it needs to be treated differently than any other non-church business.

[Golden Rocket]

Local Autonomy or Not

I believe the treatment depends on who the employer really is. Different denominations of religions vary in their entity structure based on their religious beliefs.

For example, each local congregation of Missionary Baptists is autonomous and free of control by an organizational superstructure. The Methodist Church has such a superstructure. One reliable test is "who owns the building". The Methodist church building in most towns is titled to the Regional Bishop of the Methodist Church. It is titled to local ownership in the case of Missionary Baptists.

A local church can be autonomous and still be a member of a denominational convention, and form a buying "group" for medical insurance and retirement plans. However, even so, the minister's employer is still the local church and NOT the convention. I would say if the church is part of an organizational superstructure, then the church superstructure itself is the employer and a homogenous plan covering all local subdivisions can be treated as a group plan.

Without getting into religious doctrine, there are arguments that can be made for or against a superstructure versus local control. And as I am not either a Missionary Baptist or a Methodist, my apologies to anyone if I have misrepresented any facts regarding same.

[DonB]

If it's a group plan that qualifies as a non-taxable fringe benefit, I don't think it needs to be treated differently than any other non-church business.

I believe it would be a non-taxable fringe as a group or an individual plan if paid directly by the church (employer).

[TaxGuyBill]

I agree, it's a non-taxable fringe benefit.

However, I suspect that because the church is part of a large national group of churches, that you may need to report the value of the insurance in box 12 using Code DD.

[TaxGuyBill]

I believe it would be a non-taxable fringe as a group or an individual plan if paid directly by the church (employer).

I hope they aren't reimbursing Individual policies. That could be trouble with the ACA penalty.