IRS Clarifies Individual Health Plan Premium Reimbursements The IRS recently issued a notice that provides transitional relief to churches who provide reimbursements for their employees to purchase individual health insurance. Prior to this latest guidance, any reimbursed premiums and other medical reimbursement arrangements would be included as taxable income in 2014. As with all things IRS-related, the rules surrounding health care reform can get a little complicated. The Internal Revenue Service has now issued new guidance that provides ACA relief which is highlighted below. Churches will need to conduct a review as and stop any individual premium reimbursements by June 30, 2015. ·         Employers can reimburse premiums pre-tax through June 30, 2015. ·         By June 30, 2015, employers must stop paying for or reimbursing individual health insurance unless they have just one employee. After that date, ACA penalties will be incurred. ·         If employers have only one employee, they can continue reimbursing healthcare premiums on a pre-tax basis. ·         Employers who have more than one employee and are not in a bona fide group plan, but want to continue to help pay insurance costs, need to change the way this is done after June 30, 2015, to avoid penalties. The way to do this is to increase salaries to cover the health care premiums without stipulating the salary increase for that use. ·         Employers should consider amending their 2014 payroll reports and W-2s to treat the premiums as non-taxable.  Source: Clergy Financial Resources


Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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