Cover Me

There are no state or federal laws that require employers to offer health insurance benefits to any employees at all, says Robert Zirkelbach, director of strategic communications for America's Health Insurance Plans (ahip.org). While churches aren't obligated to provide health insurance for their staffs, most want to provide those benefits for their pastors and full-time employees. Yet many pastors today need to look elsewhere for health insurance—perhaps through an employed spouse—or simply risk living without it. Why?

"From my standpoint, finding coverage for a small church is not a problem," says Shirley Crandall, president of Crandall & Associates, Inc., a full-service insurance agency in San Antonio, Texas. "Any of the companies I work with will write a policy for a church with a minimum of two employees."

Big Business Benefits

So the challenge for smaller churches isn't getting health insurance but finding affordable plans—affordable to both the church and the pastor. According to figures from the 2008 Employer Health Benefits Survey prepared by the Kaiser Family Foundation and the Health Research & Educational Trust (hret.org), the average family's out-of-pocket expense for health insurance premiums more than doubled in less than 10 years, even though more people enrolled in high-deductible plans.

The Kaiser survey found that workers in small businesses (firms of three to 199 workers) that offer health benefits pay, on average, $4,101 annually for family health insurance coverage, while workers at larger firms pay just $2,982 annually. Why the large difference?

"Many small businesses struggle just to provide any health benefits for their workers, and when it is offered, their workers on average pay more for family coverage and face higher deductibles than those working for big employers," says Kaiser Vice President Gary Claxton, co-author of the study and director of the foundation's marketplace research.

The Light and Life Free Methodist Church in Avon, Indiana, has a small staff eligible for a group health insurance plan: three full-time pastors and a preschool administrator, says Senior Pastor Chet Martin. Lining up health insurance for small churches is not a new issue for Martin, who previously worked as his denomination's conference superintendent. The conference provides a group health plan for about 40 families and a dozen individuals.

The conference also provides a Health Savings Account (HSA) plan for employees who opt to participate. "With this, we can set aside a part of our salary package—before taxes—to be used for medical costs," Martin says. "Out of our three full-time pastors, only two participate in the program, and each allocates funds into the account differently."

One of the challenges that small churches encounter in the program is the number of employees enrolled. "We are a small group, and pastors are notorious for making use of every benefit we have," Martin says. "We have an aging group and our demographics are not tipped toward young, healthy families. Consequently, I wish the law allowed all full-time pastors in Indiana or in a region to band together as one group. If we could all band together and be a group, then perhaps that would help drive prices down."

Good Health Pays

While buying in bulk doesn't guarantee lower rates, having a larger population base to survey may help by having more healthy people on the plan to balance out less healthy employees. Crandall says organizations that offer health insurance benefits cannot refuse to provide coverage to an individual, but they may choose to "rate it up." She says rates are driven by three things:

• The male/female content of the group (because males tend to visit the doctor's office less frequently);
• The ages of those to be insured (younger people will get a less expensive rate);
• The location. Rates tend to be less expensive in the South and go higher as you move north.

Health insurance for small groups is mostly regulated by state laws, according to information from AHIP. Roughly two-thirds of states have adopted premium-rating rules designed in the early 1990s by the National Association of Insurance Commissioners, which allow rates to be adjusted for the demographics of enrollees in a group, but place limits on the magnitude of adjustments for health status, industry, and other rating factors.

Federal law requires small-group health insurance to be offered on a "guaranteed-issue" basis. That is, a small business cannot be denied coverage due to the health status or illness of its employees or their dependents, according to AHIP. Martin says his church struggled with its annual renewal because the insured staff in his conference filed many claims in the previous year. "Pastors lead relatively sedentary lives," he says. "We're not the healthiest group in the world."

Budget Burden

Not surprisingly, smaller churches find the challenge of paying for health insurance premiums a serious burden. "Many of our congregations are so small (as few as 50 members), that it is difficult to pay the health insurance premium," Martin says. "Pastors are not highly paid, and the cost for the family premium in our conference—for two parents with children—is going to be $1,400 per month next year [in 2009]."

Small churches sometimes need to make very difficult decisions about even offering health insurance. When added to the expenses of paying the pastor a salary, operating the church facility, the cost of programs, ministries, and outreach—other things that a church should be doing—the health insurance premium "can be a huge obstacle," Martin says. "It isn't necessarily hard for the church where I'm the pastor, but for the smaller ones it can be a problem."

Martin's conference works with an insurance agent who happens to be a member of one of the conference's local congregations. "We are insured with Anthem, but we've been with others, too," he says. "We were in a self-insured plan for a while, which proved to not end well."

Crandall agrees that the biggest challenge for an insurance broker isn't finding the coverage, but helping the church client get the best coverage for the money they have to spend. "I normally advise them to give me a budget number for the year, and I'll make the plan work around that budget number," she says. "We may have a small group that has $10,000 to spend for the year and they need to insure the pastor and an associate pastor. I will bring them something that will work within those parameters. I can find them health insurance. The challenge is how much they have available in their budget to fund it."

Outside the Box

Crandall says there is a general misconception that health insurance coverage will cost more when an organization has a smaller population to insure. She says the difficulties are truly driven by the church's budget more than anything else.

"When times are hard and people are cutting back on things, the real challenges regarding employee benefits center on finding a renewal plan or a new group plan that will work within their budget," Crandall says. "That is where I think the biggest challenges come into play—the budget constraints."

AHIP's Zirkelbach agrees, saying a variety of coverage types are available, depending upon the church's budget and the coverage desired. Consumer-directed plans tend to be high-deductible plans that include a tax-preferred savings option such as the aforementioned Health Savings Accounts (HSA), or the Health Reimbursement Arrangements (HRA).

These plans are popular, growing steadily among small firms with three to 199 workers, according to the 2008 Employer Health Benefits Survey. These plans have an average general annual deductible for single coverage of $2,010 for HSA-qualified plans and $1,552 for HRAs, according to the survey. The HSA is a personal account that is owned and used by the individual who can keep the account as long as he or she wants.

While the HSA might be an option worth investigating, accounts can be subject to setup and maintenance fees, contributions are limited, and uses of the funds are restricted. An HRA must be setup and managed by the employer, and the rules for these accounts are complex.

Zirkelbach says small churches should follow Light and Life Free Methodist Church and check with their regional denomination offices for the availability of group plans. But even these are disappearing, as enrollment in denomination-sponsored health insurance plans dwindles. Pastors increasingly are finding higher benefits at lower costs by participating in their employed spouse's health insurance plan.

An interesting alternative is a plan like Medi-Share (medi-share.org), which is not an insurance plan at all, but a not-for-profit, faith-based, cost-sharing plan. The Medi-Share program "brings Christians together to share the cost of their medical bills and save money," according to company information. Medi-Share members have shared more than $350 million with each other since it started in 1993. The basic difference between Medi-Share and health insurance is that medical bills are shared among the members.

"Unlike health insurance companies where you pay a premium to the company and they, in turn, either reimburse you or pay the doctor or hospital, Medi-Share brings Christians together to share medical bills with one another," according to Medi-Share information. Medi-Share monthly sharing costs start at $173 for a young family with an initial member responsibility (IMR) of $10,000 per eligible expense, up to $570 for an older family with an IMR of $250.

Without an easy solution, Crandall recommends church leaders find a good insurance broker to help them navigate the many options available, and to help match their church with the best coverage they can afford.

*A 2008 study by the National Center for Health Statistics (cdc.gov/nchs/) found that 42.8 million persons of all ages (14.3%) were uninsured at the time of the interview.

Copyright © March 2009 by the author or Christianity Today.
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