Mandatory
In a nutshell the new law states that all Americans are required to obtain health insurance with “minimum essential benefits”. (“Minimum essential benefits” is a catch phrase the government is using to describe what qualifies as coverage. If your policy does not meet the government’s minimum requirements, then you will be considered to be uninsured.) There are 2 exceptions:

1. Those who are members of a religious sect (such as Amish or Old Order Mennonites). I will not dwell on this since it does not apply to clergy in our circles.
2. Those who are members of a health care sharing ministry such as Samaritan Ministries, Medi-Share, and Christian Healthcare Ministries.

HSA
When an employee has a qualified HDHP (high-deductible health plan) churches can make tax free contributions to the employee’s HSA. For more information see IRS publication 969 http://www.irs.gov/pub/irs-pdf/p969.pdf. The HDHP premium is not a tax-free fringe benefit unless it is a group plan (i.e., the employer has signed up with an insurance company to provide the HDHP to its employees as a “group”).

Marketplace
The Marketplace (state exchanges) is where the uninsured are able to go to obtain health insurance. These are the government websites you have heard so much about. Using an exchange, a low-income individual or family may qualify for a tax credit to help pay for their premium or they can choose to take a credit on the tax return instead.  If the church or employer reimburses this premium for an employee with a government subsidy, the marketplace will need to be notified as this could affect the subsidy.

Taxable Benefit
The new health care laws also affect the taxability of health insurance benefits. In short there are only two situations that qualify an employer to treat health insurance premiums as a tax-free fringe benefit:
1. Provide a group health plan for its qualified employees OR
2. Use a Health Reimbursement Arrangement (HRA).

HRA
When a church has only one employee qualified to receive health insurance benefits then it is possible to use a One-Person Stand-Alone Health Reimbursement Arrangement (HRA) http://ssfoundation.net/pastors?qa_faqs=health-reimbursement-arrangement-hra to pay or reimburse the health insurance premium. This would be a tax-free fringe benefit.  ACA Market Reforms do not apply and fraternal forms of non-insurance carriers, such as The Christian Care Ministry, Samaritan Ministries, Medi-share, etc. can be paid or reimbursed but not with an HRA.

When a church has more than one employee, but fewer than 50 employees, qualified to receive health insurance benefits then it is possible to use a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) http://ssfoundation.net/pastors?qa_faqs=health-reimbursement-arrangement-hra to pay or reimburse health insurance premiums.  All employees must be treated the same as this HRA is subject to strict discrimination laws.  This would be a tax-free fringe benefit.

When a church has 50 or more full-time employees (30 hours or more per week) a HRA can only be used when it is integrated with a group policy.

MRP
 A Medical Reimbursement Policy  http://ssfoundation.net/pastors?qa_faqs=medical-reimbursement-policy cannot be used to pay or reimburse health insurance premiums.  A MRP is limited:  $3,050 for 2023 and $3,200 for 2024.

Group Plan
Churches (employers) can provide health insurance as a tax-free fringe benefit if they obtain a group health plan.  Because these plans are expensive there is a credit available to small employers.  You can get more details about this credit on the IRS website at:  https://www.irs.gov/affordable-care-act/employers/understanding-the-small-business-health-care-tax-credit

Christian Health Sharing Ministry
For those using a Christian health sharing ministry for coverage, these expenses can NEVER be paid through an HRA.  For one employee situations the employer can reimburse the employee for their share amount.  For employers with more than one employee, two sharing ministries provide group plans that the church can provide for all employees:  The Christian Care Ministry and Christian Health Care Ministries.

*This information is provided to try to help you understand the basics.  For clarity this information has been simplified and condensed.  It should not be viewed as a comprehensive treatment of the subject.