A Church Dilemma

I got this letter yesterday, and I pass it on to you for two reasons:

Have you heard about this? What do you think?

Since States or the Feds are now requiring businesses, and that means churches too, to provide health insurance for any employee working over 30 hours, churches are now reducing staff to below 30 hours to avoid health insurance costs.

Some churches are making this their policy for all staff other than fulltime pastor, therefore adding more directors and non-pastoral staff, rather than paying for fulltime staff.

What is the ethic here? At what point is the church an example rather than doing only what is required by law?

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  • I enter this naive, I’m sure, but I think you raise a good, important question. Which I think strikes at the heart of the current debate on health care in this nation.

    Corporations are said to be people, and if so, then how do they treat other people. Or more accurately (I think), how do corporations do that? How do we treat each other in this nation?

    I think churches could do this in good conscience only through considering each individual involved. Are they covered in some other way, perhaps through a spouse?

    This really does not seem to be that difficult a question to me. But I know Christians who have no problem with misfortune leading to a loss of their own health care which could possibly lead to their own premature demise health-wise. I respect that, while disagreeing with them, thinking that we in the kingdom of God in Jesus must be an example to society of loving our neighbor as ourselves. That while it is we who follow Jesus who are to exemplify that,or live that out, that it is indeed to be an example to the world from us who I think surely accurately in this context are called the light of the world. Not an easy topic though, theologically.

  • Paul W

    In my limited experience I’ve seen churches take on staff within a 1099 tax code (in essence as an independent contractor). In IRS terminology when the church makes payment to 1099 staff it is considered “nonemployee compensation.” In practice staff are treated as employees in every other respect except for actual compensation, tax burden, and associated vulnerabilities.

  • phil_style

    Churches playing the tax avoidance and employee benefits avoidance game. This, from a distance, looks good doesn’t it?

    Once upon a time, churches provided entire health centers (hospitals) for their staff, parishioners and the wider community.

  • Robin

    First, I didn’t see a link on the post so I’m not sure how seriously to take it. Is this anecdotal information the person is hearing? Is this a story about a handful of small churches? Is this a national trend among all churches?

    Second, I think we have to keep an open mind to the possibility that this is something that some churches may genuinely not be able to afford. I would dare say that there are more churches hanging on by a shoestring than there are churches rolling in dough. In Kentucky to provide a fairly comprehensive insurance plan it costs around $10,000 (If the employer pays all of it). Lets say they only paid 25% of it but had 10 staff – an associate pastor, youth pastor 2 or 3 church secretaries, a maintenance person, etc. It is a very believable scenario. Would a church that size be likely to just have an extra $25,000 sitting around in their budget?

    Of course if we think along the lines that T brought up recently they could just reduce employee salaries by the cost of the insurance…so everyone now has $10,000 worth of insurance but they have to take a $10,000 pay cut to get it.

    The bottom line is that if this is true and widespread, it is just as likely to be about “We don’t have the money to pay for that” as “We’re playing a tax avoidance game” and in most cases it is probably both.

  • Diane


    Good to hear your always humane comments. How about Scot and you for President and VP? … Anyway, here is another indication that the health care system we have is broken. I don’t blame churches, except for not advocating with greater vigor for a single payer health care system. One thing I’ve seen in the past view years–and it has shocked me–is the number of middle-aged people foregoing health insurance. Perhaps when nobody has health insurance anymore, the system will change.

  • Dan

    As a pastor of a small church, this issue is very important to me. Again, in posts like this I find the way things are framed to miss the point.

    In so many churches like mine, it is NOT a matter of not wanting to provide insurance. It is a huge cost factor. One that many churches my size simply cannot bear. It is not out of a lack of desire… it is cost.

    On the other side (when politicians refer to individuals) it is often said we need a mandate so those not wanting insurance now will get in and lower the cost overall. Again, it is NOT a matter of not wanting to get in. It is affordability. To cover my family with MAJOR MEDICAL these days would run well over $1000 per month. This is astronomical, and will only get worse until ALL aspects of healthcare are addressed and dealt with.

    So, the premise of this post is a bit misleading. It sounds harsh so that churches don’t want to provide coverage. Not true.

    Also, the provision of the healthcare initiative that will require certain things of non-profit organizations does not necessarily apply to certain size churches and other religious “temples.”

    My two cents. (Which is all I have and if I am forced into extravagant health insurance rates I will have even less than that!) 🙂

  • DanS

    What Dan said. Major family medical costs on average $1500 per month. Churches made up of lower middle-class folk, some elderly, most with families, have a limited budget. I don’t know where the assumption comes in that because something seems like a good idea cost is no obstacle. Our church needs a new roof and all kinds of physical repairs – nothing crippling but it all strains the budget. To purchase family health insurance for a pastor and family, youth pastor and family, secretary could cost as much as $4500 per month, or $54,000 per year. Reduce to single coverage for the youth pastor and secretary and that saves a bunch, for sure, but small churches cannot afford the costs and they only will go up.

    There has to be a fundamental change in the expectation of our health care system, so that premiums do not go to the coverage of everything under the sun and primarily go to major expenses. But that is another discussion.

  • Tracy

    Our HR department explained that once the new healthcare legislation kicks in in 2014 (?) employers may opt to pay the $2,000 fine for not providing insurance, and individuals can go with the state’s plan. The concern is that healthy and young employees will opt out of the company’s plan because the state plan’s premiums will be less expensive, leaving only high-cost individuals in the corporate plan. Since we already have premium coverage and the law says employers may not reduce the benefits they are already offering, my employer is concerned about the consequences of a potentially smaller, yet sicker, pool of participants (raising costs). It really seems like the way out for employers would be to pay the $2,000 fine per employee and get out of health care insurance provision.

  • Richard

    How about congregations band together in a collective that provides nation-wide coverage to church employees; across denominational lines? Is there anything in current regulations that would prevent an “industry” pool like that?

  • MD

    would the conversation change if we understood “church organizations” to be entities separate from and different than “churches?”

  • Robin


    Maybe you could provide a little more information on exactly what in health care reform these church are supposed to be trying to avoid.

    I went back and looked at the law for employers and here is what I found:

    Employers with 200 employees – employer-provided coverage required

    The only one that makes any sense to me is that churches might have to pay a fine if salaries are low enough to qualify the employee for subsidies.


  • JoeyS

    I’ve looked into this for the faith-based non profit that I direct. I think this isn’t exactly true.

    Churches can get significant breaks on their payroll taxes if they pay for health insurance for their employees. The original law missed nonprofits and gave small businesses tax breaks but since nonprofits don’t pay taxes they had to make a rule that included NP’s. The aforementioned payroll tax break is the inclusion.

    For churches that can’t afford to provide healthcare even with a payroll tax break, then I think Richard’s idea @ #8 is a good one.

  • JoeyS
  • Dan

    Richard #8: It would be a smart idea… which is why it probably hasn’t happened. LOL

    For it to happen across denominational lines, it would need some denominational push. When denominational heads don’t see it as a high priority (like mine), then things don’t get done. Again, those who “have” can’t understand how difficult it is to move this mountain. When you “have” a denomination that is totally on board and working to provide their constituents with something, it is great.

    Putting together co-ops of some sort might work. Again, when you work with smaller churches where pastors are typically under-paid already, who will administrate this effort? It’s doable… just at great effort and tremendous expense. The ENTIRE system needs reform, which is what angers me so much about the current half-baked plan.

    Our district once tried to have a district health plan and it collapsed within a year because the premiums doubled the second year. On and on I could go.

  • T

    Yes, of course it would be great if churches could just add the cost of health insurance to their budgets for all staff and not make any cuts. But for the vast, vast majority, that’s not an option. Especially when we add the fact that many churches are facing declining revenues, churches know they have to cut back on expenses.

    I will add that in my experience with the operations and finances of churches and parachurch orgs, part-time work and volunteer workers have been key for a long time now. This tactic to cutting costs is nothing new to the non-profit world. It will certainly become more popular when insurance is required for full time staff. As others have said, the revenues, combined with the philosophy of ministry, dictate. Most churches would love to give everyone health insurance and give lots more away to the poor. But you can’t give what doesn’t come in.

  • Robin

    Sorry, two things got cut out of my post

    Employers with <50 employees – no requirement for coverage and no penalties

    Employers with 50 to 200 employees – no requirement for coverage, but $2,000 to $3,000 fines (per employee) if employees have low incomes and qualify for government insurance subsidies.

  • Joe Canner

    Robin’s points in #10 and #15 bear emphasis. Churches with more than 50 employees are not hanging by a thread and should be able to provide health insurance for their employees. If they can’t, perhaps they need to decide whether it is more important to have more staff or more important to treat their staff as humanely as do secular employers.

  • Robin

    Responding to Joe,

    If we are talking more than 50 people we are really talking about (1) mega-churches or (2) religious schools. The former should probably be OK, the latter still struggle.

  • Joe Canner

    Robin, fair comment about religious schools, although I would still push some of the responsibility to the parents who are paying tuition. Should they be expecting their children’s teachers to suffer financially or health-wise in order to keep tuition costs down?

    For that matter, shouldn’t all of us, as consumers, be willing to pay slightly higher prices so that the companies we do business with can treat their employees fairly?

  • Tim Marsh

    I don’t mind sharing that I am a pastor and that my health insurance costs $13,000 per year. I have a good health plan – low deductible, covers wife and kids, etc. Nevertheless, I am also 34 years old, my wife is 35 and both are in good health, non-smoking categories. I have had the same policy since 2008. I can tell you that the cost of the policy has nearly doubled over the course of the past 4 years, without our family entering into a new age bracket. Churches are in seriouse dilemma as to how to cover full-time staff. In medium-size congregations, such as the one that I serve, we face the dilemma of hiring part-time (and I know there really is no such thing as part-time in ministry) or cutting staff. We are an aging, plateaued congregation, which means that we are losing strong contributors. And, 4-5 younger families cannot match what these older contributors give.

    This does not even cover the costs of having insurance on our facilities, as well as increased costs of utilities. Costs are rising, contributions are declining. Many churches are in this boat. We need a new paradigm for ministry. I would consider bi-vocational even in my own setting, but our seniors would have to give up routine visits from the pastor. That is something that many older congregations are unwilling to give up – a pastor that is available for emergency, counseling, and casual, routine pastoral visitation.

    We seem to be in a catch-22. We need resources and staff to cast vision and implement ministry and missional strategies for younger people and mission to the community. Yet, we have an older congregation to maintain with fewer resources, staff and finances.

    Praying for direction for all churches who are dealing with the rising costs of insurance, declining in giving, and demands of the congregation…

  • Brian

    @ Richard #9
    There is something like this, it’s called Samaritan Ministries, which technically isn’t insurance, but a way to share medical costs among other Christians participating in the group. Needs are distributed among all the participants, according to a set monthly amount, which is then sent directly to the person with the need. The details can be found on their website. I don’t agree with everything about their philosophy, but I like the idea of Christians helping other Christians directly instead of a for-profit industry.

  • Chris Bannon

    To the point of #8 and #13… such cross-denominational Christian health care organizations do exist. Samaritan Ministries and Medi-Share are the two biggest that I am aware of. My family has a membership with Samaritan Ministries: pretty comprehensive medical “coverage” for $320/month for the whole family, and it’s accomplished simply by people meeting the needs of other people as they come up. No insurance company middle-man price-hikes… most medical providers discount at least 25% of costs off the top just because they don’t have to deal with those companies. My family is taken care of, it’s an expression of the Body of Christ at work, and I’m not paying $12,000/year to some faceless corporate behemoth just to prop up my peace of mind.

    Also, to the point of #2, it was brought to my attention this year that, according to the IRS at least, pastors are supposed to be designated as 1099 “independent contractors”, rather than “employees”. That is, as a non-profit, Churches should not be taking on the role of paying the tax liabilities of those whom they pay. Apparently, 80% of churches get this wrong… All that to say, going the 1099 “non-employee” route isn’t an “evasion”, but rather in perfect alignment with what the IRS has prescribed.

  • pepy

    Interesting…I did my own bit of research to learn:

    many small employers offer health benefits to their employees in order to attract and keep good employees. A small employer is defined as one who employs at least 2 to but not more than 50 employee. An eligible employee is one who works on a permanent basis and has a normal work week of 30 or more hours. This includes a sole proprietor, a business owner, including the owner of a farm business, a partner of a partnership, and an independent contractor if these individuals are included as an employee under a health benefit plan of a small employer.

    There is a reason they include independent contractor in this list. See Wikipedia regarding permatemp employees.

    I really don’t have answers to offer. I understand the cost to a small organization/business/church to provide this kind of benefit. I also wonder about what if you don’t provide this benefit? What is the ethic of asking a pastor to come and have no provision of healthcare? Let’s say a pastor agrees to accept this employment situation, and then he or a dependent becomes very ill, or pregnant, and the costs for medical care go beyond what they could ever pay? How would a pastor address this? Is the “God will provide” approach to rescue someone without health insurance a viable option or a cop out? Does God “provide” in the provision of health care coverage in a planned way?

  • This looks like a terrible dilemma to be in. I’m sure that churches WANT to offer it but they say they can’t afford it. I wonder if the members want their children’s workers or youth ministers to have insurance, and might therefore put a little more into the plate in order for this to happen?

    It is evident that the health system in the US is broken. It should be the responsibility of the government, not churches, charities or even employees, to make sure that a decent level of healthcare can be had my all.

    I wonder, are these the same churches that encourage their members to vote for the party that sees national health coverage reduced?

  • I would like to know where the prophetic voice of the church was in regards to universal health care earlier. Where all of our neighbors, parishioners, and staff would be covered. What I kept hearing was the American Church covering for the wealthy…

    But if the contemporary church wants to act like a business, I would say Ted #1 has that point already covered.

  • I, too, would like more details about what the letter is referring to. I’m doubtful that this applies to a church with three or four staff. But let’s presume that it does.

    Is it ethically okay for a church to pay no salaries to anyone? Everything is done by a team of volunteers … think tent-making pastor, or someone whose spouse is supporting the family.

    If so, then would it also be okay to only pay a stipend of, say, $5,000 a year to the tent-making pastor? If so, then how about a stipend equivalent to half of what pastors elsewhere in the community? How about a full-time stipend? If it is ethical to negotiate how salary will be dealt with, then why isn’t it negotiable about offering healthcare? There is a mandate by the state but where is the ethical imperative?

    That said, my denomination, PCUSA, requires that each congregation pay into the denomination’s pension and health plan based on a percentage of a pastor’s salary. (It isn’t being paid into the pastor’s account but into a pool that will be used to compensate all pastors.) It is a way of ensuring at least a minimum of compensation for everyone.

    But here is the PCUSA reality. We presently have twice as many people graduating from seminary seeking a call as there are congregations willing and financially able (meet a minimum comp package) to extend call. We have presbyteries where more than half of our congregations are without an installed pastor or they have a commissioned lay pastor (preach, administer sacraments, but don’t usually do the full pastoral role.) The letter seems to set up a binary position of pastor/staff with full salary and benefits or no pastor/staff at all. Any thing else is unethical.

    Yet what we are seeing in the PCUSA is a growing number of seminarians graduating without seeking a call to an existing church, but rather gathering people around them and forming worshiping communities that don’t fit the traditional congregation model. Are these pastors and their communities behaving unethically?

  • I find it interesting that many people have responded to this question from a practical/legislative perspective rather than from a theological perspective. It’s an age old question that churches and pastors have struggled with for a long time; what is the full time pastor valued at? This is not just a financial question, but also a theological, pastoral, and professional question. How do we, as the church treat those who have felt a call to the ministry?

    I have been both in the “mega” church world and in the “small” church world and each has its own value scale for their clergy. From a selfish perspective, (as my husband is the preacher) I would say our small church does not value their clergy in a theologically appropriate way.

    This issue isn’t about whether the church can or will pay health insurance for their clergy, it touch on something much bigger. It touches on the cultural changes of our time in the areas of theology, ecclesiology, language, and the professional value of those anointed men and women.

  • DRT

    Michael Kruse#24, I think the RCC still needs Priests.

  • Don’t blame churches for government over-regulation. Very few church staff workers are the prime bread-earners in their families.

  • Bill

    Civilized 21st century nations ought to provide universal healthcare with the option for additional specialty services through private agencies. No American should be wondering if they will have adequate health care – preventive or otherwise – or if they will lose all their resources and retirement because of an accident and/or illness. As in the spiritual realm where we have the safety net of grace that permits us to take risks in the Lord, so in the secular life universal healthcare is a safety net that will permit workers to put their focus on building our country rather than worrying.

  • DRT tells me my website link is bad, so I’m commenting again to get it right. 😉

  • Matt Edwards

    There is another element to this issue, too. To what extent do congregations have an ethical responsibility to take care of their church staff financially? Churches work with budgets that come from the donations of the people they serve. If there’s no money for health insurance, that’s either because the money is being mismanaged or the money is not coming in from the congregation.

    There’s all kinds of reasons why congregations can’t give enough to support benefitted staff. This recession has been brutal on everyone. Many are in a position where they can’t give or they can’t give much. But let’s be careful not to talk about churches like they are machines–they are congregations of people.

  • Interesting, while on church council, we voted to extend health benefits to those working 20 hours or more. Granted, this stretches us, but with the state of the economy, and the cost and system of health care available, I think it was the right decision.

  • Win

    The reality is churches have budgets like everyone else. Churches are also almost always on the edge as non-profits. Any slight reduction in revenue and/or any slight increases in expenses can put a church out. Health care is not expense. General rule of thumb for a fully loaded employee is to add 20% to employee’s salary and that’s the real cost to the organization (business, non-profit, anything). This will force us into a more British model (albeit for different reasons) where no one is actually hire. You are a contractor. The British do it to avoid a lot of the liabilities of hiring someone, such as they can’t fire anyone. Americans will do it to avoid the cost of healthcare.

    Perhaps it would be better to revisit the policy.

  • Fish


    Seriously. Our nation lost all common sense during health care reform.

    If you’re in a business, and you look around and see a bunch of your competitors all running a process that is far more effective and efficient than your version of that exact same process, do you really just stick to what you’re doing? Maybe even double-down on the world’s most inefficient process by forcing everyone in the country to buy into it?


  • My parents have pastored churches or over twenty years. Depending on the church, senior pastors even are considered contractors, and health insurance has been denied to them most of the time. It bothers me greatly. My brother worked for a church for over a year and they kept him just short of the 30 hour rate to avoid paying for his health insurance………

    My sister worked for the same church as an “intern” she raised support from other people to work 40+ a week, with no benefits. My uncle, also a pastor, hasn’t had health insurance in over twenty years. His church has used the same “religious clause” to avoid paying for it.

    Ihear arguments against govenrment interference – that the church should be responsible for welfare and healthcare. But as far as practically putting these theories into action, the church has failed. Supposedly, the church is to take care of its people. Yet all too often it doesn’t care for those who do the most for it – because it isn’t accountable to do it. Sure, the money in the old testament went to the care of widows and orphans when the country was a theocracy and this was enforced by law. It is too much to expect people to be naturally altruistic – even redeemed Christians. They are not. It is too easy to justify why that money should be used for something else.

    Welfare, healthcare etc. must be regulated by the government or else it doesn’t happen. The risks of it not happening are too great. Those who deride the US welfare system need to take a long steady walk through the slums of Mumbai and ask themselves – what would be the advantage of having this system in the United States? Because without welfare and healthcare, that is a good example of where we will end up. And the church will do nothing to stop it from happening.