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Benefits for churches and ministries that employ a small staff

A church or ministry with 2 to 50 employees is still an employer. Pastors, ministry staff, a receptionist, and part-time program people may all be on the payroll. The organization can use the same federal tools other small employers use — a group plan, an ICHRA, or a QSEHRA — and it may also need to ask a narrower question: whether a benefits plan is a "church plan" under federal law.

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Ares Benefit Group works with churches and ministries in this size range. We will be careful with the church-plan question, because not every faith-based employer automatically qualifies.

How churches and ministries actually staff

  • A mixed staff of clergy and lay employees. Some people are full-time. Many are part-time. Eligibility should be written on purpose. See part-time employee benefits.
  • Housing allowances and clergy pay do not replace a health plan. Compensation details belong with your tax advisor. They do not, by themselves, enroll someone in a group plan or an HRA.
  • Related ministries and schools. A church, a preschool, and a ministry corporation may be separate entities, or they may need to be looked at together for size tests. Bring the organizational picture.
  • The Small Business Health Care Tax Credit. Eligible small tax-exempt employers can claim a maximum credit of 35% of premiums paid, with the same basic tests (fewer than 25 FTEs, wage limits, 50% of employee-only premiums, and generally a SHOP plan). See nonprofits and the tax credit page.

Church plans and ERISA

Some plans maintained by a church, or by a convention or association of churches, are "church plans." The U.S. Department of Labor's Health Benefits Advisor states that church plans are not subject to Title I of ERISA, and that they are generally subject to parallel provisions in the Internal Revenue Code.

That exemption is real, and it is limited:

  • A church plan is a defined legal category, not a nickname for any faith-based employer's plan.
  • The Department of Labor has also stated, in its guidance for small faith-based organizations, that being a faith-based employer does not automatically mean the organization is eligible to sponsor a church plan. Certain organizations controlled by or associated with a church may qualify; others may not.
  • Employers may, in some cases, elect to treat a church plan as subject to ERISA. That is a legal choice, not a marketing preference, and we will not make it for you.
  • Even when Title I of ERISA does not apply, other rules can still apply, including Internal Revenue Code provisions and the rules that govern ICHRAs, QSEHRAs, and group coverage themselves.

We will flag the question, work with your counsel, and will not tell a ministry that it "does not have to worry about ERISA" without a determination that the plan actually qualifies.

Structures we compare for a team this size

Most churches and ministries in this size range still need a practical structure for staff medical coverage: a group plan, an ICHRA, or a QSEHRA. The church-plan question sits next to that choice; it does not replace it.

  • SHOP and other group coverage, when you want one employer-sponsored medical plan and you can meet eligibility and participation rules.
  • A level-funded arrangement, when a carrier offers one for your census. We compare it with fully insured group coverage and do not treat either as automatically better.
  • An ICHRA, when you want a set contribution and employees choose individual coverage. Permitted classes include full-time, part-time, hourly or salaried, work location, and a waiting period. It is for employees, not for a self-employed owner.
  • A QSEHRA, when you are not an applicable large employer and you are not offering a group health plan. See ICHRA vs QSEHRA if both are on the table.
  • Section 125 for pre-tax employee premium contributions on a group plan. A QSEHRA cannot be funded by salary reduction.
  • Group life and disability and voluntary benefits.

A company under 50 full-time employees, including full-time equivalents, is generally not required by federal law to offer health coverage. If you have fewer than 25 full-time equivalents and you meet the wage, contribution, and SHOP rules, look at the Small Business Health Care Tax Credit.

What to send us

A roster of employees, hours, related entities, and any existing plan documents or prior advice on church-plan status. If the church is in the Tampa Bay area, say so, and list any staff who work in other states.

Tell us about your church or ministry staff

Ares Benefit Group LLC
5701 E Hillsborough Ave
Tampa, FL 33610
(813) 540-1299
admin@aresbenefitgroup.com

Our agents are licensed in all 50 states.

Frequently asked questions

Are we automatically exempt from ERISA because we are a church?

No. Church plans that meet the federal definition are not subject to Title I of ERISA, but not every faith-based employer is eligible to sponsor a church plan. Confirm the status of your plan rather than assuming the exemption.

Can a pastor who is self-employed for tax purposes use an ICHRA?

HealthCare.gov states that CHOICE Arrangements are for employees, not for a self-employed business owner or that owner's spouse. Clergy tax status is specialized. We will not give a tax opinion here; we will work with your tax advisor on whether a given person is an employee of the church for benefits purposes.

Do we have to offer coverage to every volunteer?

Volunteers are not, by that status alone, employees. People you employ are the census. If someone is actually an employee, calling them a volunteer does not settle the question.