FSA or HRA

[artp]

We are looking for a plan to help our pastor with deductibles, copays, and other out-of-pocket medical, dental, and vision costs that are not covered under a group plan (family coverage) that his wife has with her employer. We need to do this on a tax-free basis. He is the only employee of the church. We are a very small congregation and money is very tight.

The Health FSA limit of $2500 would probably be sufficient, but the main problem is having to make a dollar commitment each year in advance and not knowing how much will really be needed.The HRA would be more flexible, but the real problem with either plan is admin cost if we go through a TPA. Is there an inexpensive option for us?

Art

[Flyboyjohn]

Yes, see if the wife's employer offers a cafeteria/FSA plan and if not convince them to offer one

[Guest swensen]

For a non-profit, I run we setup a HRA with plan documents from the following company. It cost something like $200 one-time at the time to setup (although now it seems like it might be $300), and they charge $9/month per employee to administer. Otherwise, you could just administer it yourself if it was just for one person.

I have no financial interest in this firm but have used them for 3+ years and found them responsible. I am sure there are other firms like them you could find as well.

http://www.coredocuments.com/corehra.php

[artp]

Thanks Swensen for the information.

artp

[Chaz]

I would hesitate in adopting this firm's documents without having an attorney look them over. Church plans are different from plans of other nonprofits. ERISA will not apply and the church would need to consider applicable state law.

Also, an HRA is a self-insured plan and the church will need to comply with HIPAA's privacy and securities rules at least to a certain extent with the attendant compliance costs.

[GBurns]

Chaz raises some good points.

I think that your easiest solution is to have a benefits lawyer set up a section 105 MERP for you. You would vet the expenses when submitted then reimburse. There would be no pre-funding and your commitment would be for eligible expenses (if any) up to whatever limit that you set. The lawyer should not cost more than $200.

I do not know your denomination, but the larger denominations seem to have this already set up for the smaller congregations, but you have to ask for it.

[Bill Presson]

Chaz raises some good points.

I think that your easiest solution is to have a benefits lawyer set up a section 105 MERP for you. You would vet the expenses when submitted then reimburse. There would be no pre-funding and your commitment would be for eligible expenses (if any) up to whatever limit that you set. The lawyer should not cost more than $200.

I do not know your denomination, but the larger denominations seem to have this already set up for the smaller congregations, but you have to ask for it.

Isn't a stand alone MERP not allowed now if it's not integrated with an employer group health plan?

[GBurns]

In this case, it is integrated because the Minister is covered under his wife's employer sponsored group health plan.

In IRS Notice 2013-54 etc the prohibition is against the reimbursement of premiums related to individual health policies.

http://www.irs.gov/pub/irs-drop/n-13-54.pdf

See III. GUIDANCE. Question 4 and the sections on Integration Methods.

[artp]

Thanks for the replies.

George Burns,

We are a small conservative Lutheran congregation in St. Louis and members of the Church of The Lutheran Confession headquartered in Eau Claire WI. I like your idea. I assume MERP stands for medical expense reimbursement plan? We are located in St. Louis, MO. Would you have any attorney contacts that you could recommend to us?

Thanks again,

Art

[Bill Presson]

In this case, it is integrated because the Minister is covered under his wife's employer sponsored group health plan.

In IRS Notice 2013-54 etc the prohibition is against the reimbursement of premiums related to individual health policies.

http://www.irs.gov/pub/irs-drop/n-13-54.pdf

See III. GUIDANCE. Question 4 and the sections on Integration Methods.

Thanks George. I had missed that part allowing the employee to be covered under another employer's group plan.

[GBurns]

I suggest that you contact Concordia. They should have this already set up for Lutherans.

http://www.concordiaplans.org/who-we-are/about-us.html

[John Feldt ERPA CPC QPA]

I think concordiaplans is for a different synod.

[ralphmabry]

Thanks George