A Cost of Doing Business

He was not a new pastor. He had served Alabama Baptist churches for more than 20 years and had a good reputation. God had blessed his ministry.  But he was new at this church. He had been there only a few months. Things were going well. People were joining. Offerings were up. The spirit was high. Everything pointed to a positive future.

Then a letter from the denomination raised an issue that threatened to divide the congregation. The letter was from the Annuity Board of the Southern Baptist Convention. It announced dramatic increases in medical insurance costs for the pastor and his family. The pastor was stunned.

At his previous church, medical insurance had been paid by the church as a business expense — part of the cost of having a pastor. At this church, the pastor had been given one figure and told to divide it any way he wanted. The pastor had allocated the cost of medical insurance based on the old rate, but no one had expected this kind of increase. If the pastor absorbed all the added cost, he would have less money to pay the new mortgage and support his family than he had at the previous church, and that was not much to begin with.

When the pastor shared his dilemma with the deacons, it sparked considerable discussion and disagreement. Some felt the insurance premium was the pastor’s problem, not the church’s. Others felt the church should provide medical coverage as a part of its business costs just like the church pays the light bill and other fixed costs.

Several lay leaders contacted the Alabama Baptist State Board of Missions for advice. They were urged to include medical insurance as a church-paid expense and not to provide a lump sum for the pastor to divide. The church must be a responsible employer, they were told.

After further discussion, the deacons recommended and the church approved paying the medical insurance for the pastor and family as a business expense. While no church can force any employee, including the pastor, to be financially responsible, the church can make sure that it provides adequate supports such as insurance and retirement, the congregation reasoned.

What the pastor who is described above experienced, many other pastors are experiencing now. It does not matter if one is new in the church or has served it for years, all face another round of dramatic increases in medical insurance. The actual increases differ by regions of the state and are based on age, but on average, medical insurance provided through the Annuity Board of the Southern Baptist Convention is going up 17 percent this year. And the cost of medical insurance is already high.

For a 50-year-old pastor in the Birmingham area, the cost of the primary plan offered by the Annuity Board is $557 a month just for the pastor. If the pastor adds his wife, the cost more than doubles — up to $1,321 a month. The family rate for this same plan is $1,795 a month.

Recently, the Annuity Board announced that for the first time Alabama Baptist employees could receive service through the Blue Cross and Blue Shield network. This is not Blue Cross insurance, only allowing access to Blue Cross providers. But the cost for that access is $571 per month for the employee, $1,355 when the spouse is added and $1,803 a month for family coverage.

The costs are simply outrageous.

Part of the problem is that the Annuity Board’s medical insurance program is not a group program. It is almost a self-insured program. Another part of the problem is that ministers are less healthy than the general public at large. But those are other issues. The immediate question is what can be done to make sure pastors and their families have adequate health insurance now.

The Annuity Board does offer less expensive plans and the less expensive the plan, the less coverage it provides. Less expensive does not always mean affordable. Only one of the seven available plans costs less than $1,000 a month for family coverage.

Another option is what is called a 105 Plan that allows a salary reduction for medical costs. The chief advantage of this approach is the tax savings. Jim Swedenburg, director of annuity and insurance for the State Board of Missions, can provide more information about this approach for those interested.

One pastor with whom we talked said the latest increase in medical insurance translates to about $5,000 in increased premiums for him and his family. Few pastors can afford such costs.

That means a number of churches across Alabama will be faced with the dilemma of the church described above. Churches will have to decide if they will provide medical insurance as a cost of doing business or if the church will force the pastor to bear the burden of the increased medical insurance premiums.

October is Minister Appreciation Month. There is not a better way to show your pastor how much you appreciate him than to make sure the church provides medical insurance as a business expense, to make sure the pastor does not have to bear these dramatic increases alone.