Insurance, overtime pay and staff salaries are three areas church administrators must pay close attention to, said Lee Wright, coordinator of church compensation services for the Alabama Baptist State Board of Missions.
Through the Affordable Care Act, health insurance is now mandated for everyone, he said. “There are increasing fines for those who have no insurance. This year a new form will be issued by the insurance company, employer or the government — Form 1095 will be a proof of insurance document.”
Wright said every employer of 50 or more full-time employees is mandated to provide health coverage. Churches who offer group health coverage can provide it as a tax-free benefit for the staff. Plans offered by GuideStone Financial Resources are considered group plans even if the church only has one full-time employee, he added.
Wright also said churches must be careful about overtime pay.
“Ministerial staff are generally exempt from overtime pay requirements,” he said. “But other employees should be paid for overtime work or be given equivalent time off within a seven-day period.”
Managing staff salaries is another area church administrators should monitor, Wright said.
“Many churches still offer a dollar amount ‘package’ and ask the minister to divide it as he wishes,” he explained. “This approach isn’t the best way to compensate our staff. It gives a false view of what the salary really is and it may cause the minister to pay more tax than is necessary.”
Wright said a better way of reporting is to specify salary and housing in one budget section and, in another, a benefits section which might include health insurance, life insurance and retirement. The third line item is a minister’s business expense section for reimbursable expenses incurred in the practice of ministry.
An accountable reimbursement plan is the best way to cover necessary expenses without incurring further tax liability, he said.
For more information, contact Wright at 1-800-264-1225, ext. 241, or lwright@alsbom.org.
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