The news from the Annuity Board of the Southern Baptist Convention is almost unbelievable. Medical insurance rates for pastors and church staff members will go up 35.1 percent in Alabama effective Jan. 1, 2003.
For the best medical insurance offered by the Annuity Board, the annual premium will be more than $15,000 for a 45-year-old pastor with two or more family members covered on his policy. That same insurance now costs about $11,000 if one lives in Birmingham or Mobile, slightly less in the Montgomery and Huntsville areas.
For those willing to cut back on medical insurance (higher deductibles and out-of-pocket expenses), less costly policies are available. The Annuity Board is even rolling out a policy that primarily covers catastrophic medical expenses. For those who choose this option, the church is expected to pay for other medical expenses. Basically the church would self-insure their ministers and their families against all but the highest medical costs.
But premiums for this program are not cheap, about $8,300 a year. The cost of being self-insured would be on top of that amount.
No single cost for such a drastic increase in medical premiums is cited by the Annuity Board. The board does point out that it is self-insured and that medical payments have outstripped medical premiums for about 18 months.
Whatever the reason, church budgets face a challenge this fall from skyrocketing medical insurance costs. Some budget planning committees will be tempted to make the ministers pay the premium increase. This will be done in one of three ways: In worst-case scenarios, budget planning committees will provide no new funds for medical insurance. They will simply expect the minister to pay the premium increase out of his own pocket.
In other cases, extra money will be included in the minister’s “compensation package,” and the minister will have to determine whether to buy insurance or use the money in other ways. This is better but still not right.
In still other cases, budget planning committees will recommend the extra $4,000 for medical insurance, but that will be the only adjustment in the minister’s salary and support. While better than the first two options, this approach still has problems.
In the first example, the church denies its responsibility as an employer. Medical premiums are ministry-related expenses just as much as light bills or heating bills. When premiums go up, it is a church’s responsibility.
Ministers obviously benefit from having medical insurance, but so do the churches they serve. How often does one hear of people with medical problems who have no insurance?
By providing medical insurance, the church protects itself financially. If a minister experiences medical problems, the church has exercised wise financial stewardship by providing medical insurance to help cover related costs. The church does not have to shoulder huge treatment costs out of the pockets of church members.
Example two is not wise and good stewardship. It treats all expenses related to the minister as a “package.” The result is that the minister ends up paying more taxes than is legally necessary.
When ministry-related expenses are separated from actual compensation — salary, housing and Social Security adjustment — the minister can actually receive more in cash salary than when a church uses the “package” approach, even though the same amount of money is used.
Annuity Board President O. S. Hawkins recently wrote: “These tax savings ideas are not ‘loopholes.’ They represent wise use of tax laws enacted by Congress to help ministers and employees pay the least amount of tax that is legally owed.”
Again, recognizing ministry-related expenses is a simple matter of wise and good stewardship. It helps the church and it helps the minister.
In example three the church recognizes ministry-related expenses. The problem is that no adjustment for the minister is recommended. When no salary adjustment is provided, the minister actually experiences a decline in salary. This year’s $100 does not buy as much as last year’s $100. We all understand that fact.
Increases in ministry-related expenses should not prevent a church from appropriately adjusting the salary of its ministers. When these increases do have that effect, the minister is made to carry the primary part of the financial load. It is his salary that does not get adjusted in order to pay a ministry-related expense.
The best approach is obvious. A church should be responsible for increases in ministry-related expenses, and ministerial salary adjustments should be considered independently of any changes in these expenses.
Churches can do one more thing to help bring down the cost of medical insurance. Encourage your ministers to live healthy lifestyles. The Annuity Board reported that more than half of last year’s medical claims were related to situations that could have been prevented with healthier lifestyles. The number one prescription drug cost was for stress-related issues.
Ministers have abnormally high problems with cholesterol, high blood pressure, weight control and more. The ministry is a highly stressful calling. Churches do themselves a favor — as well as their ministers — when they encourage their ministers to exercise regularly, learn to eat healthy, rest appropriately and spend time with their families.
Too often a minister feels guilty if he takes an hour to exercise or care for himself or his family. There is always one more visit to make, one more person in the hospital. The work is never done.
Churches can help their ministers stay healthy just by helping them learn to treat their own bodies as temples of the Holy Spirit, just as the Bible teaches. In the long run, that will help bring down the astronomical medical insurance costs that Alabama Baptists face this year.
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