The following post comes from Gary Skeen, president of CBF’s Church Benefits Board, as part of a blog series related to health care changes due to the Affordable Care Act. Read part 1, part 2,  part 3 and part 4.

With all the news about healthcare and the October 1 deadline quickly approaching, this post will focus on what you as church leaders, pastors and administrators need to do to comply with the Affordable Care Act.

On or before Tuesday, Oct. 1, churches and employers should send a notice about the Healthcare Exchange to their employees. Links for these notices can been found on our web site, www.churchbenefits.org, but before you go there, I want to describe some of the parameters that might best match the situation at your church or organization.

For the majority of smaller employers and churches with less than 50 employees – you should provide a notice that indicates that you do not provide healthcare coverage. In recent conversations we’ve had with the Department of Health and Human Services, it appears that for the ACA, interpretation of employer (church) providing health coverage is very narrow. By their definition, a church or employer is considered “providing coverage” when it has evaluated plans and selected one for its employees. It does not include when a church reimburses or pays for an employee-selected policy.

As a result, we are recommending that most churches provide the notice that indicates they do not provide coverage (http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf ). This notice will give the most flexibility to the employees (assuming the formal group plan and fewer than 50 employees describes your church).

In planning and evaluating health insurance coverage for the 2014 calendar year, there are three options:

1. Continue to purchase coverage in the open market just like in the past, be it an individual or group plan, based upon number of employees participating.
2. Go to the new Exchange Marketplace as a small group (SHOP)
3. Go to the individual market place for individual or family coverage.

Like any benefits decision, we recommend that you explore all of the options available to your staff. Review your current insurance plan(s). Explore the SHOP as a way to create a new group plan or just to compare rates with what you are currently offering. As you evaluate the SHOP you will need to select a preferred plan and indicate what the church would like to contribute, but withhold confirming a decision until your staff finalizes their search on the individual marketplace. Let your employees go to the exchange and review the plans available to them.

Using this process, your church and staff are in a position to consider the best way to move forward for the majority of your staff.  We have provided a chart that will help you compare the advantages and disadvantages of each option listed above.

Most everyone is anticipating some increase in premium for the new minimum coverage requirements, wellness coverage and the removal of lifetime and annual limits. However, overall healthcare spending has decreased in the last few years and many insurers have already adjusted for these changes. The exchanges hopefully will bring more participants and competition to the market (and lower costs for everyone). Recent projections have indicated lower rates and should be an encouragement to your staff to start the conversation. You may go to the HHS site to find rates projected in your state: http://aspe.hhs.gov/health/reports/2013/MarketplacePremiums/ib_marketplace_premiums.cfm

It is my assumption that for most churches this is both a financial decision that includes budget limitations and an attempt to take care of valued church employees. One recent article indicated that employers providing notice about the exchanges to employees will now result in employers having to explain their benefit strategy.  Can your church explain its strategy? My experience in recent years is that most churches have begun to take the most expedient and lowest cost solution since there were so many barriers to a group solution.

The question for the church is, “What  role does the church want to play in caring for staff and their healthcare, this year and into the future?” The answer to that question then raises more questions. Such as, “What is best for your entire staff?” One staff member may benefit from the exchange, while others may not. There are ways to help with out-of- pocket costs both in and out of the exchange.

As the SHOP exchange improves in the next few years, will you be able to maintain an influence for all the staff, not just ministerial staff, but clerical and custodial? What is the appropriate level of funding or participation?

Another recent article indicated that 75 percent of the population looks to their employer for guidance with healthcare coverage. Medical coverage protects both the church and the employee and their family from a medical crisis within the faith community – it is how we prepare for serious medical conditions and how we demonstrate to the surrounding community about how we care for those in our faith family.

The SHOP exchange may prove to be a valuable tool in not only allowing the employer to select and provide healthcare coverage at reasonable rates; it may also allow the church to assume a more active role in selecting and providing healthcare coverage for their staff. It also assumes you will do this for all of your full time staff in a fair and equitable way.

The individual exchange assumes the employer is not providing a solution for medical coverage and that the individual is looking to the exchange to find coverage and make it affordable. Many ministers will be eligible for tax credits and possible subsidies for out-of-pocket cost because of low salaries. It is good to remember that premium costs are based on the household adjusted gross income (MAGI) and housing allowance is excluded from those calculations.

Yes, this is a year of huge change for the way everyone does benefits. As a small church or employer, you may be able to shed the burden of providing medical insurance coverage. Or, you may determine that just as the church cares for its members, so shall we care for our staff, and decide to actually play a larger role in providing for everyone. It’s a choice every church should educate itself about, talk about extensively and pray about.

And if we can be of service in this process, we at the Church Benefits Board stand ready to help every step of the way.