Pastor health insurance

Is your church required to offer it?

Under the ACA, employers generally fall under the employer coverage rules if they averaged at least 50 full-time employees in the previous year. Part-time hours also count toward that threshold, so a church near it needs to check the IRS counting rules. GuideStone adds that churches with fewer than 50 full-time employees aren't required to offer coverage, so a small church won't be fined for not offering it (GuideStone).

A small church may not be required to offer coverage, but how it pays for that coverage still matters under tax rules.

Church benefits for pastors

In Lifeway Research's survey of Southern Baptist churches, 63% provided no medical insurance for their full-time senior pastor. Only 18% covered the pastor plus family (Lifeway Research).

Church size matters a lot here, so if your small church hasn't gotten there yet, plenty of others are in the same spot.

A frequent workaround is bumping up the pastor's pay rather than providing benefits. Church Answers points out that this often puts pastors in a hard place (Church Answers).

Paying for insurance directly also wins on taxes. Employer payments toward an employee's health insurance stay out of that employee's wages, meaning the pastor owes no tax on it the way they would on a raise (IRS Publication 15-B).

Health plans run by churches

A church health plan is one created and operated by a church, a convention, or a group of churches. Joining one can let a small church get group rates (GuideStone).

A big staff is not required. According to GuideStone, groups of just 2 employees can enroll in its health plans, and even a church with a single employee can set up an individual policy for that pastor (GuideStone).

Other denominations operate plans of their own. The Episcopal Church Pension Group, for one, administers a Denominational Health Plan serving active clergy and lay employees, with plan summaries posted online (Church Pension Group). If your church is part of a denomination, ask whether something like this is available before you look anywhere else.

Helping with a policy the pastor buys

Some churches would rather help pay for a policy the pastor buys personally. That can work well, but the method matters, because the wrong approach can be costly. If a church reimburses a pastor's personal policy premiums without going through an approved arrangement, the IRS treats that as an employer payment plan, and it can be charged an excise tax, meaning a penalty tax of $100 a day for each employee (IRS).

Two approved arrangements offer safe paths.

A QSEHRA lets a small employer repay health costs, premiums included, tax-free to the employee, provided the employee carries basic health coverage (HealthCare.gov). The church reports what the pastor is entitled to on the pastor's W-2, using code FF in box 12 (IRS Publication 15-B).

The second option, a CHOICE Arrangement, previously called an individual coverage HRA, allows an employer to cover premiums and out-of-pocket costs with no tax while skipping a group plan entirely (HealthCare.gov).

Those QSEHRA limits are from IRS Publication 15-B. A CHOICE Arrangement comes with one test: for 2026 plans it qualifies as affordable when what the pastor pays for the cheapest Silver plan, once the church's reimbursement is applied, stays below 9.96% of the household's monthly income (HealthCare.gov).