By Stan Friedman
CHICAGO, IL (June 7, 2011) – Evangelical Covenant Church congregations and institutions received more than $500,000 by taking advantage of a new tax credit, Controller Elliott Johnson said this morning.
“That’s just those we know about,” said Johnson, who was inundated with phone calls about the credit after a Covenant News Service story was posted April 28. The actual amount of money gained by churches and institutions probably is much higher, he added.
The credit is available to small employers – including churches – that pay at least half of the premiums for single health insurance coverage for their employees. Other qualification criteria include withholding federal income taxes and/or Medicare taxes, employing fewer than 25 full-time equivalent employees (including clergy if they receive a W-2 form), and average employee FICA wages that total less than $50,000.
Pilgrim Pines Conference Center received just over $20,000, said Executive Director Dave Cairns. “With the rising cost of healthcare, this will definitely help our bottom line.”
Modesto (California) Covenant Church received more than $6,000, said Alita Richter, business and office manager. “It’s nice to have that extra bit to put toward ministry programs,” she added.
Churches needed to submit the appropriate tax forms by May 15 to get the credit for this year. Johnson advises that churches plan ahead for the coming year.
Although some church leaders may need assistance in filling out the appropriate form, “They definitely should do it,” Richter said.
Richter praised Johnson for making churches aware of the credit. “Otherwise, there’s no way we would have known about it.”
Many churches in other denominations learned of the credit when Bob Smietana, former features editor for The Covenant Companion, interviewed Johnson for background information and published a story in The Tennessean.
The credit can be claimed through 2013 and for any two years after that, according to Internal Revenue Service guidelines. For tax years 2010 to 2013, the maximum credit is 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will increase to 35 percent of premiums paid by eligible tax-exempt organizations.
As part of the Affordable Care Act enacted in March 2010, the Health Care Tax Credit for Small Employers is designed to encourage both small businesses and small tax-exempt organizations (like churches) to offer health insurance coverage to their employees for the first time or to maintain coverage they already have.
Initially, it was unclear whether churches would qualify for the provision. Many denominations, like the Covenant, run their own healthcare insurance programs, which were not specifically mentioned in the legislation.
After meeting with representatives from church-based insurance plans, the IRS agreed that church plans qualified.