Announcements

We are thankful for the continuing evidence of God’s abundant blessings in the NC Conference. The Conference Treasurer’s Office has closed out the 2014 apportionment year and is happy to report 91.88% of the budget apportioned during 2014 was received from local churches.  Out of 788 churches receiving apportionments, 82% of them (648) paid 100% of all apportioned amounts.  The Conference Council on Finance and Administration voted to fully fund the general church, jurisdictional and Past Service Liability apportionments in full out of the conference reserves.  This is the tenth year in a row that general and jurisdictional church apportionments have been paid at 100%.  With the blessing of these resources for ministry, the Conference Council on Finance and Administration takes seriously the great responsibility for careful stewardship of their use.  We are thankful for all the ways our United Methodist connection allows us to partner in ministry at all levels of God’s church and truly be in ministry around the world!  Thank you for your part in this shared ministry!

The General Board of Pension and Health Benefits has issued guidance for churches concerning the tax consequences of payments for medical coverage for employees that are not part of an employer group plan. Effective January 1, 2014, direct reimbursement or payments made directly to an insurance or medical care provider for an individual health insurance policy are considered taxable and should be included as taxable income on the employee’s W-2. Payments made for group plan premiums on the conference plan do not have to be included in taxable wages. Please call us in the Treasurer’s Office with any questions on this change.

From the GBOPHB:
RE: Important Information on Employer Payment Plans for Medical Coverage

The Internal Revenue Service (IRS) and Department of Labor (DOL) issued guidance (DOL technical release 2013-03 and IRS Notice 2013-54) that may impact how your church funds medical coverage for some employees. The guidance states that, effective January 1, 2014, organizations may no longer directly pay premiums for an individual health insurance policy [a health insurance policy for an individual or family purchased directly from an insurance company (an “issuer”) or through the Affordable Care Act’s Marketplaces (also called exchanges)] for an employee, nor reimburse an employee who purchases an individual health insurance policy with dollars that are excluded from the employee’s taxable income. These arrangements are sometimes called “Employer Payment Plans” [EPPs] or stand-alone health reimbursement arrangements (HRAs).

Although non-taxed Employer Payments Plans and stand-alone HRAs are no longer permitted, an employer can create an Employer Payment Plan to directly pay the premium for an individual health insurance policy covering the employee—if the employer payments are considered taxable income (i.e., if the employee is taxed on the payments) and the arrangement satisfies a few other requirements:
• No contributions are made by the employer, i.e., the payment is part of the employee’s taxable salary that is being forwarded by the employer to the insurance issuer.
• Participation in the program is completely voluntary for employees.
• The employer collects premiums through payroll deduction and remits them to the insurer without endorsing the program.
• The employer receives no consideration (e.g., cash) other than reasonable compensation for administrative services rendered to collect the premiums.
In frequently asked questions (ACA FAQ XXII) recently published by the IRS (along with the DOL and the Department of Health and Human Services), the government agencies made clear that employers could also violate the ACA by reimbursing employees for premiums employees paid to the issuer with dollars reported as taxable income. These taxable reimbursement arrangements would be considered employer group health plans and would also be prohibited under the ACA as violating the prohibition on annual dollar limits in a health plan. This latest guidance means that the only way employers can assist their employees in paying for individual health insurance policies is through increased salaries or the above-described safe harbor salary-forwarding type arrangement.

Local churches that rely on Employer Payments Plans to cover lay employees, deacons or part-time clergy should terminate those plans immediately. Continuing these plans risks Affordable Care Act (ACA) excise tax penalties to the local church, namely a penalty under Section 4980D of the Tax Code that levies a penalty of $100 per day per affected employee on the employer (e.g., the local church). This can amount to $36,500 annually per employee. Moreover, these arrangements, even if prohibited, would be considered “minimum essential coverage” under the ACA, and the local church would be required to submit year-end information reporting forms (Forms 1095-B) to the IRS related to the coverage for each employee. Failure to report minimum essential coverage (no matter how small an employer/plan sponsor is) can result in significant additional penalties to the employer.

Local churches that wish to continue providing financial assistance to help employees purchase individual health plans or policies through the ACA Marketplace or the private market still have a few options:

1. A local church can increase the employee’s taxable wages based upon the premiums the employee is paying for individual health insurance or medical expenses incurred. This option also increases the employee’s taxes and the church’s payroll (FICA) taxes.

2. A local church can establish a payroll practice of forwarding post-tax employee wages to a health insurance issuer at the direction of an employee, if the practice meets the following criteria:
• No contributions are made by an employer.
• Participation in the program is completely voluntary for employees.
• The employer collects premiums through payroll deduction and remits them to the insurer without endorsing the program.
• The employer receives no consideration (e.g., cash) other than reasonable compensation for administrative services rendered to collect the premiums.
3. A local church can adopt plans through the Small Business Health Options Program (SHOP) Marketplace for employees and provide a tax-free contribution toward coverage.

In addition, there are new restrictions on health flexible spending accounts (FSAs). Employees at local churches should not be provided a health FSA unless they have also been offered access to an employer group health plan, e.g., a small group market plan, SHOP plan or an annual conference plan that is sponsored, adopted or “participated in” by the local church.

Employers also can offer tax-free excepted benefits (such as employee assistance programs, dental and vision plans) to employees. Employers also can use deferred compensation arrangements [e.g., 403(b) plans, etc.] as a complementary approach to relying on the ACA Marketplaces.

If you have any questions, please contact the annual conference benefits office.

The Affordable Care Act offered non-profits up to a 25% refund of healthcare expenses incurred on behalf of clergy and lay employees. Many of our churches have filed for all of their refunds yet many outstanding claims still exist. Outstanding claims can still be filed and change money from the US Treasury to funds for ministries and outreach … a far better use. Refunds rights for 2011 through 2013 are still available.

To make sure our NC Conference churches receive all the refunds possible, we have agreed to work with a company named Cost Stewardship to assist in determining who qualifies for a refund and to assist churches in the filing process. Please spend about two minutes of your time to complete the survey at the link provided below. No research is required … best guesses are fine as the survey is looking for round numbers and not finite answers at this point. There are a few requirements to be eligible for the health care credit refund – the survey will go through those requirements to help determine if your church is eligible. Your individual answers will help us shape a larger picture of refund accomplishments and needs for our conference. Results will be given back to us to review and share.

Cost Stewardship is a new resource available that will provide support to those requesting it. This service has been endorsed by the General Council on Finance and Administration as a service provider for assisting in getting refunds if a church would like to work with them. This is an optional service and is not mandatory. The service is paid if a church elects to use the service to file a claim and a refund is received. If so, the church is billed a percentage of the refund for the filing assistance.

Those having open potential claims from the two minute survey can elect to estimate your refunds (optional) with about 3-4 minutes of additional time. Thanks to all who participate in this survey so that we can work together to get a bigger picture of how this refund has worked out for our churches.

It is a busy time for church treasurers in January as you begin preparing for tax reporting this month. This is a reminder of a few helpful hints for you at this time of year:

On November 21, 2013, a federal district court judge in Madison, Wisconsin held that a portion of Section 107 of the tax code is unconstitutional. Specifically, it was the portion of the tax code that allows cash housing allowances paid to clergy to be exempt from federal income tax.  This ruling has the potential to have great impact on the tax status of clergy from all denominations.  The General Council on Finance and Administration (GCFA) released the following statement on this ruling and the timing of any appeals or implementation of this ruling.  It is not yet known the effect of this except that we know it would not be effective, even in this district, for the 2013 tax year.  We will watch these developments and let you know as appeals are made or details are worked out.

Christine

From GCFA:

November 26, 2013
FOR IMMEDIATE RELEASE

GCFA Statement on Clergy Housing Case in Wisconsin

Nashville, TN – On November 21, 2013, a federal district court judge in Madison, Wisconsin held that a portion of Section 107 of the tax code is unconstitutional. Section 107 is the provision dealing with tax-favored housing benefits for clergy. Specifically, the court held that Section 107(2), which permits clergy to receive a tax-free cash “housing allowance,” is unconstitutional because it violates the Establishment Clause of the First Amendment of the U.S. Constitution (“Congress shall make no law respecting an establishment of religion…”). Section 107(1), which allows clergy to reside tax-free in a church-provided parsonage, was not affected by the court’s decision.

In the case, Freedom From Religion Foundation, et al. v. Lew, et al., the United States government was the party which defended the constitutionality of Section 107, a federal law enacted by Congress many decades ago. As the losing party, the government must now decide whether it wants to appeal this decision to the next level of the federal court system, the Seventh Circuit Court of Appeals in Chicago. GCFA believes an appeal is likely.

The court in Wisconsin delayed the implementation of its decision until any appeals which may be filed by the government are concluded or until the deadline for filing an appeal has passed, whichever is later. GCFA understands that the government will have sixty days to file an appeal, and so the district court’s decision will have no effect until sometime in 2014 at the earliest. If an appeal is filed, it is certainly conceivable that this case could take several more years to be finally decided.

GCFA is tasked by the Book of Discipline with the responsibility to protect the legal rights and
interests of the United Methodist denomination. However, it is too early to fully understand the
impact of this case, or to predict the chances for this decision to be reversed. GCFA will continue to actively monitor the case as it develops, and will take the appropriate actions at the appropriate times to represent the interests of the denomination.

If you have any questions, please email them to legal@gcfa.org.

–End of Press Release–

A great opportunity to support the ministry or mission that God has led you to is coming up on Tuesday, December 3, 2013.  On that day, donations given through the UMCmission.org website for general advance specials will be matched dollar for dollar up to $500,000 for the day!  This is a great opportunity to generate additional funds for your favorite ministry.

Gifts given through the UMCmission.org website will be counted as advance special gifts for the Rainbow Covenant.  Churches, groups and individuals can donate.  Gifts given through the website will not show on your NC Conference donations statement you receive from the NC Conference Treasurer’s Office but we encourage you to participate!  You can still claim the money as part of your Rainbow Covenant even if it goes through UMCmission.org instead of the Conference Treasurer’s Office.   Gifts mailed to us on #GivingTuesday will not count toward the match – the donations must be made through the UMCmission.org website to participate in the match.

UMC #GivingTuesday follows along the recent holiday push including Black Friday, Shop Local Saturday and Cyber Monday.  What a great way to demonstrate who we are as United Methodists in giving to others intentionally as part of our holiday festivities!  We expect the limit on the match to be met early in the day so please give early and take advantage of this opportunity for your favorite project.  Please encourage your church and church members to be a part of this generosity and live out the calling to help the least of these – especially now, the needs are great.  You can find out more about general advance projects on UMCmission.org and searching #GivingTuesday.

Christine