CHICAGO, IL (February 20, 2014) — As of January 1 this year, money reimbursed to pastors and other church employees to cover medical expenses will be considered taxable income, says Elliott Johnson, controller for the Evangelical Covenant Church.
Previously, churches could designate a specific amount of insurance premiums and out-of-pocket expenses to be reimbursed as pre-taxable income through what has been known as Health Reimbursement Accounts (HRAs), says Johnson.
Any reimbursement is considered taxable regardless of whether the insurance is purchased through a health care exchange or other insurer.
Johnson says he has received many calls from churches asking about the rules change, which is mandated through the Affordable Care Act.
