The Effect of Rising Health Care Costs on Churches

How some churches are responding to a new reality.

From Managing Your Church
By Emily Lund

The vast majority of Americans currently have access to health care. As of August 2015, “an unprecedented 90.8 percent now have health insurance,” according to CNN. But this higher statistic has also translated into other higher numbers: deductibles, prices on prescription drugs, and more.

A January 2016 article in The Boston Globe stated that the “prices of some common generic drugs have surged 15, 25, and even 75 times what they were just two years ago.” In September 2015, NPR reported on other contributing factors to the rising costs, explaining that the “higher deductibles—combined with more modest but consistent increases in premiums—mean health cost[s] for consumers are growing faster than income, and taking an ever larger bite out of household budgets.”

Employees—including church staff members—who receive health insurance from their employers now face the possibility of a greater financial load.

In September 2015, the Los Angeles Times explored the “burden” of health care costs for workers, as continued increases in deductibles for employers’ health plans “marked the continuation of a trend that . . . has dramatically shifted health care costs to workers.” To cover expenses, companies are “boosting deductibles and copays,” according to the July 31, 2015 Kiplinger Letter.

With these climbing prices, employers are left with difficult choices to make as they navigate their employees’ health insurance—and churches are no exception.

Lynn Carr, church administrator for Southview Community Church in northern Virginia, called the increase on their group health plan “crippling.”

Southview, with four members on staff, had been using a health reimbursement arrangement (HRA) plan that was self-administered. But cost increases and regulations led the church to make some changes.

“When the church’s group health plan expired midyear 2015, we did not renew,” Carr said, “and we dissolved the accompanying HRA plan.”

In order to reduce any negative effects of the rising costs, “the church increased salaries in 2016 to allow staff members and their families to purchase their own health insurance,” said Carr: a move that has proved effective.

“Since we replaced the expense of insurance with staff salary increases,” said Carr, “the church budget and mission have not been affected by dropping our group health plan.”

EvFree Fullerton church in Fullerton, California, has also experienced recent changes in insurance costs, but executive pastor David Fletcher particularly emphasizes the church employees as their first priority. The church didn’t alter employee benefits, even in the midst of rising costs.

Ohio’s multisite Fairhaven Church chose another option: seeing the sharing of costs with employees not as a burden to be placed on them, but as a challenge to approach together. “As we began to navigate the Affordable Care Act implementation and [seek] the advice of our benefit agent . . . we knew that we needed to position ourselves a little bit different[ly] in the medical, health insurance arena,” said Ryan Adams, operations director at Fairhaven’s Centerville, Ohio, campus.

“While we always welcome decreases, we don’t want to trim the benefits that our employees receive,” said EvFree Fullerton’s Fletcher. “There are always ‘cheaper’ plans out there, but these tend to be more expensive for our employees in the long run.”

Fairhaven shifted from a preferred provider organization (PPO) model to a health savings account (HSA) model in an attempt to “share some of the ownership and responsibility with the staff,” Adams said.

“Under the HSA model, the idea was that as the climate and the situation of health insurance and medical care is changing . . . we could potentially go at it together rather than just looking at the church as the sole answer to providing that benefit,” Adams said.

As a part of the HSA model, a wellness program for staff members was introduced, with the church’s contribution to the staff’s HSA “contingent on them completing certain aspects of [it],” according to Adams.

“It encourages healthy living and staying on top and taking ownership of your health,” he said. “But it also helps to manage the risk of our group: because the more that we can be a healthy group, the better underwriting risk we are for an insurance company.”

The wellness program largely depends on well-visits to a doctor, which “ensures that they’re having conversations with their doctor, that they’re meeting with them, [and] they’re following through on some of those health concerns or issues they might be having,” said Adams.

The church also provided their staff with other resources, such as a medical cost estimator and access to the medical network Teladoc. Teladoc “doesn’t go through [staff members’] insurance underwriting, so they don’t have to pay all the out-of-pocket doctor bills for physically going to see the doctor,” Adams said.

Rob Cizek, executive pastor of Northshore Christian Church in Everett, Washington, also found Teladoc to be a cost-effective option when the church switched to a high-deductible insurance plan. “We plan to continue using the Teladoc service because it cuts down on our overall insurance plan usage,” he said, “and it saves our employees money.”

One key item to keep in mind when navigating costs and models and plans: trust in God’s provision. In the midst of sharing logistical details and figures, Adams shares a story of divine financial intervention.

In 2014, “our budget was such that we couldn’t afford to continue [funding HSA contributions at the same rate],” he said. “But at the end of the year, the Lord provided a really strong finish to the year, and we were able to go back to the staff and reinstitute the full HSA, which was a huge blessing: a huge encouragement, as they didn’t have to bear that financial burden.”

See the Affordable Care Act: Church Administrators Survival Guide or its supplemental companion for help with navigating Obamacare, mandates, and tax credits.

Emily Lund is the editorial resident for Church Law & Tax.