Determining the Right Insurance Option For Your Church
By: Sutton Turner October 14, 2020
Open Enrollment season often leaves a lot of church leaders feeling confused and uncertain of which options will suit their church and staff best. However, selecting the right benefits is key to risk management and helps prevent financial hardship for both the pastor and the church. Medical expenses can be both high cost and high stress, but choosing the right type of benefits can help ease this stress and give your organization and employees peace of mind. To demystify health insurance and life insurance options for churches, I sat down with Scott Charbonneau, Managing Director of Insurance and Benefits at Guidestone.
What’s the Difference Between HSA, HRA, and, FSA?
Insurance terminology often seems like a foreign language. It can be difficult to know the difference between HSA, HRA, and FSA plans. It is even harder to determine which plan is the best choice for your organization. As we enter into open enrollment season, here’s a breakdown of the differences to know:
HSA - Health Savings Account. This type of account allows individuals to put money aside to pay for medical expenses. This money is not taxed and can be spent on deductibles as well as other medical expenses. HSAs are accompanied by a high-deductible insurance plan.
HRA - Health Reimbursement Arrangement. This type of account allows employers to put money aside for their employees to pay for medical expenses. This money is not taxed and can help offset out-of-pocket expenses for employees.
FSA - Flexible Spending Account. This type of account allows individuals and employers to put money aside for out-of-pocket medical expenses. This money is not taxed.
Each of these different plans are beneficial in their own way depending on your church's needs. To make the best possible decision when choosing a health care plan, it’s critical to consider the needs, life stages, and lifestyles of your employees.
What Does Life Insurance Look Like in a Church?
Offering life insurance as part of your compensation plan shows your pastor that you are committed to not only their physical health but also the financial, emotional, and physical health of their families. Many churches would want to provide financial support to the pastor’s family if an unexpected death occurred, and without a life insurance plan, that money would be coming straight out of the church’s budget. Rather than having to rely on either the church’s finances or depend on the pastor to have their own life insurance plan, churches should add life insurance as a benefit option for their pastors.
While this may sound like just another expense to tack on, there are many different life insurance options and add-ons to consider when choosing the plan that suits you best. For instance, group life insurance plans can be used for the church’s entire staff and are contingent on employment. Group life insurance is also typically inexpensive since it does not go through significant underwriting, so if you have the option to take advantage of a group plan, it’s typically advised.
If you’re thinking it sounds unreasonable to allot more of your yearly budget to compensation, consider where you could spend less each year to prioritize covering these costs for employees. Without good health your staff can’t perform at their highest caliber, and without your support, healthcare costs are too expensive for your staff to manage on their own.
Start The Conversation
It’s never too early to start the conversation about health and life insurance. Don’t wait until your staff comes to you to talk about insurance, be proactive and start considering the best options for your organization now. If you have questions or need help deciding on insurance plans, reach out to Guidestone for financial advice guided by Christian values. With over 100 years of experience serving churches and Christian organizations, Guidestone can help guide you to make the best financial decisions for your organization.
At Vanderbloemen, we are passionate about helping you make wise and sustainable decisions that benefit your staff and your organization—and we know it’s not the easiest or most thrilling part of the job. We’d love to chat with you if you have any questions about our compensation resources or are looking for your next hire.