Health Insurance Reporting on W-2

Health Insurance Reporting on W-2

Sally Truglia


Happy New Year!

Before you distribute W-2 tax forms for your employees and most specifically for your pastors, please be aware of some of the recent IRS rulings regarding the Affordable Care Act.

The Affordable Care Act requires the employer (church) to report the value of the group medical insurance plan to the IRS in Box 12 using code DD.   The rates to be reported are the not the uniform rate that we charge each church, rather it is the actual premium rate that we are billed by HealthFlex.  (The local church does not pay the premium cost of a pastor’s health insurance; the church pays an amount apportioned to it by a formula.)   The annual value of the employer sponsored group medical plan is listed below; please use the appropriate value on the W-2, based upon your pastor’s tier level.

Reporting on Form W-2
The amount reported includes both the portion paid by the employer and the portion paid by the employee. 
2014 Group HealthFlex
Annual Policy Value by Tier Level
Single Coverage                                $7,176.00
Single + One Coverage                    $15,084.00
Family (three or more)                     $19,044.00
Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. This reporting is for informational purposes only. The value of the employer’s contribution to group health coverage continues to be excludable from an employee's income, and it is not taxable (the pre-tax deduction of the pastor’s contribution to HealthFlex can also be excluded from taxable income but should be reported in Box 14 – Other as Pre-Tax Medical.)

Information for non-HealthFlex Churches:

If your pastor is not enrolled in the Conference sponsored health insurance plan, and your church is paying or reimbursing the pastor for the premiums of an individual insurance plan, the total cost of any premium is to be added to the pastor’s annual wages.   Any church/employer payment for insurance premiums is considered by the IRS to be taxable income – the value of which is the full annual premium.
This information is being sent so you can properly prepare the tax forms for your employees.  Please check with your payroll company or tax advisor for complete compliance information.  Most of the above information can be found on the IRS website:   or the General Board of Pension and Health Benefits ACA link:
2015 UMPIP Contribution Limits

I hope that your pastor is contributing to UMPIP, the United Methodist Personal Investment Plan.  In 2015, employees may contribute up to $18,000 (up from $17,500) in before-tax participant contributions to retirement savings plans or $24,000 (up from $23,000) if the employee will be age 50 or older by the end of 2015. Participants with 15 or more years of Church service may make an additional annual before-tax contribution of $3,000; however, eligibility requirements and lifetime limits apply. If an employee has more than 15 years of service and wants to contribute more than $18,000 this year (or $24,000 if he or she will be age 50 or over,) the employee should contact the General Board at 1-800-851-2201 for a 403(b) Contribution Planner to determine the maximum contributions that can be made to his or her account.
Pastors can complete an UMPIP Before and After Tax Contribution form to change their contribution at any time. The form can be found here:   The completed form should be given to the church treasurer for payroll processing and then forwarded to the General Board of Pensions.

I hope that this information is helpful to you.  I look forward to working with you throughout the year.