I hear the “donut hole” for Medicare Part D drugs will be eliminated by healthcare reform. When will that happen?
The Part D coverage gap will be eliminated gradually from 2010 through 2020.
- In 2010, seniors who reached the donut hole received a $250 rebate to help cover the costs of their medications.
- Beginning in 2011, drug manufacturers began discounting some brand-name drugs by 50% for Medicare Part D beneficiaries. The discounted amount will be reflected when you check-out at the pharmacy. You will pay 100% of the discounted drug costs for preferred and non-preferred brand-name drugs.
- From 2012 to 2020, you can expect additional savings on your brand-name and generic drugs during the coverage gap until it’s closed.
For more information, please read Medicare’s Closing the Coverage Gap FAQs.
Will the implementation of medical loss ratios affect the premiums I pay?
No. As a self-funded health plan, GuideStone is not subject to healthcare reform provision regarding medical loss ratios. However, GuideStone will continue to set and meet reasonable loss ratios comparable to new healthcare reform standards and aggressively manage our claims costs.
Do churches qualify for the Small Business Tax Credit?
Yes. On December 2, 2010, the IRS issued Notice 2010-82 announcing that the Small Business Health Care Tax Credit is available to churches and includes coverage purchased through self-funded denominational church health plans (including GuideStone health plans). GuideStone recommends that churches weigh all factors before determining whether to pursue the credit.
To be eligible, employers (including churches) must have fewer than 25 full-time equivalent employees whose average annual wage is less than $50,000. For 2010, employers must pay at least 50% of the insurance premiums for all enrolled employees. After 2010, employers must make uniform premium contributions of at least 50% for all enrolled employees.
The tax credit is of limited duration: from 2010 to 2013 for health insurance coverage, and from 2014 to 2016 for coverage purchased from a Health Insurance Exchange.
Additional important things to consider:
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Increased tax reporting requirements. Churches who qualify for and choose to claim the credit will be subject to some of the same enhanced tax reporting requirements now required of small businesses. It is wise for churches to take into account the additional reporting burden when evaluating whether to pursue the credit.
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The challenge of pastor tax status. Some pastors may be classified as “self-employed” for employment tax (SECA) purposes, which may present a challenge for small churches who wish to pursue the tax credit. Notice 2010-82 takes into account when clergy, who may be considered self-employed for employment tax (SECA) purposes, are to be counted as employees for purposes of the Tax Credit and how clergy compensation is to be treated for the Tax Credit’s average wage calculations. These additional requirements may add complexity to churches’ tax considerations.
For more information:
Note: This educational information is not intended as legal or tax advice. Ministers or churches with specific legal or tax questions should consult a legal or tax advisor who understands ministerial tax issues.