Church plans and religious employers: which federal benefit rules apply, and which do not.
What counts as a church plan, which ERISA and COBRA requirements fall away, which ACA rules still apply, and how church-affiliated schools, hospitals and ministries should check their status. Written for the pastor, administrator or HR lead.
A Church Plan Is a Defined Legal Term
Not every plan sponsored by a religious organization is a church plan under the federal definition.
Plans of a Church or Association of Churches
A plan established and maintained by a church or a convention or association of churches can qualify. The definition is technical and depends on who established the plan, who maintains it and how it is governed. Gather the founding documents early and ask counsel to review them instead of relying on the plan’s own label.
Affiliated Organizations
Some organizations controlled by or associated with a church, such as schools or hospitals, can take part in a church plan. The control or association test matters. Ask whether the organization is controlled by or shares common religious bonds with a church, and gather documents that show it. Counsel can help evaluate close cases, since the answer often depends on specific facts.
Status Is Not Automatic
Religious mission alone does not decide it. Counsel should confirm the status before the employer relies on it. A mission statement or a denominational connection is only part of the picture. Written confirmation from counsel is worth having, because the status can affect filings, notices and which rules your plan must follow.
Church Plans Are Exempt From ERISA Unless They Elect In
Most of the federal ERISA structure falls away for a church plan.
Reporting and Fiduciary Rules
A church plan generally does not file Form 5500 or follow ERISA fiduciary rules, unless the plan elects to be covered. Even when these requirements do not apply, many employers still choose good governance practices such as written procedures and regular reviews. Ask counsel whether an election has been made and whether state rules fill any gap.
COBRA
Church plans are generally exempt from federal COBRA. Insured plans may still be subject to state continuation rules. Do not assume that no continuation rights exist. State rules may apply to insured coverage, and the plan may offer continuation voluntarily. Confirm what your carrier contracts and plan documents require, and explain it clearly to departing employees.
State Law Fills the Space
Because ERISA does not preempt state law for these plans, state insurance requirements can apply more directly. Insured plans may need to follow state mandates and filing rules more directly. Ask your carrier and counsel which state requirements apply to your coverage so your plan documents and notices stay accurate.
The ACA and Other Rules Do Not Disappear
A church plan is exempt from some laws, not all of them.
Employer Mandate
A church-affiliated employer with enough full-time employees can still be an applicable large employer under the ACA. Church status does not remove the need to count employees and monitor full-time hours. Check with a benefits adviser or counsel on how the rules apply to your organization and affiliated entities.
Plan Market Rules
Fully insured coverage follows state and federal insurance rules, including the 90-day waiting period limit. Confirm that your plan design, waiting periods and notices match the insurance rules for your coverage type. Carriers typically build these into their forms, but employers should still check them against their own enrollment practices.
Nondiscrimination and Civil Rights
Federal and state nondiscrimination laws may apply, with religious exemptions that depend on the facts. Exemptions can be narrow and may differ by law and by the nature of the position. Get legal advice before making any assumption about which rules apply, especially for hiring, eligibility or benefit design decisions.
Common Questions for Ministries and Affiliated Employers
Religious employers often have unusual workforce structures.
Clergy and Employees
Clergy are treated differently for many tax purposes. Ask how their coverage and housing allowances interact with plan design. Clergy and lay employees may have different tax treatment, which can affect payroll reporting and how benefits are set up. A tax adviser familiar with clergy compensation should review the arrangement before it is finalized.
Part-Time and Volunteer Staff
Part-time staff may meet eligibility depending on hours, and volunteers are generally not covered by group plans. Eligibility rules should be written down so they are applied consistently. If someone’s status is unclear, such as a stipend worker, ask counsel or your adviser how to classify them before enrolling them.
Denominational Programs
Some denominations sponsor benefit programs for member churches. Compare them with market options on cost and fit. Ask what the program covers, how rates are set and how decisions about plan design are made. Comparing it with other options is worthwhile, but consider service, flexibility and portability, not just price.
How to Check Your Status
A short review answers most of these questions.
Collect the Plan Documents
Gather the plan document, any denominational program terms and filings. Include the governing documents, any election made about ERISA coverage, insurance contracts and prior filings. Having them in one place makes the status review faster and helps your adviser prepare accurate notices.
Ask Counsel About Status
Have counsel confirm whether the plan is a church plan and whether it elected ERISA coverage. Give counsel the documents and the history of the organization, including any changes in control or affiliation. Ask for the conclusion in writing so you can share it with your adviser and carriers.
Align Your Benefits Adviser
Share the conclusion with your adviser so notices and filings match your status. Adviser and carrier materials, such as notices, summaries and filing checklists, should reflect the status counsel confirmed. Ask for a review of existing documents so nothing continues to assume a different status.
The questions that come from religious employers.
Six questions administrators bring us about church plans.
Is every religious organization plan a church plan?
No. Church plan is a defined term, and status depends on who established and maintains the plan.
Do church plans have to follow COBRA?
Generally not federal COBRA. State continuation rules may apply to insured coverage.
Do we file a Form 5500?
Church plans generally do not, unless they elect ERISA coverage.
Does the ACA employer mandate apply?
It can, for a church-affiliated employer with enough full-time employees.
How are clergy treated?
Differently for many tax purposes. Ask a tax adviser about coverage and housing allowances.
Who confirms our status?
Counsel, based on the plan documents and the organization’s structure.
Ready? Send us your renewal, or talk it through with someone first. No cost, no obligation.
General information about church plan status, not legal advice. Church plan definitions are technical, so confirm your status with counsel before relying on any exemption.
Related guides.
Nonprofit Health Benefits: Grants and Tax Credits
How grants, tax credits and unemployment choices shape benefit planning for nonprofits.
Nonprofit Employee Benefits
Benefit planning for tax-exempt organizations.
ERISA for Employer Health Plans
What ERISA requires of group plans.
Reading Your Plan Documents
Where plan terms and status are documented.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
Laws and rules referenced
29 U.S.C. § 1003(b)(2) — Church plans are exempt from ERISA Title I coverage.
26 U.S.C. § 414(b), (c) and (m) — Controlled group and affiliated service group rules, and church plan definition in subsection (e).
This page is general information, not legal or tax advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
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