I recently spoke with a pastor who was tearfully concerned about his health insurance. He had just received notice of a large premium increase that he could not afford. With a diabetic child, he did not know what to do.
The only good news in this story is that he had health insurance.
Many pastors do not.
Even more church staff do not.
Once again, I turned to the data trove, 2016-2017 Compensation Handbook for Church Staff, by Richard R. Hammar. Church Law and Tax, a ministry of Christianity Today, publishes the volume. The material includes data from 8,250 ministry positions in 2,500 churches.
In my previous post, I looked primarily at compensation issues. In this post, I examine benefits of church staff.
I am concerned about some of the findings.
- Fewer than half of solo pastors receive any health insurance benefits. A solo pastor is full-time without other pastors on staff. The news is better among lead or senior pastors, but it still is disconcerting. Fewer than two-thirds of lead pastors receive health insurance benefits.
- Almost three-fourths of full-time worship/music leaders receive health insurance benefits. The worship leader is the most likely ministry staff to receive these benefits, but there are still over one-fourth of them who do not.
- Many full-time church staff receive no retirement benefits. Those who do receive these benefits range from solo pastors (44%) to lead or senior pastors (64%). I am particularly concerned about the pastors of small churches who labor faithfully for 30 or 40 years and have no retirement plans made.
- Almost all full-time staff get paid vacations. This information was one piece of good news in an overall concerning report.
- Only six in ten full-time pastors and staff get any type of automobile reimbursement. Only five in ten children’s ministers do so. This item is actually a reimbursable expense rather than a benefit. Those who do not get automobile reimbursements must pay the expenses out of pocket, so it becomes a de facto pay cut.
- Very few full-time ministry staff receive either life insurance or disability insurance. At the very least, ministers should be made aware of the potential need of such insurances, even if they have to purchase small policies themselves.
- The parsonage as a benefit has all but disappeared. Only about one in eight pastors have this benefit. The numbers will likely continue to get smaller.
It is a tragedy that many church members have misperceptions about pay and compensation of ministry staff. Many of our ministers are underpaid by community standards. Even more don’t have benefits common in the secular world.
Would you church members make certain you are taking care of your pastor and church staff in terms of compensation and benefits? Also keep in mind that many of them have not received a raise in years.
Our pastors and church staff do an incredible job caring for us, the church members. Let’s be sure we are taking care of them as well.
Let me hear from you.
Posted on February 15, 2016
With nearly 40 years of ministry experience, Thom Rainer has spent a lifetime committed to the growth and health of local churches across North America.
More from Thom
73 Comments
I recently moved out of a church parsonage. I built a house to build equity in and to have a place to retire one day, a place my children could call home. I asked the church to designate part of my salary as a housing allowance. Between not paying self-employment tax on the parsonage & utilities, and not paying federal income tax on the allowance, my take home pay increased by $4,000. There is a definite benefit to not having a parsonage.
Yes there is.
Eddie, I hope your church has adjusted its numbers because $12,000 is no longer an adequate amount of compensation to cover a family’s annual health insurance. Health insurance for my family is almost $20,000, annually.
Rich, yeah, I have experienced similar change even from just a year ago. My insurance was just at 12000 per year for 2014 to 2015. Health coverage just went up to $14,400. I am grateful for my church because it clearly takes very good care of my family and me. As a husband & father, their care for my families needs allows me to focus more energy and focus on building the Kingdom.
I would encourage you to take a look at Samaritan Ministries (www.samaritanministries.org). $405/month for our entire family (no matter how many kids we have), covers any expense over $300, and you’re giving your monthly gift to a family in need rather than paying into a major corporation. Meets the ACA mandate. Works great for our family.
Obviously, the most expensive benefit for churches is health insurance and as such creates a real stumbling block for church and pastor finances. This may be beyond the scope of this blog, but I believe that health insurance costs are intentionally being driven up to eventually force a single payer system. When that day comes, I cringe to think what will happen to both tax liability and the quality of health care available, especially for pastors.
And for all Americans! I am a lay person who has retired from Healthcare and I agree with Christopher. From my observation, I see smaller third party payers of Healthcare being bought up by bigger third party payers. As this is happening, all of us are getting less Healthcare and paying more for it. Americans all over are losing control of their own Healthcare choices. I know this is beyond the scope of this blog, but this is what is happening now. Americans need to investigate the character of each Presidential candidate and where he/she stands on healthcare; then after prayerful consideration, everyone of us needs to go out and vote for the best candidate that we think God would approve.
I serve as a full-time solo pastor of a smaller congregation in rural Iowa. Our church has been generous in my salary and also to provide a modest amount to cover books, conferences, and ministry expenses. The church also contributes towards some retirement benefits. I have purchased my own term life insurance to cover my wife and young family.
Where the church struggles is with health insurance. Our church gives generously to missions and it would probably break our church financially to pay my salary and for health insurance on top of that. As an alternative we have found the Christian health sharing program Medi-Share to work for us. The church does cover that expense for us.
I believe that even smaller churches can find unique ways to lovingly provide for their pastor who labors in the Word and prayer.
Good counsel, Ryan. Thank you.
I think there’s a reluctance, particularly among older member, to view the business aspects of a church as business. Of course there are some differences, such as housing allowances or parsonages, but other than that, a church is a business with income, expenses, and employees. From the smallest to the largest, just like the smallest-to-largest businesses. And in a free-market society, those businesses don’t get very far without competitive salaries, benefits, etc.
And we really have to divorce what a pastor is called to do, from what the church, as a body, ought to do.
Words of wisdom indeed, Bob.
A few years ago, my husband, who is a worship pastor, was asked by the senior pastor to prayerfully consider how much of his salary he could give up, voluntarily. Two days later, my husband discovered that other staff members had been asked the same question when, caught off guard, each was asked during the weekly staff meeting to reveal the answer. Pressure was also placed upon staff members to give up the great guidestone insurance (however expensive, was secure in the midst of growing problems across America, at the time) and sign up for Obamacare. When my husband didn’t consider it wise to do so and even volunteered to pay extra out of pocket to keep the Guidestone, a personal conflict between the Sr. Pastor and himself began to manifest. The Church /congregation had no clue about the behind the scenes pressures. The church was ONLY under financial pressure because it was in phase II of a million dollar renovation project…the pet project of the Sr. Pastor. We’re no longer serving at this church, but what is sad is to know that, to this day, the congregation still had no clue about the challenges the ministry staff faced and still face behind the scenes.
I am sorry for your pain, Anne.
if this advice keeps spreading our services/infrastructure will drop drastically overnight.. firemen will run out of gas for trucks.. police will be drastically reduced, maybe one or two policemen per town.. our military which is so poorly supplied these days will lose the will to fight from experiencing so many shortages.. and so on ad nauseum.. the truth is that this is already occurring but the steam and pressure are being raised so slowly so that the frogs do not perceive it until it is too late to do anything about it.. question? why are none these referred to as entitlements… or free bees… everyone else is asked to go find a better paying job and stop the country for more money which they do not have… what in the world would make anyone think that a small church can do better than the whole nation can…
As a DOM I have discovered that often it is hard to look at things such as salary and benefits in a truly balanced manner. For some it is very clear cut but for others, as we see in one of the comments here, churches have done something “outside the box” so to speak. I have found many churches/pastors simply do not understand the tax benefits pastors have been given. For example, even if the church does not have a ministry expense item in the budget, the pastor can create this with a portion of his salary. I know this means it is still coming out of his pocket but he is able to avoid paying taxes (including the SE tax) on that amount. This saves on average around 17% to 20% for most pastors. They can also arrange to setup FSA, HSA, or HRAs to eliminate all taxes on amounts they know they will spend on healthcare. If they are not aware of these items then I also have to wonder whether they are aware of the parsonage allowance which reduces their income tax. While I know this is not the same as providing benefits outright, this at least provides great help to pastors. Finally, having helped 6 small churches find pastors in the past 2 years, I can say that many churches simply cannot afford more than they provide their pastor. It is not because they do not want to pay them more, they simply cannot financially do so. None of the churches I have worked with at this level believes their pastor is paid enough. I believe we are seeing that some of the churches who have been blessed with full time pastors are now entering a stage of life that they are transitioning to bivocational pastors due to a significant drop in giving as older believers die. These churches start by cutting budget, followed by benefits, then salary.
I believe you are exactly right about the trends, John.
Hi Thom.
I’m concerned about many of these trends, as well. I work for GuideStone, and we see the individual faces of many of these data trends.
Some Christian denominations take very good care of their Pastors in the way of earned pay and benefits. Sadly, many evangelical denominations do less than they should.
Regarding those in your number 3, who labor their whole career with little, if any, provision for their retirement, I’m grateful that GuideStone sponsors an effort called “Mission:Dignity” precisely to aid those in this situation. This donor-funded initiative provides a monthly stipend to retired SBC Pastors or widows in need. But, as you say, the need is great.
Thanks for this information. I will take back to my own church!
Mission Dignity is a great ministry. Thanks, Harry.
I am a solo pastor in a church that averages 140 in worship. The church already provided a lot of the benefits before I came to be their pastor. They did not provide insurance to the previous pastor. I negotiated a benefit package that covers all of the areas mentioned. They provide all of those things now. The lesson: negotiate before you accept the position. If they decline and God leads you to accept anyway, then you know the terms.
I love your blog and have encouraged my deacons to subscribe.
That is wisdom, Jeremy. Thank you.
A number of years ago we quit buying health insurance for ministerial staff. Instead we gave them the same amount to buy it on their own (about $12,000 each–cost of family coverage). They could buy it individually cheaper thanwe could buy a small group. Some were able to go through their spouse and saved significantly–really a raise, I guess.
Thanks, Eddie.
But would that place a heavier tax burden on the pastor who files self-employed by removing a non-taxed benefit or by place them in a high tax bracket?
But would that place a higher tax burden on the pastor who files self-employed by removing a non-taxed benefit or by placing them in a higher tax bracket? You can’t deduct insurance unless the church pays it according to my accountant.
Sorry I duplicated my comment. My apologies.
David –
You are correct. It is a tax disadvantage to receive cash in lieu of health insurance.
The parsonage going away in my opinion is actually a positive change as long as the church provides the staff member a large enough salary to purchase or rent what they think they need for their family. Many churches today are very unstable, meaning that it does not take much to cause division/dissension which could lead to the forced resignation or termination of the staff member. If that happens, then they loose their home as well with an average of (30-60) days notice. At least if they own/rent their own home they are not at the mercy of the church. I know that sounds cynical, but I’ve known dozens of ministers that it has happened to and have heard them say they would never live in a parsonage again.
There is indeed some truth to that, Shelby.
The flip side is that if you are forced to leave the church and must move to another community to find work you may be stuck with a house that you can’t sell, or have to take a huge financial hit for it to sell.
There are always positives and negatives in all issues and choices such as this. You weigh out what is best for you.
That is the situation I am currently in. Serving in a rural church was a wonderful blessing, however, I have been unable for four years to sell my home there. Thankfully, I live in a parsonage, and I have good tenants renting my home. But I still lose about $250 per month on that rental property. Maybe the Lord wants me to retire to it some day?!!!!?
The problem I had with a parsonage is that I had to jump through all kinds of hoops to get anything fixed there. I also had to declare the fair rental value on my taxes for Social Security purposes. I’ve also found that I get more privacy living in my own house. Mind you, Dan and Christopher raise valid points, too, but I still prefer having my own house.
My church provides a parsonage which we wish we didn’t have. You have to drive through the church parking lot to get to it. The big kicker is that they include the value they believe it has as part of our taxable income.
If so many churches aren’t providing health insurance, then how do pastors get it? My husband and I agreed at the beginning of our marriage that I would work due to the fact that his job would rarely provide health insurance. I know that’s not the case for every family, so what other options are there?
Samantha –
There are some Christian health insurance companies. Ask some other ministers to get specific recommendations.
Many churches think they provide coverage when they actually don’t. Dr. Rainer has talked about this before. They call insurance part of my package. They have always argued not wanting to influence or limit insurance options that are available to me. So they decide a total amount of money I’ll receive and let me use it however I desire. According to the IRS, this is considered not being provided insurance. In the end, it means I buy my family’s health insurance through the public exchange as many people without company provided or subsidized group insurance do.
Dear Brethren in Christ
Greetings in the name of our Lord and savior Jesus Christ.Actually it’s joy to find out that you are serving the LORD right from what I read from your website on the internet. And I am pleased with the good job that your ministry is doing and I really love to be among you mostly in prayers and in ministering together.Pray for the Lord’s ministry down here in KENYA that GOD will empower us and provide resources for us to get out to reach to many out here who have not received Him as their LORD and savior for we as Christians are convinced that only agreed upon prayers bring forth breakthroughs.Finally doors are open for you and your ministry to come and minister to us and start your ministry here in KENYA. Read psalms 133. Your kind approval and consideration regarding this matter will be highly appreciate. Thank you. God bless you and more power in your ministry we request to pray our orphans ,disability and blind people. We love to hear from you soon.
God bless you and yours,
in service
Pastor Elijah ;[email protected]
We buy the bare minimum or do with out.
As a pastor we were forced to go to the Obamacare exchange. But because of a “legal loophole” the exchange said we qualified for medicaid. The state said “no we did not”. So we went back to the exchange and was told they would not open the exchange to us till we submitted in writing to some place in Kentucky (We dont live in KY). We then learned that the legal loop hole was that medicaid determination now to be based on MAGI (Modified Adjusted Gross Income). Before the affordable care act eligibility was based on gross income. What that means for ministers is for example If I make $35,000 a year total package I can deduct my housing allowance for example $8500. SO for determination the state can only see that I make $26,500. The state keeps trying to deny us but we have provided documentation and every year they finally approve us for medicaid. This is all a double edged sword. Even though I qualify for medicaid I face ridicule and scorn from people in the congregation because they see us as low lives because we are on medicaid. I dont like being on government aid. The federal gov. doesnt care and wont allow us on obamacare. and private ins. dont get me started.
So what does all this mean.
1. We cannot make any more money. If we do we lose state aid.
2. My wife cannot work. for reasons stated above and because childcare would eat her salary alive. Plus we live in a community where there simply arent enough jobs that we could make the money we need and would provide reasonable benefits.
3. I am not on state aid because I want to “sponge” off the system. I literally have no choice.
My hope is that congregations will understand they must take care of their pastors and staff. I believe this to be the heart of Dr. Rainer’s message through these blog posts.
Your last two sentences are dead on, my friend.
What saddens me most is your sentence “I face ridicule and scorn from people in the congregation”. They are the ones who pay your salary. If they think you are not rich enough, they should do something about it.
I still do not hear from many pastors this fact of having to be on aid… If you have finally woken up to tis fact that churched people are on minimum wages and minimum hours as well so that the boss who is now deregulated can get away with not providing you with medical, you should understand where and why the pastors led the church into.. It was a trap.. we tried to tell you all. but you chanted non-stop:.. away with entitlements… away with freeloaders and now that you have to lie and say that you make less than you do.. you still don’t get it… how about owning up to the consequences of your actions.. obviously you are going through what your congregation is probably going through.. only that, you are still trying to shift the blame to anything or anyone except the many years of church activism calling for a callous disregard of human dignity.. you reap what you sow… look it up…
“how about owning up to the consequences of your actions”–What are you talking about! This is not our fault for having to choose Medicaid. The Obama policies have forced not only companies but also ministries to drop health benefits for their employees. We are not reaping what we sowed. We are reaping what our country has sowed. We would much rather stay off of welfare, but the government has pushed everyone in the middle class into an underinsured category. Gas prices might be going down, but health costs have far outpaced inflation. Very few non-profits can take these kinds of financial hits.
Samantha, check out http://www.samaritanministries.org. Works great for our ministry family.
AMEN to Samaritan Ministries!!!!!
This is one of the reasons that there are so many bi-vocational Pastors. With funds not being that great in the churches Pastors have to make a decision (or it is made based on circumstances) to work in the private or public sector to continue receiving benefits and salaries that churches cannot afford to provide. It is a delicate balance but I do believe God would require wisdom in each situation.