Why Religious Orders and Dioceses, MUST do control group testing, NOW,

Why Religious Orders and Dioceses, MUST do control group testing, NOW, to comply with the Affordable Care Act and not get fined and penalized significant sums of money.


Separate incorporation is NOT a protection, safe harbor, or an exemption.  


You are responsible for sponsored ministries and even Former sponsored ministries. Dioceses are responsible for every group in the Catholic directory that Orders aren't responsible for. Do not assume you are not responsible for "independent or former sponsored ministries etc."

In simple terms the Affordable Care Act requires all employers above 50 people to make available affordable health insurance to all full time employees.


It then requires the application of section 414 of the tax code to prevent employers from breaking into smaller pieces to avoid the law.


With corporations it's easy to look at stock to determine control. With Non Profits and especially churches the rules are very complex.


We continuously hear "But we aren't responsible for the school, sponsored ministry, etc, they are separately incorporated."  


"A "church" includes a religious order or other organization which, as an integral part of a church, is engaged in carrying out the functions of the church, whether as a separate corporation or otherwise. See S. Rep. No. 1622, 83d Cong., 2d Sess. 30, 207 (1954).[Emphasis added]"

Because you are responsible for all controlled groups- the fines and penalties will be the Diocese or Orders responsibility.

This means you MUST make a "good faith effort" as defined by the law, to make sure all these groups have insurance that meats affordability and minimum value. And if they do not you will have to make sure they comply or you will be fined.


The enforcement is serious. There are six new tax forms employers will have to complete, and all health plans will have to report who is covered. These will be matched in the new data hub. The computers will catch non compliance. In addition, The DOL hired more than 1,000 new employees in 2013 to help bolster their auditing efforts with respect to ERISA and PPACA compliance. Through the DOL's Employee Benefits Security Administration's ("EBSA"), the DOL achieved over $1.6 billion in total monetary results in the fiscal year 2013 through enforcement activities.

These fines are independent of the draconian ones of the IRS for failure to provide 'affordable' insurance that meets Minimum Essential Coverage ("MEC"), a requirement of large employers (100 or more FTE's). Not to be confused with Essential Health Benefits ("EHB") a requirement of small employers.

Since every organization that Order is involved with was mostly likely started as a sponsored ministry of theirs, the task of identifying and control group testing would most likely fall on the CFO and HR Directors of the Order. If, at the conclusion of the testing, over 100 FTE's are aggregated, by January 1, 2015, (or first plan anniversary thereafter) all the employees must have health insurance that meets the large group employer requirements (50 FTE's on January 1, 2016) of affordability and MEC.


Every Order, that has not done so already, should immediately start the process of controlled group testing of all ministries that Order is now, or has ever been, associated with, as theology may still aggregate. If it is determined that more than 100 FTE's are aggregated, a new series of tests needs to be applied to verify that EVERY employee has access to affordable insurance (by PPACA definitions) that meet MEC, to avoid DOL and IRS audits and fines.

Feel free to contact us for help or questions.




If you'd like to ask questions on this subject or any other part of the Affordable Care Act, join us for dinner or lunch during the RCRI conference next Tuesday - Thursday, details below.


Dean A Burri Esq. LL.M.