If money is given to a clergyman to reimburse him for car expenses upon his submitting receipts, then the money he receives for such reimbursement is not taxable income since he has provided receipts and he is being reimbursed for those expenses.
However, if receipts are not furnished and he receives an amount to use for car expenses, whether or not that amount is the same month to month or is labeled as a Car Allowance, then the money he receives as a Car Allowance is added to his salary and is considered to be taxable income. Car expenses are deductible to the extent that they can be on Schedule A, Itemized Deductions as part of unreimbursed business expenses (Form 2106 – Employee Business Expenses).
In the Greek Orthodox Archdiocese of America, Car Allowances are not pensionable earnings for pension plan contributions.
The first stop from a clergyman’s home is considered to be commuting, as is the distance from the last stop he makes before arriving at his home. Commuting expenses are not deductible. If a parish owns or leases the car a clergyman uses for his ministry, then the value of those commuting miles would need to be added to a clergyman’s income as it is taxable income.
The Orthodox Health Plan
The Uniform Parish Regulations of the Greek Orthodox Archdiocese of America require that parishes provide The Orthodox Health Plan medical insurance coverage (medical/dental/prescription) for their clergy. Article 17, Section 8, A, 4. Clergy are required to join and maintain current their participation in The Orthodox Health Plan. Article 17, Section 11.
Premiums for The Orthodox HealthPlan change at the beginning of the new plan year, which is May 1st. The premiums as of May 1, 2016 are:
Single Coverage $1,365 per month / $16,380 per year
Family Coverage $2,395 per month / $28,740 per year
NEW Benefit Added July 1, 2015 - Teladoc Aetna Teladoc
Oftentimes, clergy may find that generic medications are available at substantially reduced cost without going through insurance at their local supermarket pharmacy, retail stores such as Target, membership warehouse clubs such as Costco, and many other businesses.
The Pension Program of the Greek Orthodox Archdiocese of America
The Uniform Parish Regulations of the Greek Orthodox Archdiocese of America require that all clergy of the Archdiocese join and maintain current their participation in the Archdiocese Pension Program. In fact, as part of the ordination application process all candidates for ordination as well as those clergy desiring to transfer into the Greek Orthodox Archdiocese of America are required to submit a signed letter stating that they will join and maintain current their participation in the Archdiocese Pension Plan.
The Pension Program is a defined benefit plan that encompasses the clergy of the Archdiocese of America as well as lay employees of the Archdiocese. Participants contribute either:
3 ½% of their pensionable earnings to earn a 1 ½% accrual, or
5% of their pensionable earnings to earn a 2% accrual.
For example, on $1,000 of pensionable earnings, one could contribute $35 and earn a $15 per year pension benefit; or contribute $50 and earn a $20 per year pension benefit. Participants may change their contribution/accrual selection annually by the end of December for the following calendar year.
Pensionable earnings for a clergyman are defined as:
Salary and housing allowance (or rental value of a parish furnished home) and Social Security reimbursement payments
Car allowances are not considered pensionable earnings.
Vesting takes place after five (5) full years of pension contributions (60 months of personal contributions being made to the plan).
The normal retirement age is 65, with full pension benefits. Early retirement can take place at 55, which would result in one-half the benefit that has been earned at the time of early retirement and that would have been paid at age 65.
Those presently in the pension program begin to receive their pension benefit at age 70, regardless if they are still working full-time.
At the time one is to receive benefits, if married, they can choose from three benefit payment options:
Full pension benefit (100% of benefit) that has been earned for life.
50% joint (a reduced benefit – approximately 91% of full benefit, which at death is reduced further by 50% and is paid the surviving spouse)
100% joint (a more reduced benefit – approximately 83% of full benefit, which at death continues at 100% payable to the surviving spouse)
The Archdiocese Pension Program offers a number of significant benefits at no cost to the clergyman that are calculated based on the monthly contribution paid into the Pension Program. The contribution is based on pensionable earnings. These benefits include:
Life insurance calculated at two times pensionable earnings to a maximum of $150,000 until age 70, with a minimum of $10,000.
At age 70, the life insurance benefit reduces to $50,000 until age 75.
At age 75, the life insurance benefit reduces to $30,000 for life.
For Those Who Were Retired as of January 1, 2015
Benefit of $50,000 to age 70.. From age 70, benefit of $30,000 for life
Prior to March 2009, the life insurance coverage had dropped to $30,000 at age 65, with a $2,000 reduction each year after until it reached $12,000 (at age 74). For those at that time (March 2009) in the reduction stage (65 to 74), their reduction in coverage continued until it reached $15,000 (up from $12,000). Presently the coverage for this group has been raised to a $25,000.
Accidental Death and Dismemberment insurance while a clergyman is in active service
For accidental death - $200,000 - up to and including age 74
$90,000 for ages 75-79
$60,000 for ages 80-84
$30,000 for age 85 and over
Dismemberment benefits are payable according to the Policy Schedule
Business travel life insurance of five (5) times pensionable earnings up to a maximum of $300,000. If a clergyman’s spouse is accompanying her husband on his business travels, she is covered for $50,000.
Disability insurance coverage of 60% of pensionable earnings up to $5,000 per month.
Disability coverage is occupation specific, which means a clergyman qualifies for coverage if he cannot function as a priest, even though he could otherwise be employed and work.
There is a 180-day elimination period from the time of disability. Payments are not made under this insurance policy until after the 180th day of disability as defined by the policy (a priest cannot fulfill his duties as a priest)
Confidential Assistance Program (CAP)
An employee assistance program offered at no-cost available to help address the personal issues that a priest and his family are facing. Staffed by experienced clinicians this service is available by phone 24 hours a day, seven days a week. This service also provides legal information and resources as well as financial information.
Benefits for those clergymen who are not active participants in the Pension Program
None of the above benefits are available to someone who is not an active participant in the Pension Program.
© 2017 by Fr. Michael T. Kontogiorgis