Health Insurance Options for Churches: Group Plans, ICHRA, and Denominational Providers Compared

Most church administrators we talk to think they have two options for employee health insurance: a group plan from Blue Cross or whatever their denomination offers. That’s it. Pick one.

The reality is more interesting — and more complicated. Churches today have at least five distinct paths to covering their staff, each with different cost structures, compliance requirements, and trade-offs. Some of these options didn’t exist five years ago. Others have been around for decades but rarely get explained clearly.

Here’s what church leaders and pastors in West Michigan need to know about church employee health insurance — and how to figure out which option actually fits your congregation.

Option 1: Traditional Group Health Insurance

This is the approach most people think of first. The church compares group plans currently available for its location and census; carrier participation, networks, products, and terms must be verified for the plan year.

How it works: The church selects a plan (or a few plan options), pays a set premium per employee, and employees get coverage through that carrier’s network. Premiums are based on census data — the ages and locations of your covered employees.

Cost structure: Monthly premiums per employee, typically with the church covering 70–80% and employees paying the rest. Michigan small group rates are up 11.1% on average for 2026, so expect a family plan to run around $20,400 per year.

The upside: It’s familiar. Employees get a card, they go to the doctor, insurance pays. Administrative burden is relatively low once you’re set up. And for churches with healthy, younger staff, group rates can be competitive.

The downside: You’re locked into one carrier’s network and plan designs. If you have a small staff and one person has a bad claims year, your renewal can spike 20–30%. And in Michigan’s small group market, your options are limited — most churches end up choosing between BCBSM and Priority Health.

Best fit: Churches with 5–50 employees, relatively stable staff, and the budget to absorb annual premium increases.

Option 2: Level-Funded Plans

Level-funded plans have quietly become one of the most significant shifts in small employer health insurance. Nationally, level-funded adoption among small employers has surged — KFF’s Employer Health Benefits Survey shows a dramatic shift over the past five years, with small employers increasingly choosing level-funding over fully insured plans. But many church administrators have never heard the term.

How it works: You pay a fixed monthly amount that covers expected claims, stop-loss insurance (which protects you if claims are unusually high), and administrative costs. If your actual claims come in lower than expected, you can get money back. If claims are higher, the stop-loss coverage kicks in.

Cost structure: Predictable monthly payments like a group plan, but with the potential for refunds in good claims years. You also get access to your claims data, which most fully insured plans don’t provide.

The upside: Cost savings potential, especially for churches with generally healthy staff. You get the predictability of a fixed monthly bill with the upside of getting money back. Access to claims data means you can make smarter decisions about your plan design over time.

The downside: If your church has a very small staff (under 10), you may not have enough participants for level-funding to make sense. Underwriting is more detailed than fully insured plans, so a workforce with significant health conditions may not get favorable terms. And you do take on slightly more risk, even with stop-loss protection.

Best fit: Churches with 10–50 employees and generally healthy staff who want to control costs without losing the structure of a traditional plan.

Option 3: ICHRA (Individual Coverage HRA)

ICHRA — the Individual Coverage Health Reimbursement Arrangement — has grown rapidly since it launched in 2020, with the HRA Council reporting significant year-over-year adoption increases. According to HRA Council data, the majority of employers who adopt ICHRA had never offered health coverage before. For small churches that couldn’t afford a group plan, this created a real option for getting staff covered.

How it works: Instead of buying a group plan, the church gives each employee a set monthly allowance. Employees shop for their own individual health insurance plan on the marketplace (Healthcare.gov) or off-exchange, and the church reimburses them tax-free up to the allowance amount.

Cost structure: The church sets a fixed monthly budget per employee. According to HRA Council data, the average ICHRA allowance runs around $524 per month, with small employers often contributing more since ICHRA is typically their primary benefits offering. The church’s cost is completely predictable — no renewal surprises.

The upside: Employees get to choose their own plan, network, and coverage level. The church controls its budget exactly. No minimum participation requirements, so it works even for churches with just two or three staff members. And according to industry data, most ICHRA employees choose Gold or Silver plans — they don’t race to the bottom on coverage.

The downside: Here’s where Michigan churches need to pay attention. Individual market rates in Michigan jumped 20.2% for 2026. That means the employee’s share of the cost — the gap between your allowance and the actual premium — just got bigger. HAP CareSource, Molina Healthcare, and Meridian Health Plan (now metro Detroit only) all pulled back from Michigan’s marketplace for 2026, reducing options significantly in some areas. Employees have to navigate plan selection themselves, which can be confusing, especially for staff who’ve always had employer-provided coverage.

A critical note on ICHRA and compliance: Churches are generally exempt from ERISA as “church plans.” But ICHRA is classified as an ERISA group health plan. The interaction between these two frameworks is a real compliance question that requires specialized knowledge of church plan rules. An advisor who understands church plans specifically can help you navigate this correctly.

Best fit: Small churches and ministries (under 20 employees) that have never offered coverage, or churches that want to give employees maximum choice while keeping budgets fixed.

Option 4: Denominational Benefits Providers

If your church belongs to a denomination, you may have access to a benefits provider that exists specifically to serve your tradition. These are often overlooked — or assumed to be the only option — when in fact they’re one choice among several.

Reformed Benefits Association (RBA): Deeply relevant in West Michigan, where the Christian Reformed and Reformed Church in America communities are strong. RBA provides health coverage designed around the values and needs of Reformed congregations. If your church is CRC or RCA, this is worth a serious look — but also worth comparing against the commercial alternatives.

GuideStone (Southern Baptist Convention): One of the largest church benefits providers nationally, serving SBC-affiliated churches and ministries. GuideStone offers medical, dental, life, and disability coverage with plans designed around ministry life. Available nationwide.

Board of Pensions (Presbyterian Church USA): Provides benefits for PC(USA) congregations, including medical coverage, death and disability benefits, and retirement plans.

Cost structure: Varies by provider. Denominational plans may pool risk across their entire member base, which can smooth out costs. Some offer subsidized rates for smaller congregations.

The upside: Plans designed by people who understand church operations. Risk pooling across a large denominational membership. Their support teams understand church operations — they know what a consistory is and why your benefits year might not align with the calendar year.

The downside: You may have fewer plan design options than the commercial market. Rates aren’t always competitive — it depends on the denomination’s overall claims experience. If your church isn’t formally affiliated, you may not be eligible. And it’s worth noting that denominational loyalty shouldn’t replace clear-eyed cost comparison.

Best fit: Churches with strong denominational ties that value having a provider who understands ministry, especially when the denominational plan’s cost and coverage are competitive with commercial options.

Option 5: Health Sharing Ministries

We include this because it comes up in nearly every conversation with church administrators. Samaritan Ministries, Medi-Share, and Liberty HealthShare are popular among church staff and congregations.

How it works: Members pay a monthly “share” amount. When a member has a medical need, other members’ shares are directed to cover the cost. It’s a community sharing model based on shared faith principles.

Here’s what you need to know: Health sharing ministries are not insurance. They are not regulated as insurance. They do not guarantee payment of claims. And — this is critical — they do not qualify as minimum essential coverage under the ACA.

Why that matters for your church: If you’re considering ICHRA, employees enrolled in a health sharing ministry cannot participate. ICHRA requires employees to have actual health insurance. If your staff currently uses Medi-Share or Samaritan, setting up an ICHRA means they’d need to switch to a marketplace or off-exchange insurance plan to receive reimbursements.

Health sharing ministries also don’t meet ACA reporting requirements, which matters if your church has 50 or more full-time equivalent employees and is subject to the employer mandate.

Best fit: Individual employees who choose this for personal faith reasons and understand it’s not insurance. It is not a church-sponsored benefits strategy.

Making the Decision: A Framework for Your Church

Here’s how to think through the choice:

Factor	Group Plan	Level-Funded	ICHRA	Denominational	Health Sharing
Budget predictability	Moderate	Moderate-High	High	Moderate	Moderate
Employee choice	Limited	Limited	High	Limited	N/A
Compliance burden	Low	Moderate	Moderate	Low	None (not insurance)
Works for <10 staff	Difficult	Difficult	Yes	Varies	N/A
Cost savings potential	Low	Moderate	Varies	Varies	Not comparable
ERISA considerations	Typically exempt	Typically exempt	Needs review	Varies by plan	N/A

Before you pick a path, run a cost analysis. One of the most important steps — and one that often gets skipped — is determining whether employer-sponsored coverage even makes sense for every class of employee. Many church employees, particularly part-time or lower-salaried staff, qualify for federal marketplace subsidies that can make individual coverage significantly cheaper than what a group plan would cost. An employer-sponsored plan can actually make those employees’ situations worse by disqualifying them from subsidies they’d otherwise receive.

In some cases, a stipend approach — giving employees a defined dollar amount toward their own coverage — is the better move for part of your workforce. Churches with a mix of salaried and hourly staff can also explore classing out salaried employees for a group plan while using a stipend strategy for hourly workers. The difference is in the details, and it’s exactly why working with a true health insurance advisor — not just picking a plan off a menu — matters.

Start here: How many employees do you have? What’s your budget? Do your staff value choice, or do they prefer simplicity? Is your church affiliated with a denomination that offers benefits? And — honestly — how much administrative capacity does your team have?

These aren’t questions you should answer alone. Church benefits involve ERISA exemptions, clergy tax status, ACA compliance, and now the interaction between individual market disruptions and employer-sponsored coverage. Getting this wrong can cost your church — and your employees — real money.

These aren’t questions you should answer alone. Church benefits involve ERISA exemptions, clergy tax status, ACA compliance, denominational provider dynamics, and the Michigan-specific market shifts that affect every option on this list. Getting it wrong can cost your church and your employees real money.

If your church is evaluating health insurance options — or if your current plan is up for renewal and nobody’s walked you through all five of these paths with real numbers — that’s a conversation worth having.

Nexus Benefit Solutions is an independent benefits advisory firm in Grand Rapids, Michigan, specializing in churches, ministries, nonprofits, and small-to-midsize employers. Our advisors will take the time to discuss your situation in detail. Schedule a call — no pitch, just clarity.

Current market source: Verify plan-year, county, issuer, network, and rate information through Michigan DIFS Marketplace plan and rate information.