Michael Brooks
Medicare benefits for the Catholic clergy are dependent on several factors. Clergy members are generally covered by Social Security and Medicare under the self-employment tax system, and they can also be eligible for a post-retirement health subsidy based on their earned years of Credited Service. However, eligibility for retiree benefits is determined by the Diocese from which the priest is retired. Additionally, Medicare eligibility is generally granted to US citizens or legal residents over 65 who have lived in the US for at least 5 years, and the cost of Medicare Part A is affected by opting out of Social Security.
| Characteristics | Values |
|---|---|
| Clergy subject to Medicare tax | Yes |
| Clergy eligible for Medicare | Yes, if over 65 and a US citizen or legal resident |
| Clergy eligible for discounted or free Medicare | Yes, if over 65 and married to an eligible spouse over 62 for at least one year |
| Clergy eligible for post-retirement health benefits | Yes, if beneficiary of a defined benefit or defined contribution retirement plan |
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What You'll Learn
Clergy members pay Medicare tax
Clergy members are subject to self-employment tax, which includes Medicare tax. Clergy members are considered employees for federal income tax reporting purposes, but they are classified as self-employed for Social Security and Medicare tax purposes when it comes to services performed in the exercise of their ministry.
This means that clergy members are responsible for paying both federal income taxes and self-employment taxes for Social Security and Medicare. While they may voluntarily choose to have their employer withhold income taxes from their wages, their employer will not withhold their share of Social Security and Medicare taxes as is typically done for secular jobs.
The Internal Revenue Service (IRS) outlines that there are three federal taxes paid on wages and self-employment income: income tax, Social Security tax, and Medicare tax. These taxes are collected under two systems: the Self-Employment Contributions Act (SECA) and the Federal Insurance Contributions Act (FICA). Under SECA, the self-employed individual pays all taxes, while under FICA, the employee and employer each pay half. Clergy members' earnings are taxed under SECA, and they are responsible for paying both the employee and employer portions of Medicare tax.
It is important to note that clergy members can request an exemption from self-employment tax, including Medicare tax, if they oppose certain public insurance programs for religious or conscientious reasons. This exemption must be requested by filing Form 4361 with the IRS by the due date of the individual's income tax return for the relevant tax year.
In terms of retirement benefits, Medicare coverage for retired Catholic clergy appears to be determined by the Diocese from which the priest is retired. For example, the Michigan Catholic Conference offers the Humana Medicare Advantage Plan to retired diocesan priests enrolled in Medicare Parts A and B.
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Clergy can apply for exemption from self-employment tax
Clergy members are generally considered employees if the church or organization they perform services for has the legal right to dictate what they do and how they do it. In this case, their salary is considered wages for income tax withholding purposes. However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are typically considered earnings from self-employment for income tax purposes.
The Internal Revenue Service (IRS) recognizes that clergy members can fall into a unique category when it comes to taxation. While clergy earnings are generally subject to self-employment taxes, there is a provision for exemption. Clergy members can apply for an exemption from self-employment tax if they meet certain criteria. This exemption is outlined in Form 4361, "Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners."
To be eligible for this exemption, clergy members must be conscientiously opposed to public insurance due to individual religious considerations or the principles of their religious denomination. This exemption applies to both the Social Security and Medicare taxes that are typically included in self-employment taxes. It is important to note that once granted, this exemption is irrevocable, and the clergy member will not receive credit toward Social Security or Medicare benefits in retirement.
The process for requesting this exemption involves filing Form 4361 with the IRS by the due date of the tax return for the second tax year in which the clergy member earned at least $400 in self-employment earnings. Clergy members can also exclude from their income a rental allowance or the fair rental value of a parsonage provided to them as compensation for their services. However, this exclusion only applies to income tax and not to self-employment taxes.
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Eligibility for Medicare is based on age and residency
Medicare is a health insurance program designed primarily for individuals aged 65 and older. However, it is important to note that individuals under 65 may also be eligible for Medicare if they have a disability, End-Stage Renal Disease (ESRD), or ALS (Lou Gehrig's Disease). For those who are still working at 65 and not yet receiving Social Security benefits, they can apply for Medicare separately.
Eligibility for Medicare is based on age, with most individuals becoming eligible at 65. However, as mentioned, there are circumstances where individuals under 65 may qualify. Additionally, residency, or more specifically, US citizenship or permanent residency, is also a factor in determining eligibility. To be eligible for Medicare, an individual must be a US citizen or have been a permanent legal resident for at least five continuous years.
Regarding the Catholic clergy, while there is no explicit information indicating that they automatically receive Medicare benefits, clergy members are subject to Social Security and Medicare taxes. Their earnings from ministerial services are generally covered by Social Security and Medicare under the self-employment tax system. This means that their salary, net profit, and housing allowance are subject to self-employment tax. However, clergy members can request an exemption from self-employment tax for their ministerial earnings if they have religious or conscientious objections to certain public insurance programs.
In terms of retirement benefits for the Catholic clergy, it appears that eligibility may vary depending on the Diocese. For example, the Michigan Catholic Conference offers the Humana Medicare Advantage Plan to retired diocesan priests enrolled in Medicare Parts A and B. Medicare Part A covers hospitalization, home or skilled nursing, and hospice care, while Part B provides medical insurance. Therefore, it is important for members of the Catholic clergy to refer to their specific Diocese to understand their eligibility for Medicare and other retirement benefits.
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Spouses of clergy can receive Medicare Part A for free
In the United States, individuals may be eligible for premium-free Medicare Part A if they meet certain criteria. This includes individuals who are eligible for Social Security or Railroad Retirement Board (RRB) benefits, or those who are the spouse or dependent child of someone who has worked the required amount of time under Social Security, the RRB, or as a government employee.
Spouses of clergy can, therefore, receive Medicare Part A for free if their spouse has worked the required amount of time under Social Security, the RRB, or as a government employee. To be eligible, the spouse of the clergy must have been married for at least one year before applying if currently married, or for at least 10 years if divorced and now single.
It is important to note that Medicare Part A coverage begins the month the individual turns 65, provided they file an application within 6 months of their 65th birthday. If the application is filed more than 6 months after turning 65, Part A coverage will be retroactive for 6 months.
In addition, individuals who do not enroll in premium Part A when first eligible because they are covered under a group health plan based on their spouse's current employment may enroll at any time while covered under the group health plan or during the 8-month period that begins the month the employment ends or the group health plan coverage ends.
For example, retired diocesan priests enrolled in Medicare Parts A and B may be provided with the Humana Medicare Advantage Plan, as determined by the Diocese from which they retired.
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Diocesan priests enrolled in Medicare Parts A and B get Humana Medicare Advantage Plan
In the United States, members of the clergy are subject to federal taxes on their wages and self-employment income, including income tax, Social Security tax, and Medicare tax. While churches and church-controlled organizations are exempt from FICA taxes, the services performed by members of the clergy are generally covered by Social Security and Medicare under the self-employment tax system.
Diocesan priests who are enrolled in Medicare Parts A and B are eligible for the Humana Medicare Advantage Plan as a retiree benefit. This is determined by the Diocese from which the priest is retired. The Humana Medicare Advantage Plan is provided by Humana Inc., which complies with federal civil rights laws and does not discriminate based on race, color, religion, gender, gender identity, sex, sexual orientation, age, disability, national origin, military status, or other factors.
The Humana Medicare Advantage Plan offers all the benefits of Original Medicare Parts A and B, and many plans include coverage for prescription drugs. This means that diocesan priests enrolled in this plan can benefit from the additional security of an annual maximum out-of-pocket cost limit. Once this limit is reached, they will pay nothing for covered services for the rest of the plan year.
To apply for the Humana Medicare Advantage Plan, individuals should refer to the pre-enrollment disclosures, which may include provisions that could exclude, limit, reduce, modify, or terminate their coverage. It is important to carefully review these provisions and consult with a sales representative to ensure that the plan meets their specific needs and budget.
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Frequently asked questions
Catholic clergy can be eligible for Medicare benefits. Clergy members are generally covered by Social Security and Medicare under the self-employment tax system. They can also be eligible for a post-retirement health subsidy based on their earned years of Credited Service at retirement.
Anyone over the age of 65 who is a US citizen or legal resident and has lived in the US continuously for at least 5 years is eligible for Medicare. You can also receive discounted or free Medicare Part A premiums based on your spouse's work history.
You can check your eligibility for Medicare by using the Eligibility & Premium Calculator from medicare.gov.
You should sign up for Medicare three months before you turn 65.
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