Healthcare sharing ministries are nonprofit organizations that facilitate the sharing of qualifying medical expenses among members. As long as a healthcare sharing ministry has been established and operating since December 31, 1999, and are a classified as a nonprofit organization, members are exempt from paying the penalty for not having insurance as part of the individual mandate of Obamacare.
Are payments to cost-sharing ministries tax deductible?
Traditional Insurance and Tax Deductions
Traditional insurance is deductible under certain circumstances. If you are self-employed, you can deduct 100% of your health insurance premiums on line 29 of Form 1040.
For everyone else, you can only deduct health insurance premiums to the amount that your premiums plus out-of-pocket medical expenses exceed 7.5% of your income.
Only premiums paid with out-of-pocket money, after taxes have been taken out, can be deducted. So, if the government or your employer pays the full amount of the premium, the cost is not deductible. In addition, you cannot deduct any subsidy, and if you get your insurance through a state- or federally-run insurance marketplace, you can deduct the amount paid out of pocket only.
Healthshare Plans and Tax Deductions
Healthcare sharing ministries are not insurance, are not regulated like insurance, and do not function like insurance. Instead, these cost-sharing ministries are nonprofit organizations, and therefore, the cost-sharing dollars are typically not deductible because they are seen as charities, and most expenses are shared with the group as a whole.
Popular Healthcare Sharing Ministries
Christian Healthcare Ministries
In this Christian-based sharing program, cost-sharing dollars are not deductible (except in Missouri). However, extra giving is tax deductible, including Prayer Page donations. This means, if you want to pay a little extra to help the family who just discovered their son has cancer, that amount will be tax deductible
Like Christian Healthcare Ministries, the cost-sharing dollars for members of Medi-Share are not tax-deductible. This is, as their website claims, because the savings with this ministry are enough on their own. In fact, members save up to 50% of their annual healthcare costs on average.
With Samaritan Ministries, cost-sharing dollars are not tax exempt, except in the state of Missouri. Like Medi-Share, amounts beyond the monthly shares and administration fees are indeed tax deductible.
This is simply a brief overview and does not delve any deeper than the surface. If you have any further questions, you should contact your tax professional. Overall, the cost-sharing dollars paid to healthcare sharing ministries are typically not tax deductible due to the organizations’ nonprofit status.
After all, healthshare programs are not insurance, which is actually one of their best selling points!
I’ve been a long time advocate for health insurance savings. I’m always willing to help anyone figure out the best way to save money on their health insurance. I also love living in Colorado in the Fort Collins area. What a great state to live in!