Wondering about sharing ministries and ICHRA? Health Care Sharing Ministries like Medi-Share have been around a while and continue to gain popularity as an affordable alternative to traditional health insurance, especially in today's expensive health insurance market. If you (or your client) is considering offering the ICHRA, integration with sharing ministries could be a match made in heaven. But what do the final HRA regulatory rules have to say about it?
What is a Health Care Sharing Ministry?
Health Care Sharing Ministries (HCSM) are typically faith-based, 501(c)(3) organizations that have created an alternative to traditional insurance. HCSMs are mostly religious associations that allow individuals to share the burden of health care costs. Today, some health care sharing ministries still maintain their religious affiliations but some have allowed non-religious, but ethically similar individuals and groups to join. Health care sharing ministries are not insurance providers although many of their practices resemble such. They provide affordability and flexibility with a legit PPO network, but there are a few distinct differences when it comes to pre-existing conditions, for example. See what our CEO says about his experience with sharing ministries, particularly Medi-Share, here.
Because of their faith-based connections and certain state’s safe-harbor status, HCSMs have been exempt from many of the regulations and consumer protections under the PPACA. Traditional insurance companies must follow certain rules to be permitted to offer health care assistance like maintaining Minimum Essential Coverage (MEC), covering pre-existing conditions, and capping out of pocket expenses for the insured.
So, health care sharing ministries ≠ health insurance providers. You can see what the IRS has said the most recently about sharing ministries here.
Which brings us to our next point.
How Does ICHRA work with Sharing Ministries?
Remember ICHRA? The IRS-approved, tax-advantaged health benefit? Yes, the one with no monthly min or max contributions, tax free health care, and a variety of amounts for a variety of employee classes. The one that our team went to the White House to celebrate? That’s the one.
The final rules for ICHRA clearly state that an employee must have an individual marketplace plan to integrate with their employer-sponsored HRA. Sharing ministries can't join in on the fun.
The reason for that is they are trying to encourage folks to use marketplace plans in hopes of returning healthy individuals to the pool. If it works, it would lower costs for everyone simply by increased competition and a higher percentage of healthy people.
ICHRA compliance dictates that ICHRA is not available to employees who belong to health care sharing ministries such as Medi-Share, Samaritan Ministries, or Liberty HealthShare. Since HCSMs are not offered through insurance providers the money paid in (NOT premiums) cannot be reimbursed.
Sharing ministries are in good company when it comes to their inability to integrate with ICHRA; TRICARE is another example that cannot work with the new tax-friendly HRA.
Some say these restrictions (not allowing HRAs to “work” with HCSMs) will be problematic to the free exercise of religion, providing an unequal tax advantage to individual coverage HRAs. We will keep an eye on that for you.
Recent update for sharing ministries and ICHRA
As of 2021, sharing plans still will not integrate with ICHRA, but costs for these ministries now will qualify as payments for a medical care expense under Section 213(d), and should be considered tax-deductible. But does that really change anything?
The new update allows for sharing ministry expenses to be tax-free, but it doesn't erase the fact that individuals would need to have a marketplace plan in addition to a sharing ministry. And that leaves the individual with double coverage, which makes no financial or logical sense.
While it seems redundant, this arrangement of using a sharing ministry as an eligible medical expense with an ICHRA still works for certain individuals based on their unique needs, preferences for doctors / networks and their reimbursement amount.
Looking for more?
Chat with our team with any questions you may have about these new, tax-friendly benefits, how to find an ICHRA-compliant plan, or check out our ICHRA FAQ post or the new ICHRA Guide for more information on its background, setup process, requirements, and rules.
This post was originally published in 2019 and has been updated for 2023.
