Final Medical Expenses Rules Raise Concerns for Health Care Sharing Ministries

The IRS has proposed expanding the definition of medical expenses to include payments to health care sharing arrangements (REG-109755-19).  The intent of the IRS was to provide relief for individuals that reach or surpass the threshold for claiming medical expenses as itemized deductions on Schedule A.

The proposed regulations also raise two other important issues:

  • Employer payments.  The inclusion of payments to a health care sharing plan is important for employers.  If an employer makes health care sharing payments on behalf of an employee and the payments constitute medical insurance, they could qualify for tax-free treatment under an qualified small employer health reimbursement arrangement (QSEHRA) or an individual coverage health reimbursement arrangement (ICHRA).
  • The status of health care sharing arrangements with the states.  The Alliance of Health Care Sharing Ministries objects to the treatment of healthcare sharing ministry membership contributions as payments for insurance to avoid confusion.  These arrangements are generally not currently regulated under state insurance laws. 

The National Association of Insurance Commissioners urged the IRS not to rely on an interpretation that classifies healthcare sharing ministries as insurance.  The Association said “They should not be permitted to at once maintain exemption from the laws that regulate insurance and at the same time derive benefits from an IRS classification that conflates them with insurance.”

A hearing on the proposed rules was held on October 7 but the rules have not yet been finalized.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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