Healthcare sharing ministry pros & cons

Traditional health insurance plans can be costly and restrictive, prompting many employers to explore affordable alternatives like healthcare sharing ministries. Healthcare sharing ministries have grown in popularity since Congress passed the Affordable Care Act (ACA).

While religious organizations created most health sharing ministries as a benefit for their own members, a select few offer open membership, with Medi-Share being the most popular.

These organizations are not-for-profit and don't fund the cost of certain medical procedures that act against their spiritual or religious beliefs. Therefore, the monthly cost for members is generally lower than other health insurance options. But before you join a healthcare sharing ministry, you need to know how they work.

In this article, we'll define what a healthcare sharing ministry is, its pros and cons, and other alternative health plan options that can help your employees save on healthcare costs.

Takeaways from this blog post:

• Healthcare sharing ministries, also known as health sharing plans, offer a more affordable alternative to traditional health insurance plans.
• They are not-for-profit organizations and typically have lower monthly costs for members.
• Members of healthcare sharing ministries contribute to their own savings accounts and can request funds to cover medical expenses.

What are healthcare sharing ministries?

A healthcare sharing ministry is a medical sharing plan or private healthcare system (PHCS). They began in the 1990s as a faith-based 501(c)3 not-for-profit organization.

Members use their shared similar beliefs and values as guidelines for the foundation of their medical expense distributions. The vast majority of the known and active healthcare sharing organizations are founded on religious principles.

Unlike the average health insurance plan purchased on the federal or state exchanges, you can sign up for a health sharing ministry anytime without waiting for an open enrollment period or a qualifying life event.

Some of the more prominent healthcare sharing ministries are:

• Christian Healthcare Ministries
• Zion HealthShare
• OneShare Health
• Solidarity HealthShare
• Medi-Share
• Samaritan Ministries
• Liberty HealthShare
• United Refuah HealthShare
• MCS Medical Cost Sharing
• Altrua HealthShare
• Freedom HealthShare
• Trinity HealthShare Inc

How do healthcare sharing ministries work?

Members of healthcare sharing ministries contribute a fixed monthly dollar amount to their own savings accounts. When a member of the ministry community is ill and needs help to pay their medical bills, the person submits a request for the amount required to cover the expense.

If approved by a person appointed to an administrative position or by committee vote, the other members use their funds to pay the healthcare provider directly.

As with traditional health insurance policies, there’s usually a set amount that each family or individual must pay before submitting requests to the program for assistance. This amount can range from about $500 to $10,000.

Members are part of a preferred provider organization (PPO), which means they receive pre-negotiated rates when using providers in their network. A member using a non-PPO physician or facility may have to pay out-of-network prices or cover the entire medical bill.

Many refer to healthcare sharing ministries as Christian health insurance or a Christian care ministry because members need to comply with the imposed rules of Christianity. This typically means there are no payouts for procedures against Christian beliefs.

What are the pros and cons of healthcare sharing ministries?

Like any health benefit, healthcare sharing ministries have their pros and cons. This section will break down the major advantages and disadvantages of healthcare ministries so you can make the best decision for you and your organization.

Pros of healthcare sharing ministries

While low health costs are a perk of healthcare sharing ministries, some organizations have additional membership bonuses such as dental and vision discounts, disability sharing, and free telehealth.

More advantages of healthcare sharing ministries include the following:

• Monthly contributions to the ministry are often lower than traditional health insurance premiums. This is a significant benefit for individuals and families looking for more affordable options.
• Medical conditions can't end membership.
• Healthcare sharing ministries can cover qualified adoption and funeral expenses.
• Where you live or your employment status doesn’t affect your membership status.
• An independent accounting firm can audit healthcare sharing ministries annually to ensure financial stability.
• Healthcare sharing ministries provide a viable option for those seeking an alternative to shopping on the ACA Marketplace.
• Members of these ministries can encourage one another through personal notes of encouragement, which can foster a sense of community and family between each other.

Cons of healthcare sharing ministries

As with all health insurance programs, there are some disadvantages to medishare organizations. Members need to know about the limitations so those considering the benefit know the entire process and can make the right decision for their health and family.

Disadvantages of healthcare sharing ministries include the following:

• Unlike traditional health insurance and marketplace plans, many state insurance departments don’t regulate healthcare sharing ministries. At least 30 states exempt these plans from insurance rules and regulations. This lack of oversight can leave members with fewer consumer protections and recourse in case of disputes or issues.
• Treasury letter 2016-0051 confirms that healthcare sharing ministries don't qualify as minimum essential coverage (MEC)¹ under the ACA's employer mandate. This means employers with 50 or more full-time equivalent employees (FTEs) can’t offer them as an alternative to group health insurance or an individual coverage health reimbursement arrangement (ICHRA).
• Healthcare sharing ministries often have restrictions on coverage for pre-existing conditions, certain treatments, and preventive care. This can be a concern for individuals with ongoing medical needs or those who require specific treatments not covered by the ministry.
• Certain pre-existing conditions, such as diabetes, may require a member to pay an additional cost for monthly premiums and standard membership fees.
• Health share plans can impose annual and lifetime benefit caps.
• Because healthcare sharing ministries are faith-based organizations, they can have specific rules associated with membership. For example, members might have to attend church regularly, abstain from tobacco and illegal drugs, and attest to a specific statement of faith.
• Since healthcare sharing plans aren’t ACA-compliant and don’t provide MEC, you aren’t eligible for a special enrollment period if you lose coverage.

Can you use an HRA with a Medishare?

Under IRS guidelines, you can't reimburse healthcare sharing ministries' membership fees with a health reimbursement arrangement (HRA), such as the qualified small employer HRA (QSEHRA) or ICHRA. This is due to U.S. Code 213², which determines the eligible expenses and health insurance premiums you can reimburse through an HRA.

Since health insurance companies don’t offer healthcare sharing ministries and they aren’t ACA-compliant, the benefit isn’t considered insurance. Therefore, membership fees or donations aren't eligible for reimbursement per the IRS.

The IRS proposed a new rule in 2020 that would allow organizations to reimburse employees with MEC for their healthcare sharing ministry fees tax-free. However, the changes haven’t taken effect.

Employees may still be eligible to receive reimbursements for other types of qualified medical expenses. For example, the 21st Century Cures Act doesn’t require traditional health insurance coverage to participate in a QSEHRA. However, it does require an MEC plan for tax-free reimbursements,

Employees can use their QSEHRA allowance to pay for out-of-pocket healthcare expenses, including prescription drugs, counseling, over-the-counter medicine, and more on a taxable basis. If your employees want tax-free reimbursements, they can purchase an MEC preventative plan, a catastrophic plan, or a bronze-level plan to supplement their sharing plan.

If you're comparing the two benefits and searching for a comprehensive healthcare alternative with more flexibility and fewer limitations for your employees, an HRA might be the way to go. Your employees will have better control over their healthcare decisions and provide you with a tax-free and budget-friendly alternative to your organization's traditional insurance plan.

Can you use a health stipend with healthcare sharing ministries?

While you can't reimburse healthcare sharing ministries' membership fees with an HRA, you can reimburse them through a health stipend. A health stipend isn't a formal health benefit, so there are fewer restrictions on how you can use it.

A health stipend works similarly to an HRA. Employees submit requests for reimbursement on their medical care expenses, and their employer reimburses them up to their monthly allowance amount. However, unlike HRAs, health stipends are taxable and must be reported as income on an employee's W-2.

Health stipends allow employers to reimburse employees for health, dental, and vision insurance premiums, chiropractic care, medical services like office visits, prescriptions, health sharing membership fees, and more.

While most expense reimbursements with a health stipend don't require proof of purchase, an employer can require proof of purchase for healthcare sharing ministries membership fees. Because a healthcare sharing ministry isn't a formal group health plan under IRS Publication 502, it isn't subject to HIPAA regulations.

Your employer can approve or reject the expense when you submit a receipt for your membership fees. Once approved, your employer reimburses you up to your available monthly allowance. Most employers reimburse employees through payroll, though some admins may process a separate payment.

Conclusion

It's understandable to be cautious about healthcare sharing if you're unfamiliar with it. However, it remains relatively popular, with more than 1.7 million Americans³ participating in the benefit. Healthcare sharing can provide an alternative to health insurance, but it has certain restrictions.

You should review medishare membership requirements to see if the terms to join are agreeable to you. Failure to adhere to these terms could result in a denied application or membership cancellation.

If you think a tax-advantaged HRA benefit will be more flexible and comprehensive for you and your employees' needs, PeopleKeep can help you get started! Our HRA administration software makes it easy to set up and manage your benefit in minutes.

This blog article was originally published on August 18, 2020. It was last updated on January 16, 2024.

1. https://www.irs.gov/pub/irs-wd/16-0051.pdf
2. https://www.law.cornell.edu/uscode/text/26/213
3. https://healthnews.com/news/more-than-1-7-million-americans-participate-in-health-care-sharing-plans/#:~:text=Published%20on%20December%2008%2C%202023%20.