If your church is experiencing some sticker shock with your 2021 health insurance increases, you’re not alone. Many people are searching for alternative healthcare solutions, includinghealth reimbursem*nt arrangements(HRAs) and healthcare sharing ministries.
Healthcare sharing ministriesare cost-sharing programs or private healthcare systems (PHCS) that are set up as a faith-based 501(c)3 not-for-profit organization. Members share religious beliefs and values and use these as a cornerstone for their medical expense distributions.
The concept behind Healthcare sharing is simple. Every month you pay into a pool of money that many other members pay into. In addition to paying into that pool, you also are responsible for a certain amount of your medical care each and every year (out of pocket). When someone gets sick and needs to pay a bill, funds from the group go to pay that bill.
Your share payment is not deductible for federal income tax purposes as a charitable donation or as a medical expense. Since there is a strong possibility that your medical expenses will get shared by another member, you cannot deduct your share as a charitable donation, even though the company is a 501(c)3 not-for-profit ministry.
Health insurance premiums are tax-deductible. Healthcare Sharfing contributions are not. That said, medical expenses are still deductible, subject to a threshold based on a percentage of your adjusted gross income.
Some of the larger healthcare sharing ministries are:
Clergy Financial Resources offers several options to help you with your tax questions or filing. Pro Advisor below is a great option to get started.
- Pro Advisor I Tax Support
This support service provides you comprehensive answers to your notice questions. This support service is available at a flat rate of $45.00 for each 30-minutes session.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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