Updated as of Feb 2024
Medi-Share, a unique non-profit Christian health care sharing ministry, offers an innovative community-based alternative to traditional health insurance, allowing members to support each other's medical needs in a spirit of shared faith and financial cooperation.
As tax season approaches, you may wonder: Is health care sharing through Medi-Share tax-deductible? In short, health-sharing contributions are generally not tax deductible. But monthly contributions are not the only consideration. This article provides clarity and insight into common tax and financial-related questions. Whether you're a current member or are considering joining, understanding the tax implications of Medi-Share is important.
What is Medi-Share?
Medi-Share is a faith-based ministry where members share health care costs. We are supportive, community-driven, and rooted in the Christian value of mutual care.
Medi-Share's approach to medical costs involves members contributing a monthly share used to satisfy the eligible medical costs of other members. Our supportive network is not an insurance model. The advantages of our model are particularly significant for self-employed individuals, small business owners, missionaries, and many Americans who don’t qualify for government-funded insurance programs.
The sharing ministry’s flexibility is also valued by many of our members with varying incomes or those needing adaptable health care. We’ve designed Medi-Share to foster a community bonded by Christian values, offering economic and spiritual support.
If you’re seeking a better understanding of how Medi-Share is different from insurance and whether it’s the right option for your family, you can review more comparisons and perks in Does Medi-Share Work.
Tax Implications of Medi-Share
Medi-Share operates in a unique space within the health care landscape, especially when it comes to taxation. Understanding the tax implications of cost-sharing is important for members and potential members alike, so let’s break it down:
Health Sharing Is Not Health Insurance Under ACA: It's important to note that Medi-Share is not classified as health insurance under the Affordable Care Act (ACA). This classification has significant tax implications. While ACA-compliant health insurance plans offer certain tax benefits, Medi-Share's structure as a health care sharing ministry places it outside these provisions.
Non-Deductibility of Payments: Payments made to Medi-Share are not tax-deductible. Unlike premiums for health insurance, which may be deductible under certain conditions, Medi-Share contributions cannot be claimed as medical expenses on tax returns. Similarly, despite Medi-Share’s Christian non-profit status, these contributions do not qualify as charitable donations for tax deduction purposes.
Implications for Tax Returns and AGI: For Medi-Share members, their monthly share contributions will not reduce their adjusted gross income (AGI). In traditional insurance, premiums can sometimes lower AGI, potentially leading to tax savings. Medi-Share members should plan their finances and tax strategies, accordingly, understanding that their share contributions remain a part of their taxable income.
Interaction with Health Savings Accounts (HSAs): Since Medi-Share is not considered health insurance, members are not able to use Health Savings Accounts (HSAs) with their Medi-Share membership. HSAs are designed to work with high-deductible health plans that are ACA-compliant, which is not the case with Medi-Share.
While Medi-Share offers a unique approach to health care cost sharing with plenty of advantages, members need to be aware of its distinct tax implications, especially regarding the non-deductibility of contributions and the ineligibility of HSAs. As always, members should consult with a tax professional to understand how their Medi-Share membership interacts with their specific tax situation.
Financial Perks of Medi-Share
Although monthly contributions are not tax deductible, Medi-Share offers substantial financial advantages, particularly compared to health insurance.
Cost Savings Compared to Insurance: One of the most significant perks reported by members is the reduction in overall health care costs. On average, members of Medi-Share experience savings on average of $500 a month, when compared to non-subsidized health insurance premiums. These savings are especially impactful for individuals and families who find health insurance financially challenging. The lower monthly share contributions in Medi-Share, as opposed to the typically higher premiums of insurance plans, play a major role in these cost savings.
Member-Voted Guidelines for Cost Management: A key factor in controlling medical care expenses within Medi-Share is the role of member-voted guidelines. These guidelines are used to determine how the shared funds are utilized. This participatory approach ensures that the funds are used efficiently and in a way that aligns with biblical values and priorities of the membership at large.
Fair Pricing and Transparency: Through our partnership with Healthcare Bluebook, Medi-Share helps members steward healthcare dollars by providing transparency through pricing and provider quality rankings. Healthcare Bluebook makes this possible by exposing the truth about price and quality variation through an intuitive, easy to use platform. For inpatient procedures, Healthcare Bluebook makes it simple to see quality scores by facility, provider, and procedure. It can also save you money on hundreds of the most common medical services and procedures by showing you the cost ranges in your area, and providing you with a selection of Fair Price* providers.
The Medi-Share Guidelines outline which types of medical procedures and treatments are eligible for sharing, limitations on sharing for pre-existing conditions, and proactive health measures to minimize medical bills. This member-driven governance model empowers members and helps maintain affordability by avoiding unnecessary or overly expensive medical practices.
The combination of member involvement in cost management and the communal approach to sharing health care expenses results in a more affordable, transparent, and value-aligned health care experience. This makes Medi-Share an attractive option for those seeking a financially viable alternative to health insurance.
Legal and Regulatory Considerations
Navigating the legal and regulatory landscape is an important aspect of Medi-Share’s operations, ensuring that it aligns with various health care regulations while offering unique amenities to its members.
Compliance with the Internal Revenue Code: Medi-Share diligently adheres to the stipulations of the Internal Revenue Code. This compliance is critical regarding the non-deductibility of member contributions for tax purposes. Medi-Share’s status as a health care sharing ministry means that, while members' monthly shares are not tax-deductible, the organization still operates within the bounds of federal tax laws, ensuring transparency and legality in its financial dealings.
Exemptions Under Federal Law: One of the key legal aspects of Medi-Share is the exemptions its members enjoy under current federal law. Members of Medi-Share are exempt from the individual state mandate of the ACA, which requires individuals to have health insurance or face a penalty. This exemption is particularly beneficial as it allows members to participate in Medi-Share without the concern of legal repercussions for not having health insurance.
Additional Financial Considerations for Members
For those considering or currently participating in Medi-Share, there are several additional financial aspects to be aware of, particularly regarding Health Reimbursement Arrangements (HRAs), tax credits, dependents, and direct primary care options.
Eligibility for Health Reimbursement Arrangements (HRAs)
- HRAs are employer-funded plans that reimburse employees for medical expenses and, in some cases, health insurance premiums.
- Because HRAs are generally used with health insurance, Medi-Share members may have restricted access to these arrangements.
- Members need to check with their employers and tax advisors to understand how their participation in Medi-Share aligns with HRA eligibility and benefits.
- Members should also consider the implications regarding tax credits, particularly those related to health insurance under the Affordable Care Act (ACA).
- Since Medi-Share is not classified as health insurance, members typically do not qualify for health insurance-related tax credits.
- However, members should consult with a tax professional to explore potential tax benefits or implications of their healthcare expenses.
Considerations for Dependents
- Medi-Share offers the option to include dependents under a member’s program, which can be an economical choice for families.
- The inclusion of dependents must adhere to the guidelines set by Medi-Share, and members should understand how this affects their overall contribution and the sharing of medical expenses.
Direct Primary Care Options
- Direct primary care (DPC) is an alternative model where patients pay a flat monthly fee for access to primary care services without the involvement of insurance.
- Within the Medi-Share framework, members have access to a DPC option with a $12,000 Annual Household Portion. This can offer an additional layer of health care management, especially for those seeking more personalized care.
- Members should evaluate how DPC integrates with Medi-Share’s model, including cost implications and sharing of services.
Consulting with financial and tax advisors can provide clarity and help you make informed decisions that align with individual and family needs.
Explore Everything Medi-Share Has to Offer
To truly understand the impact and advantages of Medi-Share, we encourage you to dive deeper into what this community has to offer. Explore how Medi-Share compares with insurance plans and other health sharing ministries. Discover the communal and financial perks it provides and consider how it aligns with your health care needs and values.
Your journey toward informed health care choices begins here. Learn more about Medi-Share, engage with the community, and consider how its unique approach to health care can be a part of your life.