There has been a significant increase in enrollment in health care sharing ministries over the years since enactment of the Affordable Care Act (ACA). ACA specifically referenced health care sharing ministries, allowing an exemption from the individual mandate for individuals participating in one.
According to the Alliance of Health Care Sharing Ministries there are more than 100 registered health care sharing ministries across the country. And, the alliance claims more than one million participants.
A health care sharing ministry is not insurance. Instead, they are faith-based organizations that provide “financial, emotional, and spiritual support” to members. Participating individuals pay a monthly membership fee if they meet the qualifications to join the ministry. In many cases, the monthly membership fee is significantly lower than an insurance plan.
Qualifications may require regular attendance at worship services, abstention from tobacco and alcohol and other unhealthy activities. In some cases applicants must pledge to live a Christian lifestyle or get a recommendation from their clergy.
Since these plans are not insurance, states are generally unable to require the ministries to meet solvency requirements or establish required reserves for claims. Other protections regarding appeals for claims decisions are also not applicable to these plans.
A new wrinkle with the health care sharing ministry plans is the interest of some employers in offering these plans to employees. Apart from the concerns regarding solvency and minimal state or federal oversight, there are tax implications to consider. A letter from the IRS unequivocally states that a health care sharing ministry is “not employer-provided coverage under an accident or health plan.” The cost of employee participation is “not excluded” from the employee’s gross income. The IRS letter can be reviewed here.
Employers who are subject to the employer shared responsibility (ESR) provisions face additional hurdles if considering these plans. A health care sharing ministry plan is not considered minimum essential coverage (MEC). As such, employers could face ESR penalties if they cannot meet the required 95% offer of coverage requirement to avoid the “no offer” penalty of $2,320 per employee in 2018.
Employees may also balk at an employer offering a plan that is inextricably tied to religion and religious practices.
Employers should obtain legal guidance before offering a health care sharing ministry plan to explore all issues surrounding these plans. Individuals interested in the plans should ensure that they understand fully the requirements and restrictions associated with them.