Healthcare sharing ministries are a healthcare alternative that has grown in popularity since the Affordable Care Act (ACA). Although they began in the 1990s, some people remain unfamiliar with the benefit.
While most health sharing ministries were created for organizations as a benefit for their own members, a select few offer open membership, with Medishare being the most popular.
Because these organizations are not-for-profit and don’t fund the cost of certain medical procedures that act against their religious or spiritual beliefs, costs for members are generally lower than other health insurance options. But just how do healthcare sharing ministries work, and who is eligible?
Before entering into this arrangement, it’s essential to understand the organization’s rules, how they function, and the benefits and challenges.
This article will define what a healthcare sharing ministry is, the pros and cons of this benefit, and other alternative health plan options such as health reimbursement arrangements (HRAs) and health stipends.
What are healthcare sharing ministries?
A healthcare sharing ministry is a medical sharing plan or private healthcare system (PHCS), a faith-based 501(c)3 not-for-profit organization.
Members share similar beliefs and values and use guidelines as the foundation for their medical expense distributions. The vast majority of the known and active health care sharing organizations are founded on religious principles.
Unlike health insurance, you can sign up for a health sharing ministry at any time with no need to wait for an open enrollment period or a major life event.
Some of the larger healthcare sharing ministries are:
- Christian Healthcare Ministries
- 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 savings accounts. When a member of the ministry community is ill and needs help paying their medical expenses, the person submits a request for the amount required to cover the bill. If approved, either by a person appointed to the position or by committee vote, the request is paid directly to the healthcare provider with funds from other members’ savings accounts.
As with traditional health insurance policies, there is usually a set amount that each family or individual has to 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 that network. If a member uses a non-PPO physician or facility, they may have to pay out-of-network prices or cover the entire 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.
Are healthcare sharing ministries worth it?
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 that you can make the best decision for you and your organization.
Pros of healthcare sharing ministries
While low costs are a perk of healthcare sharing ministries, some of these organizations have additional membership bonuses such as dental and vision discounts, disability sharing, and free telehealth—offering members the ability to speak to a licensed physician via phone or video at no extra charge.
More advantages of healthcare sharing ministries include the following:
- Healthcare sharing ministries are cost-effective because each family contributes a specific monthly dollar amount they choose based on program options.
- Membership can’t be terminated for developing a medical condition.
- Healthcare sharing ministries don’t impose annual or lifetime limits.
- Healthcare sharing ministries can cover qualified adoption and funeral expenses.
- Membership isn’t affected by where you live or employment status.
- An independent accounting firm can audit healthcare sharing ministries annually to ensure financial stability.
- Healthcare sharing ministries provide a viable option for those who are looking for 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 is the case of all health insurance programs, there are some disadvantages to Medishare organizations. Members need to know about the limitations so those considering the benefit are aware of the entire process and can make the right decision for their health and family.
Disadvantages of healthcare sharing ministries include the following:
- Many regulations don’t consider healthcare sharing insurance, so consumers have little or no legal protection if a claim is not paid, coverage is denied, or the ministry goes bankrupt.
- Treasury letter 2016-0051 confirms that healthcare sharing ministries don’t qualify as minimum essential coverage (MEC) the ACA’s employer mandate.
- There are certain restrictions and payment caps relating to pre-existing conditions.
- Certain pre-existing conditions, such as diabetes, may require a member to pay an additional monthly amount along with standard membership fees.
- Because healthcare sharing ministries are faith-based organizations, they can have specific rules associated with membership.
- For example, members might be required to attend church regularly, abstain from tobacco and illegal drugs, and attest to a specific statement of faith.
Can you use an HRA with a Medishare?
Because of IRS guidelines, healthcare sharing ministries' membership fees can’t be reimbursed under an HRA, such as the qualified small employer HRA (QSEHRA). This is due to U.S. Code 213, which determines the expenses and health insurance premiums that you can reimburse through an HRA.
Healthcare sharing ministry programs aren’t offered by a health insurance company, making the benefit technically not considered insurance. Therefore, membership fees or donations aren’t eligible for reimbursement per the IRS.
However, employees may still be eligible to receive reimbursements on other types of qualified medical expenses. For example, health insurance isn’t required to participate in a QSEHRA. Employees can use their HRA allowance to pay for out-of-pocket expenses, including prescription drugs, counseling, over-the-counter medicine, and more.
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 health 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 expenses, and their employer reimburses them up to their monthly allowance amount. However, unlike HRAs, health stipends are taxable and must be reported on an employee’s W-2 as income.
Health stipends allow employers to reimburse their 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 choose to reimburse employees through payroll, though some admins may process a separate payment.
It’s understandable to be cautious about healthcare sharing if you’re not familiar with it. However, it remains fairly popular, with more than 1.5 million Americans participating in the benefit. Healthcare sharing can provide an alternative to traditional health insurance, but it does come with 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 that a tax-advantaged HRA benefit or a taxable health stipend will be more flexible and comprehensive for you and your employees’ needs, PeopleKeep can help you get started! Our HRA and employee stipend benefits 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 May 3, 2022.