Navigating the tax landscape surrounding healthcare sharing ministries can be complex, but it’s essential for members to understand their financial and legal obligations. Christian Healthcare Ministries (CHM), a faith-based organization with over four decades of service, offers members a unique alternative to traditional health insurance by facilitating voluntary sharing of medical expenses rooted in religious principles. This guide provides clarity on federal tax considerations, state-specific deductions, proof of coverage requirements, and frequently asked questions to help members maximize their benefits and stay compliant with regulations.
Federal Tax Considerations
The following overview aims to clarify the tax status of healthcare sharing ministries like CHM but is not intended as legal, tax, or financial advice.
A Cost-Sharing Alternative to Insurance Under the ACA
Christian Healthcare Ministries qualifies as a religious exemption under the U.S. Patient Protection and Affordable Care Act (ACA). As a voluntary, faith-based healthcare sharing organization (HCSM), CHM has served members nationwide for over 40 years, providing an alternative to traditional insurance. Its members come from all fifty states, united by shared religious beliefs and a commitment to mutual support.
Since the enactment of the Tax Cuts and Jobs Act in 2019, the federal government eliminated the individual mandate penalty for not having health insurance or an exemption, such as membership in a qualified religious organization. Consequently, filing Form 8965 is no longer necessary with your Federal Form 1040, as per IRS regulations. However, some members employed by organizations may still receive a Form 1095-C from their employers, indicating their coverage status. For further guidance, consult the official IRS resources.
Monthly Contributions and Federal Tax Exemption
Members contributing to CHM generally cannot make new contributions to Health Savings Accounts (HSAs) because CHM is not classified as health insurance and does not meet the criteria for a high-deductible health plan. Nonetheless, some members may be able to use limited-purpose Flexible Spending Accounts (FSAs) or Health Reimbursement Accounts (HRAs), depending on their employer’s policies. It’s advisable to consult with a tax professional or employer to explore available options, especially under state laws that might differ.
Giving Beyond Standard Contributions
Members who donate additional funds to CHM’s charitable program, CHM Give, may claim these donations as charitable deductions on their federal taxes. Contributions are credited in the year they are received by CHM. Donations made in December but received in January are credited to the following year. Members can make donations via the Member Portal, while non-members can contribute through the designated donation page. In 2024, CHM members contributed over $2.5 million to support medical bill sharing, with all donors receiving official statements for tax purposes. For more details, visit the virtual reality perspectives in medicine.
State Tax Deductions
Several states permit residents to deduct their yearly contributions to CHM from state taxable income. Members in these states will receive a detailed statement listing their contributions and any additional charitable donations for tax claiming purposes. A summary of each state’s applicable deductions and forms includes:
- Indiana: Members can deduct the total amount of their CHM membership fees, using Schedule 2 and Schedule C.
- Missouri: Residents may subtract the amount paid toward CHM membership from their adjusted gross income, provided it is not deducted on federal returns, with specific forms available here.
- Montana: Contributions to a Medical Savings Account (MSA) up to $4,600 per year can be excluded from taxable income, including CHM monthly payments. Details are available in IRS Publication 502 and Montana-specific guides.
Proof of Coverage Requirements
Generally, CHM members are not required to report their membership on federal tax forms related to healthcare coverage. However, some states mandate proof of insurance coverage, often called “Minimum Essential Coverage,” which may include CHM membership. These states include California, District of Columbia, Massachusetts, New Jersey, Rhode Island, and Vermont. Members should consult state tax authorities or a tax professional to ensure compliance and proper documentation. Additionally, members participating in employer groups may receive Form 1095-C, which should be reviewed with their tax advisors.
Interesting:
- Understanding hipaa your rights and protections for healthcare data
- Understanding hipaa essential faqs for healthcare compliance
- Understanding protected health information phi and its critical role in healthcare privacy
- Understanding medical billing essential insights for healthcare professionals
- Effective strategies for healthcare lead generation and growth
For state-specific requirements, visit the official state resources.
Note: This information is provided for informational purposes only and does not substitute for professional legal, tax, or financial advice. Laws and regulations vary by state and are subject to change. Consult with qualified professionals for personalized guidance.
Frequently Asked Questions
How are healthcare sharing ministries defined under the ACA?
Organizations classified as “health cost sharing ministries” (or HCSMs) are non-profit religious groups where members share medical expenses based on shared beliefs. To qualify for the religious exemption, such groups must have operated continuously since December 31, 1999, and undergo annual independent audits. These organizations, including CHM, are recognized for their compliance and exemption status under federal law.
What distinguishes CHM from other health sharing options?
Beyond religious principles, CHM offers several unique advantages:
- Over 40 years of faithful service
- Acceptance of members with pre-existing conditions without penalty
- No rate increases due to health issues
- No membership cancellations because of costly health conditions
- Programs to assist with certain pre-existing health expenses
- An optional catastrophic illness program for expenses exceeding $125,000
- Flexibility to see providers of choice, including out-of-state options
- No restrictions to limited provider networks
Is “healthcare sharing ministry” the same as “health cost sharing ministry”?
Yes, both terms refer to the same concept. CHM prefers “health cost sharing ministry” as it more clearly describes its purpose of sharing healthcare costs within a faith-based community.
How does CHM support recognition of member contributions for tax benefits?
CHM actively advocates for legislative recognition at federal and state levels, aiming to improve the tax treatment of member contributions. If you wish to support these efforts or share your experience, contact us at info@chministries.org.
For more about how health innovations like virtual reality in medicine are transforming healthcare, explore the evolving landscape of medical technology and its integration with service models like CHM.