IRS Proposes Tax Deductions for Health Care Sharing Ministries

On June 10, 2020, the IRS issued proposed regulations that would treat payments to health care sharing ministries as payments for health insurance.

Comments on the proposed regulations were due August 10, 2020, and the IRS held a virtual hearing on October 7, 2020. The Alliance of Health Care Sharing Ministries and the National Association of Insurance Commissioners, among others, opposed the characterization of health care sharing payments as payments for health insurance.

So here we sit on February 1, 2023, with no word from the IRS. Will it finalize or withdraw the proposed regulations that would make payments to health care sharing ministries tax deductible?

While we wait, here’s the status: Payments to health care sharing ministries are not allowable as reimbursable expenses by Section 105 medical plans or other health reimbursement accounts (HRAs) such as qualified small employer HRAs or individual coverage HRAs. (The proposed regulations have no effect on this status because they are not effective until adopted as final regulations.)

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Takeaway

Payments to a health care sharing ministry are not tax-deductible as medical expenses.

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