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The Affordable Care Act required workers to have “essential coverage” health insurance.  An exemption was “carved out” for Health Care Sharing Ministry (HCSM) memberships.  However, the HCSM payments were not included in “medical expenses” under I.R.C. Section 213.  Now, proposed regulations are set to change that.



Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

We’ve been communicating with the folks at MBC over the past few years about health care plans/costs for their employees.  They have fewer than 50 employees and have been making payments into Health Reimbursement Accounts (HRAs).  Some of MBC’s workers participate in HCSMs, others pay premiums for “traditional” health insurance.

Historically, the HRAs could reimburse employees’ payments for health insurance premiums and other medical expenses under Code Section 213, but HCSM memberships were not able to be reimbursed.  Now, with Proposed Regulation 1.213-1 (REG-109755-19), payments for membership in an HCSM would be treated as Section 213 medical care expenses. That will allow an HRA provided by an employer to generally be able to reimburse an employee for HCSM membership payments. The regulations are proposed to apply to tax years that begin on or after the date they are adopted as final.



From REG-109755-19. Certain Medical Care Arrangements:

Executive Order 13877 On June 24, 2019, President Trump issued Executive Order 13877, “Improving Price and Quality Transparency in American Healthcare to Put Patients First” (84 FR 30849 (June 27, 2019)). The Executive Order states that it is the policy of the Federal Government to ensure that patients are engaged with their healthcare decisions and have the information requisite for choosing the healthcare they want and need. In furtherance of that policy, section 6(b) of the Executive Order directs the Secretary of the Treasury, to the extent consistent with law, to “propose regulations to treat expenses related to certain types of arrangements, potentially including direct primary care arrangements and healthcare sharing ministries, as eligible medical expenses under Section 213(d)” of the Code. The proposed regulations have been developed in response to this Executive Order.

Definition of Health Care Sharing Ministry For the purposes of section 213, the proposed regulations define a health care sharing ministry as an organization: (1) which is described in section 501(c)(3) and is exempt from taxation under section 501(a); (2) members of which share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs and without regard to the State in which a member resides or is employed; (3) members of which retain membership even after they develop a medical condition; (4) which (or a predecessor of which) has been in existence at all times since December 31, 1999, and medical expenses of its members have been shared continuously and without interruption since at least December 31, 1999; and (5) which conducts an annual audit which is performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and which is made available to the public upon request. This definition is from section 5000A(d)(2)(B)(ii), which provides that the individual shared responsibility payment (which is zero after December 31, 2018) does not apply to an individual who is a member of a health care sharing ministry. The Treasury Department and the IRS request comments on the definition of a health care sharing ministry.



  • Health Care Sharing Ministry memberships have historically not been considered a medical expense under I.R.C. Section 213.
  • Many smaller Bible colleges and seminaries may have employees participating in HCSMs.
  • When the proposed regulations under Section 1.213-1 become final, HCSM membership payments may be reimbursed from an HRA-type plan.
  • This may be a great time for some institutions to look closer at HRAs, QSEHRAs, and/or ICHRAs.

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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