October 31, 2014

Health Insurance Marketplace - Exempt Based upon Membership in Health Care Sharing Ministry

Question:

According to HealthCare.gov, some individuals who don't have a qualified health insurance plan may be exempt from making the individual shared responsibility payment. I was reading the list of exemptions, and one of them stated an exemption for a member of a recognized health care sharing ministry.

What is a recognized health care sharing ministry? And what do I have to do in order to qualify for the exemption?

Answer:

A few days ago, we gave an overview of all the exemptions from the fee for not having health coverage. One of the exemptions we mentioned was based upon being a member of a recognized health care sharing ministry.

According to HealthCare.gov, a health care sharing ministry is "an organization whose members share a common set of ethical and religious beliefs and share medical expenses among themselves in accordance with these beliefs." The most common health care sharing ministries are Samaritan Ministries and Christian Healthcare Ministries.

H.R. 3590: U.S. Patient Protection and Affordable Care Act [26 U.S.C. 5000A(d)(2)(B)(ii); p. 128] details the federal definition of a recognized health care sharing ministry. Below is a summary of the characteristics that qualify a health care sharing ministry as being recognized by the federal government:
  • Must be a 501(c)(3) organization
  • Members must share common ethical or religious beliefs
  • Must not discriminate membership based on state of residence or employment
  • Members cannot lose membership due to development of a medical condition
  • Must have existed and been in practice continually since December 31, 1999
  • Must be subject to an annual audit by an independent CPA which must be publicly available upon request 
In order to qualify for this exemption, you have two options:
  1. You can claim this exemption when you fill out your 2014 federal tax return which is due in April 2015.
     

  2. You can follow the instructions on this application form and submit it to the Marketplace (same as HealthCare.gov). The instructions note that after the application form is submitted, you should hear back within 1-2 weeks concerning whether or not you have been granted the exemption. If you get an exemption from the Marketplace, you must keep the letter that the Marketplace sends you with your exemption certificate number (ECN). You will need the ECN when filing your personal federal taxes. 

2 comments:

  1. Is it legal to use a section 125 plan to pay the monthly 'premiums' of a health care sharing ministry?

    ReplyDelete
  2. Good question! Health reimbursement arrangements (HRAs) or Sec. 125 cafeteria plan deferrals cannot be used to reimburse individuals for share payments because they are not medical expenses as defined under Sec. 213; however, they can be used to pay medical expenses paid directly by the taxpayer, such as co-pays, prescriptions, and preventive care as permitted by Sec. 213.

    The one exception is for Missouri residents. Only Missouri allows a deduction for the share amount in determining state income tax.

    ReplyDelete