Overview of Healthcare Sharing Ministries

Healthcare sharing ministries (HCSMs) are programs under which groups of people who share a common faith make monthly payments that are used to cover the cost of members' medical care.

This article will explain how health care sharing ministry plans work, how they're regulated, and what consumers need to understand before joining one of these plans.

Some HCSMs instruct members to send their payments directly to other members who have recently incurred medical bills, while others gather members' payments into a pool of money that is then sent out to pay medical bills for members who have claims.

But regardless of which method they use, HCSMs are not health insurance, and they do not provide minimum essential coverage under the Affordable Care Act.

ACA Exemption for HCSMs

Although the IRS assessed a penalty on people who did not have minimum essential coverage between 2014 and 2018, there was an exemption for healthcare sharing ministry members.

The ACA's requirements for penalty exemptions for HCSM members were outlined in Section 1501 of the law. The exemption applied as long as the HCSM had been in existence and continuously sharing members' healthcare costs since at least December 31, 1999. 

There was a requirement that the HCSM continue to include members after they become ill, and must have an annual audit performed by an independent accounting firm. And the members of the HCSM had to "share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs."

But it's important to understand that even when HCSMs complied with these requirements, they were not considered health insurance, and were not required to be compliant with any of the ACA's rules for health insurance plans.

So for example, they didn't have to cover pre-existing conditions or provide coverage for essential health benefits, and they could still impose annual and lifetime benefit caps (all of this continues to be true, even though there is no longer a federal penalty for not having health insurance).

In the majority of the states, healthcare sharing ministries are explicitly exempt from health insurance rules and regulations. And crucially, HCSMs are not under a contractual obligation to pay members' medical claims. They generally make this clear in their enrollment paperwork, but members might not fully understand the lack of a guarantee of coverage until they incur a significant medical expense.

To be clear, HCSMs sometimes provide excellent coverage of large medical claims. But they are not obligated to do so, nor are they subject to oversight and regulation by the state's insurance commissioner.

Many HCSMs are run by small Amish and Mennonite churches and have fewer than 100 members (note that the ACA's religious exemption from the individual mandate—which is different from the HCSM exemption—also applied to Amish and Old Order Mennonite congregants).

But the large majority of HCSM members participate in healthcare sharing via one of the largest HCSMs, run by Samaritan Ministries, Christian Care Ministry (Medi-Share), Christian Healthcare Ministries, and Liberty HealthShare.

HCSMs Are Still Not Minimum Essential Coverage

Now that the ACA's individual mandate penalty has been reduced to $0, there is no longer a need for HCSM members to obtain an exemption from the individual mandate penalty. So there's no longer a need, for example, for HCSMs to have been in operation since 1999.

A newer HCSM can enroll members and function just like any other HCSM—their members would not be eligible for a penalty exemption under the ACA, but that's no longer an issue since there is no longer a federal penalty for being without minimum essential coverage.

(Note that there is still a requirement to maintain health insurance in Washington DC and four states, but all of them grant exemptions for members of health care sharing ministries.)

It's important to understand, however, that the concept of minimum essential coverage continues to be relevant in terms of qualifying for a special enrollment period to purchase ACA-compliant coverage.

Special enrollment periods are granted when a person experiences a qualifying event that allows them to enroll in an ACA-compliant individual/family plan outside of the normal annual enrollment window. But in most cases, the applicant must have had minimum essential coverage prior to the qualifying event in order to trigger a special enrollment period.

In other words, most qualifying events allow for plan changes but don't necessarily allow a person to go from being uninsured to being insured (there are some exceptions where prior minimum essential coverage is not necessary).

If a person is enrolled in a healthcare sharing ministry plan, that does not count as minimum essential coverage. So if they experience one of the qualifying events that require prior coverage in order to trigger a special enrollment period, they would not be able to enroll in an ACA-compliant plan at that point.

For example, if they lose coverage under the healthcare sharing ministry for some reason, it would not trigger a loss-of-coverage special enrollment period, because the coverage that's ending—the healthcare sharing ministry plan—is not considered minimum essential coverage.

In that scenario, the person would have to wait until the annual open enrollment period for ACA-compliant plans (November 1 to January 15 in most states), and the soonest their new coverage could take effect would be January 1 of the coming year.

Membership Has Grown Considerably in Recent Years

Total HCSM membership has grown significantly in the years since the Affordable Care Act was implemented. There were fewer than 200,00 sharing ministry members in 2010, and that had increased to an estimated 1.7 million by 2021.

Several factors account for the growth in HCSM membership, including some Christians' desire to avoid health plans that cover services like contraception and abortion and opt instead for plans that share healthcare costs with fellow Christians in a more Biblical manner.

In addition, HCSM memberships are often less expensive than health insurance premiums, although that varies considerably depending on whether or not the household qualifies for premium subsidies in the health insurance exchanges.

The American Rescue Plan (ARP), enacted in March 2021, has increased the size of premium subsidies in the exchange, and made them more widely available. These subsidy enhancements were initially made available through 2022, but the Inflation Reduction Act (IRA) has extended them through 2025.

As a result of the ARP and IRA, some people who weren't previously eligible for subsidies—and may have chosen a sharing ministry plan due to cost—may find that they're now eligible for subsidies.

What You Need to Know

If you're considering dropping your health insurance in favor of HCSM membership, here's what you need to know:

• HCSMs are not health insurance, and they don't come with guarantees, mandates, and consumer protections that are standard on health insurance plans. In 30 states, the insurance laws and regulations in those states specifically do not apply to HCSMs, and the state insurance department will not be able to intervene on a member's behalf if problems arise.
• However, HCSMs are 501(c)(3) charities, so they are regulated by the Internal Revenue Service and state attorneys general.
• HCMSs require members to utilize any available health benefits before submitting an expense to be considered for sharing. And a significant number of HCMSs state or imply that members must either request that hospitals and medical providers discount or write off a portion of the bill, or request charity care prior to submitting expenses.
• HCSMs do not have to follow ACA regulations. This means they don't have to cover the essential health benefits, they can (and do) still exclude pre-existing conditions, and they can (and do) impose annual and lifetime benefit caps.
• There are concerns that HCSMs could undermine the stability of regular health insurance risk pools. That's because HCSMs tend to attract healthy enrollees since they generally don't cover pre-existing conditions (some do, but usually only after a person has been a member for a specified amount of time). They also require members to shun things like sex outside of marriage, tobacco use, illegal drugs, and alcohol abuse, which further helps to improve the overall health of their membership. But by default, that results in a less-healthy overall risk pool for regular health insurance plans, and ultimately, higher premiums.
• HCSMs can refuse to share claims that result from prohibited behavior. So a person who is unmarried and pregnant would generally be ineligible for maternity benefits, and things like treatment for alcohol or drug abuse wouldn't be shared with other members.
• If you end up needing healthcare that's not covered by your HCSM, or if your bills exceed the sharing caps imposed by your HCSM, you'll have to wait until the next open enrollment period to sign up for an ACA-compliant health plan, unless you have a qualifying event. But as noted above, many qualifying events only trigger a special enrollment period if you already had some type of minimum essential coverage in place—and sharing ministry plans are not minimum essential coverage.
• HCSMs can have PPO networks (members would be responsible for additional charges if they go outside the network), or can share members' costs regardless of what doctors and hospitals are used—it depends on the HCSM. So it's important for members to understand whether they're limited to using certain medical providers.

Summary

Health care sharing ministries allow members to share in each other's medical costs. But they are not health insurance and are generally not subject to health insurance laws, regulations, or oversight. This means sharing ministry plans are not required to cover essential health benefits or pre-existing conditions, and they can cap how much they'll pay for a member's medical care. And it also means that consumers may find that they cannot receive assistance from the state insurance department if they have a problem with their sharing ministry coverage.

Health care sharing ministry plans are generally less expensive than major medical health coverage, for people who aren't eligible for subsidies in the marketplace. But most marketplace enrollees do qualify for subsidies, especially with the American Rescue Plan and Inflation Reduction Act in effect.

A Word from Verywell

The adage about things that sound too good to be true is applicable when it comes to health coverage. If you're not eligible for premium subsidies in the exchange and can't afford to pay full price for an ACA-compliant plan, you might find that a sharing ministry plan is a lot less expensive. But there's a reason for that. There will be more gaps and holes in the coverage, and you won't get the sort of consumer protections that come with real health insurance.

The American Rescue Plan and the Inflation Reduction Act have made subsidies (for ACA-compliant plans purchased in the marketplace/exchange) larger and more widely available. This makes it more important than ever for people to check to see how much they'd have to pay to get real health insurance, before making the decision to buy into a plan that isn't actually health insurance.