Federal Tax Considerations

The following summary is provided for informational purposes only and should not be construed as legal, tax, or financial advice.


A Cost-Sharing Alternative to Insurance Under the ACA

Christian Healthcare Ministries (CHM) qualifies as a religious exemption under the U.S. Patient Protection and Affordable Care Act (the ACA, also known as “Obamacare”). With over 40 years of serving ministry members, CHM is a faith-based, voluntary healthcare sharing ministry (HCSM) that includes hundreds of thousands of CHM members across all fifty (50) states.

As of tax year 2019, The U.S. Tax Cuts and Jobs Act removed the individual mandate penalty for people who don’t have insurance or who can claim a qualifying exemption from health insurance coverage, including through a qualified alternative such as CHM membership, for the applicable tax year. Therefore, the Form 8965 should no longer be required as an attachment to your Federal Form 1040, according to IRS regulations. However, members who are part of a group may still receive a Form 1095-C from their employers. See below regarding states’ “Proof of coverage requirements“.

Monthly Contributions and Federal Tax Exemption

Cost-sharing ministry members generally cannot make new Health Savings Account contributions because a HCSM is not health insurance and does not meet the IRS definition of a high-deductible health plan; however, in some circumstances, CHM members may be able to utilize limited-purpose Flexible Spending Accounts or Health Reimbursement Accounts, but should consult with their employer and a tax or accounting professional to see what options are available, including under state law.

Giving Beyond Standard Contributions

Members who contribute to CHM Give or donate above their monthly contribution may claim these donations as charitable tax deductions. Donations are credited to the year in which they’re received by CHM. However, any contributions made in December but not arriving or posted with CHM until January are credited to the new calendar year. Members can use the Member Portal to make donations, while non-members can donate here.

NOTE: In 2024, CHM members gave more than $2.5 million in charitable donations to CHM Give which is used for a range of member medical bill sharing incurred by CHM members. Those who make these charitable donations (whether members or non-members) will receive a statement acknowledging their total prior annual contributions for tax-filing purposes.

State tax deductions

These states currently allow resident members to utilize a state tax deduction for the total annual contributions made to CHM. Members in these states will receive a letter listing their contributions for that deduction and including any additional charitable donations. A summary of each state’s allowed deduction and related forms are listed here:

Indiana

As an Indiana resident, you may claim a deduction equal to the total amount of your CHM qualified membership fees for the taxable year. Applicable forms include: Schedule 2 and Schedule C

Missouri

An individual resident may subtract the Missouri taxable income amount from their adjusted gross income, which was paid during the tax year for CHM membership (as defined for sharing ministries in § 376.1750) and shall only be deductible to the extent that such amount is not deducted on the federal income tax return for that year. Applicable forms include can be found here.

Montana

Montana residents can contribute to a Medical Savings Account (MSA) and exclude from Montana taxable income up to $4,600 per tax year (amount is subject to change based on the applicable tax year). A list of eligible medical expenses is available in IRS Publication 502, Medical and Dental Expenses, and for the state, includes CHM monthly contribution payments. Learn more: Montana Medical Care Savings Account – MontGuide and Montana Medical Care Savings Account (MSA) Log

Proof of coverage requirements

CHM members do not need to report CHM membership on their federal taxes for the applicable tax year in relation to healthcare coverage but may need to do so under certain states’ requirements.

The following states require all eligible residents to declare annual proof of health insurance coverage on state taxes, which may be called “Minimum Essential or Creditable Coverage”. Please refer to your state’s applicable tax authority resources and consult your tax or accounting professional for additional information, help with preparing required documentation, and properly reporting CHM as a qualified exemption to health insurance coverage.

  • California
  • District of Columbia
  • Massachusetts
  • New Jersey
  • Rhode Island
  • Vermont

In addition, members who are part of a group may still receive a Form 1095-C from their employers. Members of such groups should contact their group administrator with questions and consult their tax attorney and/or certified professional accountant with any questions they may have and for assistance with tax filing preparation.

For more on your specific state’s mandates, click here.

NOTICE: The above information is not provided as legal, tax, or financial advice and is for informational purposes only. Please contact your legal, tax, and/or financial professional to determine how these laws and regulations may affect you. Please note that the federal government and states have varying tax laws and regulations which are subject to periodic changes. Refer to any current information provided by the applicable federal or state agency for additional information regarding current or updated forms, requirements, and instructions related to your tax filings. CHM will periodically monitor pending changes in state laws and update this page, from time to time.

Frequently Asked Questions:

How does the ACA define healthcare sharing ministries?

Healthcare Sharing Ministries” (HCSMs), also often referred to as “health cost sharing ministries, are defined in the ACA at 26 U.S.C. §5000A(d)(2)(B)(ii) as a non-profit religious organization whose members share a common set of ethical or religious beliefs and share medical expenses among those members in accordance with those beliefs.

Only HCSMs which have existed since December 31, 1999, have continuously shared medical expenses of its members without interruption, and conduct an annual audit performed by an independent certified public accounting firm (made available upon request) receive a religious exemption.

In addition to being a religious-exempt health cost-sharing option under the ACA, what else makes CHM stand out?

In addition to operating under shared Christian values and ethical guidelines, CHM:

  • has over 40 years of compassionate and faithful service to members
  • doesn’t reject new members if they have one or more health conditions
  • doesn’t increase rates on members who have a costly health condition or medical care
  • doesn’t “cancel” anyone’s membership because of a costly health condition
  • has programs to help members with certain costs for pre-existing conditions
  • has an optional catastrophic illness cost sharing program that assists members with healthcare costs over $125,000
  •  emphasizes the importance of members seeing providers of choice, including in other states for greater flexibility in options
  •  does not limit provider options to “networks”
Is a “healthcare sharing ministry” the same as a “health cost sharing ministry?”

Yes, the terms refer to the same concept. CHM uses ‘health cost sharing ministry’ because it more clearly conveys our purpose and function for sharing health costs.

What is CHM doing to encourage federal recognition of members’ monthly contributions for increased financial and healthcare expense freedom under the tax code?

CHM eagerly awaits further action from state legislators, members of U.S. Congress, and the IRS to recognize members’ sharing ministry contributions for increased financial and healthcare expense freedom under the tax code. If you are interested in sharing your member experience or supporting legislative efforts related to health cost sharing, we encourage you to connect with us: info@chministries.org