Amends the tax code to classify health care sharing ministry memberships as medical expenses, not insurance, for tax years after 2025.
Mike Kelly
Representative
PA-16
This bill amends the Internal Revenue Code to classify health care sharing ministry memberships as medical expenses, allowing them to be tax deductible. It clarifies that these ministries are not considered health plans or insurance under the tax code. These changes will apply for taxable years beginning after December 31, 2025.
Bill Proposes Tax Deduction for Health Care Sharing Ministry Fees Starting 2026 Tax Year
This bill proposes a change to the U.S. tax code, specifically allowing membership fees and administrative costs for Health Care Sharing Ministries (HCSMs) to be treated as medical expenses. If passed, this would apply to taxable years beginning after December 31, 2025. The core idea is to let individuals potentially deduct these costs under Section 213(d)(1) of the Internal Revenue Code, similar to how other medical expenses are treated.
Your Wallet and Your Well-being: HCSMs as Medical Expenses
So, what does this mean practically? If you're a member of an HCSM and you itemize deductions on your tax return, this bill could allow you to count your monthly share amounts and any administrative fees towards the total medical expenses you claim. Currently, medical expenses are only deductible to the extent they exceed 7.5% of your Adjusted Gross Income (AGI). For example, if your AGI is $60,000, you'd need more than $4,500 in qualified medical expenses before you could deduct the excess. Under this bill, if you paid $5,000 in HCSM fees that year, those fees could help you cross that threshold. Remember, this change wouldn't kick in until you file taxes for the 2026 tax year (in early 2027).
Not Your Typical Insurance: Drawing a Line in the Tax Code
The legislation also makes a point to add a new section (7702C) clarifying that HCSMs are not considered health plans or insurance for tax purposes. This distinction is important. HCSMs operate on a model where members share funds to cover each other's healthcare costs, often with specific guidelines and limitations, and they aren't regulated like traditional insurance under the Affordable Care Act (ACA). This bill recognizes that difference within the tax framework, offering a potential tax benefit for members without classifying the ministries themselves as insurance providers under the tax code. While this could make HCSMs more financially attractive for some taxpayers who itemize, it doesn't change the underlying structure or regulatory status of these ministries.