The Christian Healthcare Ministry Exemption

Posted by Lee Reams Sr. on

Several students have submitted questions related to health care “insurance” obtained from the Christian Healthcare Ministry and the fact that no Form 1095-B or 1095-C has or will be issued.

IRC Sec. 5000A(d)(2) provides religious exemption from the penalty for being insured for members of health care sharing ministries. As defined in that section of the code, a “health care sharing ministry” is a 501(c)(3) organization that is exempt from taxation under section 501(a), and its members:

• Share a common set of ethical or religious beliefs, 

• Share medical expenses among members in accordance with those beliefs and without regard to where a member resides or whether or not he or she is employed, and

• Retain membership even after they develop a medical condition.

Furthermore, the organization or a predecessor must have been in existence at all times since December 31, 1999; medical expenses of its members must have been shared continuously and without interruption since at least December 31, 1999; and an annual audit must be performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and made available to the public upon request.

Christian Healthcare Ministry applied for and was granted an exemption in a letter issued January 14, 2014, from the Department of Health and Human Services (HHS) under 5000A. However, the letter also stated that although HHS was granting the exemption, it did not reflect any decision by the IRS as to Christian Healthcare Ministry’s compliance with the Internal Revenue Code. So while they are technically not covered by health care insurance, participants in this health care cost-sharing program are eligible for exemption from the shared responsibility penalty.

For the penalty exception, use Code D in Part III of the Form 8965 for any month that the taxpayer and any member of the taxpayer’s household were members of the Christian Healthcare Ministry’s health care cost-sharing program. Enter the code in column (c), and identify the months to which the coverage exemption applies. For a full year, check Column (e). If not a full year, check the months covered in columns (d) through (p) (Form 8965 (2015) instructions, page 12). Part I and II of the 8965 would generally be left blank.