Are Medi-Share Premiums Tax Deductible?

Health care sharing ministries (HCSMs), such as Medi-Share, are organizations where members with common ethical or religious beliefs contribute monthly amounts to a shared fund. These contributions are then used to pay for the qualifying medical bills of other members. A frequent question for participants is whether their monthly financial commitments can be treated as a tax-deductible expense.

The IRS Definition of Medical Insurance

To understand the tax treatment of health-related payments, one must look to the Internal Revenue Service’s definition of medical insurance. For a premium to be deductible, it must be paid for a contract that qualifies as medical insurance. According to IRS Publication 502, this definition is rooted in the concept of risk-shifting, where the financial risk of a potential loss is transferred from an individual to an insurance company.

An insurance contract involves a legal obligation for the insurer to pay for covered events in exchange for a premium, creating a binding agreement. The payment must be for “insurance” in the traditional sense, involving a policy that legally binds the provider to cover expenses. This distinction is important because the tax code allows for the deduction of payments for “insurance covering medical care,” as defined under section 213 of the Internal Revenue Code. The arrangement must function as a formal insurance plan.

Tax Treatment of Health Care Sharing Ministry Payments

Monthly payments made to health care sharing ministries like Medi-Share are not tax-deductible as medical insurance premiums. This is because these arrangements do not meet the IRS’s definition of “medical insurance,” as HCSMs are not contractually obligated to pay members’ medical bills. The IRS has clarified that HCSMs do not involve the risk-shifting that characterizes a formal insurance contract.

Instead of a guaranteed payment, the ministry facilitates the sharing of medical costs among its members. The monthly payments, often called “shares,” are considered voluntary contributions to a collective fund with no legal transfer of risk from the individual to the organization. Because membership is not a formal insurance policy, the share payments do not qualify as deductible premiums.

These payments are also not considered charitable contributions, even if the ministry is a non-profit organization. This is because the member anticipates receiving a direct benefit in return, which is the potential for their own medical bills to be shared.

Deducting Direct Medical Expenses

While monthly share payments to a health care sharing ministry are not deductible, members may be able to deduct certain direct medical costs they pay out-of-pocket. These are expenses not covered or reimbursed by the sharing ministry, such as costs applied toward a member’s “annual unshared amount” or for services ineligible for sharing under the ministry’s guidelines.

To deduct these direct payments, a taxpayer must meet two requirements set by the IRS. First, the taxpayer must itemize their deductions on Schedule A of Form 1040, rather than taking the standard deduction. For many, the standard deduction is higher than their total itemized deductions, which makes itemizing less advantageous.

Second, the total of all qualifying medical expenses must exceed 7.5% of the taxpayer’s Adjusted Gross Income (AGI). Only the amount of expenses that surpasses this AGI threshold is deductible. For example, if a taxpayer has an AGI of $60,000, the threshold is $4,500. If they paid $6,000 in qualifying, unreimbursed medical expenses, they could deduct $1,500 on their Schedule A.

Health Savings Accounts and Sharing Ministries

Health Savings Accounts (HSAs) are tax-advantaged savings accounts that allow individuals to set aside money for medical expenses. However, contributing to an HSA has strict eligibility requirements, the primary one being that an individual must be covered by a qualifying High-Deductible Health Plan (HDHP). The IRS defines an HDHP with specific criteria regarding minimum deductibles and maximum out-of-pocket limits.

For 2025, a qualifying HDHP must have a minimum deductible of $1,650 for self-only coverage and $3,300 for family coverage. Health care sharing ministries are not insurance plans and therefore do not meet the statutory definition of an HDHP. Because HCSM membership is not a qualifying HDHP, being a member of a ministry like Medi-Share does not, by itself, make an individual eligible to contribute to an HSA. An individual must be separately enrolled in a qualifying HDHP.