Does Medi-Share Count as Insurance for Taxes?

Health care sharing ministries like Medi-Share have emerged as a popular alternative to traditional health insurance. These organizations are non-profits where members, who often share common religious or ethical beliefs, contribute monthly payments to a collective fund. This fund is then used to pay for the eligible medical bills of other members. This model of mutual aid raises important questions for members regarding their federal and state tax filings.

Tax Deductibility of Monthly Payments

A primary question for members is whether their monthly contributions, or “shares,” can be deducted like health insurance premiums. These payments are not considered a deductible medical expense. The Internal Revenue Service (IRS) does not classify health care sharing ministries as medical insurance because they are not licensed or regulated as insurance companies. They operate as 501(c)(3) non-profits, and contributions are viewed as voluntary payments to a shared pool.

Because these funds may be used for another member’s expenses, they cannot be treated as a direct payment for one’s own coverage. Consequently, these amounts cannot be claimed on Schedule A (Form 1040) as a medical insurance premium or as a charitable donation.

For small business owners who contribute to an employee’s Medi-Share payments, the tax treatment is different. An employer can deduct their contributions as a business expense related to employee benefits. However, this does not change the fact that the payments remain non-deductible on the employee’s personal tax return.

Applying the Medical Expense Deduction

While monthly share payments are not deductible, members may still be able to deduct certain medical costs through the medical expense deduction. This is available to taxpayers who itemize on Schedule A of their Form 1040 and allows for the deduction of qualified medical expenses not reimbursed by any source, including a health sharing ministry. To qualify, a taxpayer’s total unreimbursed medical expenses must exceed 7.5% of their Adjusted Gross Income (AGI).

For a ministry member, qualifying expenses can include payments toward their “Annual Household Portion” (AHP), which is the amount paid before sharing begins. It also includes payments for medical services that are not eligible for sharing under the ministry’s guidelines. According to IRS Publication 502, deductible medical expenses include costs for diagnosing, treating, or preventing disease, such as doctor visits, hospital stays, and prescriptions. Members must keep records of all medical payments not covered by the ministry to determine if they meet the AGI threshold.

Health Care Sharing Ministries and the ACA

The Affordable Care Act (ACA) requires most Americans to have Minimum Essential Coverage (MEC). Membership in a health care sharing ministry does not count as MEC. The ACA initially included an individual mandate that required people to maintain MEC or pay a penalty. However, the law also provided a specific exemption for members of recognized health care sharing ministries that were in continuous operation since December 31, 1999, meaning they were not subject to this penalty.

The Tax Cuts and Jobs Act of 2017 reduced the federal penalty for not having MEC to $0, starting in 2019. While the legal requirement to have MEC still exists, there is no longer a federal financial penalty for non-compliance. This change makes the federal exemption less impactful than in previous years, but the classification of these ministries as non-MEC remains.

State-Level Health Insurance Mandates

The elimination of the federal penalty has led several states and the District of Columbia to create their own individual mandates. These jurisdictions require residents to maintain qualifying health coverage or pay a penalty on their state tax returns. As of 2025, this includes:

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

The federal exemption for health sharing ministries does not automatically apply at the state level. Each state has its own rules for what constitutes qualifying coverage, and penalties for non-compliance also differ by state. For example, some states may require residents to have coverage that meets all the standards of their state’s health insurance marketplace, which a sharing ministry plan would not. Residents of these states should consult their state’s tax or health authority to determine if their ministry membership is recognized for the purpose of avoiding a state tax penalty.

Compatibility with Health Savings Accounts

A Health Savings Account (HSA) is a tax-advantaged account for medical expenses, but contributing to one requires coverage under a qualified High-Deductible Health Plan (HDHP). An HDHP is a specific type of health insurance plan that meets certain IRS criteria. Because membership in a health care sharing ministry is not considered a health insurance plan, it does not qualify as an HDHP. This makes members ineligible to open or make new contributions to an HSA, preventing them from using its triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.

If an individual already has an HSA from a time when they were covered by a qualified HDHP, they can still use the existing funds to pay for medical expenses. However, they cannot make new contributions to the account while their only coverage is through a health sharing ministry.