Does Medi-Share Qualify for an HSA?
Explore how IRS rules for qualifying health plans affect your ability to contribute to an HSA while using a health care sharing ministry.
Health Savings Accounts (HSAs) and Health Care Sharing Ministries (HCSMs), like Medi-Share, are two alternatives to traditional insurance. An HSA offers a tax-advantaged way to pay for medical expenses, while an HCSM allows members to share healthcare costs. A common question is whether participating in an HCSM makes a person eligible to contribute to an HSA. Understanding the rules governing each is necessary to determine how they interact.
Understanding HSA Eligibility Requirements
A Health Savings Account is a tax-exempt account used to pay for qualified medical expenses. To contribute to an HSA, the Internal Revenue Service requires an individual to be covered by a High-Deductible Health Plan (HDHP). An HDHP is a health insurance plan with specific, inflation-adjusted minimums for the deductible and maximums for out-of-pocket costs.
The IRS defines HDHP parameters annually. For 2025, a plan must have a minimum annual deductible of $1,650 for self-only coverage or $3,300 for family coverage. The plan’s maximum annual out-of-pocket expenses, including deductibles and copayments, cannot exceed $8,300 for self-only coverage or $16,600 for family coverage. A plan that does not meet these financial boundaries is not a qualifying HDHP.
Other factors can also disqualify an individual from contributing to an HSA. A person is ineligible if they are enrolled in Medicare, can be claimed as a dependent on another person’s tax return, or have other non-HDHP health coverage. Permitted coverage like vision or dental are exceptions.
Defining Health Care Sharing Ministries
A Health Care Sharing Ministry is an organization where members, who often share a common set of ethical or religious beliefs, contribute money to share in each other’s medical costs. Medi-Share is a well-known HCSM. Members make monthly payments, or “shares,” which are used to pay the qualifying medical bills of other members.
HCSMs are not health insurance. They are not regulated as insurance companies and are exempt from many requirements of the Affordable Care Act (ACA). This means they are not required to cover pre-existing conditions or guarantee payment for medical services. Members rely on the commitment of other members to share costs, not a contractual guarantee from an insurance underwriter.
To be recognized as an HCSM under federal law, an organization must be a non-profit, have been in continuous operation since December 31, 1999, and be subject to an annual, publicly available audit. These requirements distinguish them from commercial insurance entities.
The IRS Position on HCSMs and HSAs
The Internal Revenue Service position is that participation in an HCSM like Medi-Share does not, on its own, satisfy the requirements for HSA eligibility. This is because an HCSM is not considered a High-Deductible Health Plan under the tax code. Since having qualifying HDHP coverage is the primary prerequisite, HCSM membership alone is insufficient.
The IRS views HCSMs as a form of “health coverage,” but not a type of health insurance that meets the specific structural requirements of an HDHP. The sharing arrangement does not have the defined deductibles and out-of-pocket maximums that characterize an HDHP.
However, HCSM membership does not disqualify someone who has other, separate qualifying coverage. If an individual is covered by a qualifying HDHP and also chooses to be a member of an HCSM, they can still contribute to an HSA. In this scenario, eligibility is derived entirely from the qualifying HDHP, independent of the HCSM participation.
Consequences of Incorrect HSA Contributions
Contributing to an HSA without meeting eligibility requirements results in an “excess contribution.” These contributions are not tax-deductible and are subject to a 6% excise tax on the excess amount. This tax applies for each year the excess funds remain in the account and must be reported on IRS Form 5329 with the individual’s annual tax return.
Beyond the excise tax, the excess funds are also subject to income tax when withdrawn. If an individual withdraws the excess contribution, both the principal amount and any earnings it generated are included in their gross income for the year. This can lead to a higher overall tax liability.