An IRS approved exception to the penalty.
Todd's Tax Service LLC
Health Care Sharing Ministries are an alternative to traditional health insurance that may provide an option with regard to how to pay for healthcare costs.
Taxpayers who participate in a bonafide Health Care Sharing Ministry, may claim an exemption from the "shared responsibility payment" (or penalty). Note: With the startling rise in premiums, the unaffordability exception (premiums more than 8% of income) may already take care of that issue.
Members of a health care sharing program agree to pool their money and pay each other's medical bills (usually through an intermediary or third party). The intermediary may charge
an annual fee for administration and also take a fee from contributions to pay for administrative overhead. These have been around for a long time (they are not new). In fact, the health care ministry must have been in existence prior to Dec 31 1999 in order to be grandfathered in as part of the ACA exception discussed above.
Here are some of the ministries currently operating:
Christian Care Ministry's Medi-Share program
Christian Healthcare Ministries Inc
Todd's Tax Service LLC does not advocate participation in these organizations. Nor have we researched the merits of such participation. This information is presented in view of the fact that traditional health insurance has become unaffordable for many families and the health care sharing programs may be an option for some folks who otherwise might be without any coverage for whatever reason.
Payments to a healthcare sharing ministry do not qualify as health insurance premiums for tax purposes are not deductible as such. Payments may qualify as out of pocket medical expenses since the money goes toward medical bills*. (*subject to further research).
And it is worth noting that the entire health care system is under review in Washington and we don't know yet what changes are coming.