Health Reimbursement Arrangements (HRAs) offer non-profits, faith-based organizations, and churches a dynamic health benefits tool to recruit and retain key employees. This article looks at how organizations can use Health Reimbursement Arrangements with health care ministry sharing programs, commonly referred to as medishare or medi-share programs.
What are Health Care Ministry Sharing Programs?
By definition, a health care sharing ministry is a non-profit organization that facilitates sharing of health care costs between individual members.
There are several faith-based organizations who offer these types of health care sharing ministries, and all programs are set up differently. However, the basic concept is that members donate a monthly amount, and then are able to apply for a grant (or access "shares") when a medical expense is incurred. There is often a threshold to apply for assistance (for example, a medical expense must be more than $300 to apply for assistance).
Individuals that belong to a health sharing ministry are exempt from the individual responsibility requirements of the Patient Protection and Affordable Care Act (PPACA) in 2014. In other words, if an individual belongs to a health sharing ministry, they are not subject to the "individual mandate." According to the federal definition outlined in the PPACA, a health care ministry program:
Must be a 501(c)(3) organization
Members must share common ethical or religious beliefs
Must not discriminate membership based on state of residence or employment
Members cannot lose membership due to development of a medical condition
Must have existed and been in practice continually since December 31, 1999 (a grandfather clause)
Must be subject to an annual audit by an independent CPA which must be publicly available upon request
Can an HRA Reimburse Health Care Ministry Membership Donations?
No. Health Reimbursement Arrangement funds cannot reimburse employees for their membership fees/donations to a health care savings ministry program. Why?
IRC Section 213 governs which types of expenses and health insurance premiums can be reimbursed through a Health Reimbursement Arrangement.
IRC Section 213 specifies in "(D) for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B (b))."
Health care ministry programs are not offered by an insurance company, and the benefit is not insurance. Therefore, the membership fees/donations are not reimbursable through a Health Reimbursement Arrangement according to IRS guidelines. However, there is a way these medi-sharing programs and HRAs work well together (read on...).
How HRAs Can Work with Health Care Ministry Programs
Even though Health Reimbursement Arrangements are not allowed to reimburse employees for the Health Care Ministry membership donations, many organizations pair a Health Reimbursement Arrangement with a Health Care Ministry Program.
For example, an organization could design the Health Reimbursement Arrangement to reimburse employees for expenses up until the Health Care Ministry threshold. If the Health Care Ministry threshold was $1,000, the organization could use the Health Reimbursement to cover employees for first dollar coverage, up to their first $1,000 annually. After the HRA allowance of $1,000 was met, the employee could apply for assistance with the Health Care Ministry Program.
Or, an organization could design their Health Reimbursement Arrangement to reimburse types of medical expenses the health care ministry does not cover, such as smaller medical expenses like co-pays, prescriptions, and preventative care.