Under the Affordable Care Act (ACA), members belonging to a certain number of organizations known as Health Care Sharing Ministries – sometimes called Christian Health Plans or Christian Ministries Plan were granted an exemption from the personal tax penalty (up to 2.5% of one’s household income in 2016 and beyond) for not having a qualified plan under the Act. The basic concept behind these plans is to have those who meet certain membership qualifications (attend church regularly, do not smoke or drink, etc.), co-op and share in the costs of the other participants medical expenses. Sometimes this is accomplished by a level monthly contribution to the sponsoring organization, other times you are asked to write a check directly to another member to cover their medical expenses.
While originally targeting individuals, these plans have gained some momentum as a substitute to an employer sponsored group medical plan. However, these programs are not insurance and rely totally on the trust and goodwill of the other members in the co-op. Should there be an economic downturn or any number of other reasons where a substantial number of members leave the plan, there is tremendous potential that claims may be unpaid as promised.
The following paper primarily focuses on the dangers and potential legal pitfalls an employer and an individual employee should consider before using a Christian Ministries Plan as a replacement for their group health insurance.