Health Care Sharing Ministry (HCSM)

A health care sharing ministry is a nonprofit organization whose members contribute money each month and share one another's medical expenses in accordance with a common set of religious or ethical beliefs. The term is defined in federal tax law at IRC 5000A(d)(2)(B)(ii), which requires the organization to be a tax-exempt charity under section 501(c)(3), to have members who share a common set of ethical or religious beliefs and share medical expenses among themselves "without regard to the State in which a member resides or is employed", to let members keep membership "even after they develop a medical condition", to have existed, and to have shared members' medical expenses continuously and without interruption, since December 31, 1999, and to conduct an annual independent audit made available to the public on request. The definition tells you what the organization must be. It says nothing about what the organization must pay.

The central fact is a negative, and the regulators state it plainly. The National Association of Insurance Commissioners writes that health care sharing ministries "are not insurance and can't guarantee the payment of claims; i.e., while they may share funds with members who have health needs, they are not legally required to do so", and that "[s]tate insurance regulators don't supervise HCSMs." Its 2026 shopping guidance repeats the point alongside discount plans and risk-sharing plans, saying all three "are not insurance and are not regulated by consumer protection laws." An insurance policy is a contract enforceable against a licensed, solvency-regulated company, backed in most lines by a state guaranty association and policed by a department of insurance. A sharing arrangement is a set of published guidelines and a membership, and when a submitted expense is not shared the recourse is not a regulator.

The 1999 condition is the most consequential clause in the definition, and it is easy to read past. IRC 5000A(d)(2)(B)(ii)(IV) requires an organization "which (or a predecessor of which) has been in existence at all times since December 31, 1999" and whose members' medical expenses "have been shared continuously and without interruption since at least December 31, 1999." That is a closed grandfather. No organization founded after 1999 can ever meet it, however it is structured, so an entity marketing itself as a health care sharing ministry is not necessarily one within the meaning of the statute. It is a checkable question, since the date is fixed and an organization's founding is a matter of record.

The exemption the definition supports is currently worth nothing federally. The statutory definition sits inside IRC 5000A, the individual shared responsibility provision, and its effect is that a member of a health care sharing ministry is not an applicable individual for the month. But IRC 5000A(c)(3)(A) now provides that "the applicable dollar amount is $0", so the payment the exemption exempts from is zero for everyone. That does not make the definition irrelevant, because it remains the federal government's only statement of what a health care sharing ministry is, but it does mean the tax exemption is not a reason to join one today.

The absence of a network is a cost, not a detail. The National Association of Insurance Commissioners notes that these organizations "usually don't have provider networks, so members may be charged full price by doctors and hospitals, rather than the lower negotiated rates charged to consumers who have insurance coverage." That matters more than most comparisons of monthly amounts suggest. A network contract does two things for a patient: it fixes the price at a negotiated rate well below list charges, and it bars the provider from billing the difference. A member without one is exposed to the list price on every bill before any sharing question is even reached.

What else does not apply. The Affordable Care Act's protections do not reach these organizations either. The same source records that they "do not have to comply with the consumer protections of the federal Affordable Care Act (ACA), like covering treatments for pre-existing conditions or capping out-of-pocket costs." Membership guidelines commonly limit or exclude sharing for pre-existing conditions, impose waiting periods, cap amounts per condition or per year, and condition membership on lifestyle commitments. None of that is hidden, because the guidelines are published; the point is that guidelines are not a policy, and they can be revised by the organization.

The state picture is not uniform, and the available figure is dated. In December 2023, the National Association of Insurance Commissioners reported that there were then 30 states whose law explicitly exempted these organizations from insurance regulation, with the remaining 20 states and the District of Columbia containing no explicit exemption. That is a snapshot from that date rather than a current count, and anyone relying on it should confirm the position with their own state department of insurance, which is also the body that would field a complaint about a sharing arrangement operating as unlicensed insurance.

How to think about one honestly. The comparison people run is the monthly amount against a premium, and that comparison omits the two things that decide outcomes: whether the organization is obliged to pay, and what price the bill arrives at. Neither favors sharing. That does not make membership irrational for someone who values the religious community and understands the exposure. It does mean the arrangement should be understood as a mutual-aid commitment among people with shared convictions rather than as inexpensive insurance.

1. You join and agree to the guidelines, which usually include a statement of faith or a lifestyle commitment as well as the sharing rules.

2. You send a monthly amount, sometimes called a share, which is not a premium and is not held in a regulated reserve against your future claims.

3. You receive care and are billed. Without a provider network you are generally billed at the provider's own prices rather than at a negotiated rate.

4. You submit the expense for sharing, subject to the guidelines: an amount you bear yourself, any waiting period, any limit per condition or per year, and any exclusion for a pre-existing condition.

5. The organization may share the expense. It is not legally required to, there is no insurance regulator behind the decision, and no guaranty association stands behind the organization.

A hypothetical. Suppose a hospital's list charge for an admission is $40,000, and an insurer's negotiated rate for the identical care would have been $18,000. Under a health plan with a $3,000 deductible and 20% coinsurance, the member pays the $3,000 plus 20% of the remaining $15,000, which is $3,000, for a total of $6,000, and the negotiated rate also bars the hospital from billing the $22,000 difference. Under a sharing arrangement whose published guidelines ask the member to bear the first $1,000 and then share 90% of the rest, the same admission is measured against the $40,000 list charge: the member bears $1,000 plus 10% of $39,000, which is $3,900, for a total of $4,900, and there is no contractual obligation on anyone to send the other $35,100. The dollar figures are illustrative. The structural points are that the bill starts higher without a network and that the favorable-looking arithmetic depends entirely on a payment nobody is required to make.

Pros

• Monthly amounts are often lower than an unsubsidized premium for comparable medical coverage.
• Membership can be joined at any time of year rather than only during open enrollment or a special enrollment period.
• The guidelines are published, so what the organization says it will and will not share is readable before joining.
• For members who value it, the arrangement is an expression of a shared religious commitment as well as a way of paying for care.

Cons

• It is not insurance, and state insurance regulators say the organization is not legally required to pay anything.
• No state insurance department supervises these organizations, and no guaranty association stands behind them, so there is no regulator to appeal to.
• Without a provider network, bills generally arrive at list prices rather than negotiated rates, and there is no contractual bar on billing the difference.
• The Affordable Care Act's protections do not apply, so pre-existing conditions can be excluded and nothing caps what a member ends up paying.
• It is not minimum essential coverage, so it satisfies no coverage requirement and leaving it does not open a Marketplace special enrollment period.