Can I claim medical expenses if they were reimbursed by a health care sharing ministry?

[firekayak]

I do not have insurance but am a member of a health care sharing ministry. Can I claim medical expenses if they were reimbursed by the health care sharing ministry (not insurance)?

[JulieH1]

Did the ministry pay directly to the provider (hospital. doctor, etc) or pay you back after you paid the provider?

[firekayak]

I paid the medical bills out of pocket and the ministry paid me back (as long as 120 days after submitting the bills).

[Firefly]

firekayak, see my answer below. Did you decide to deduct the medical expenses?

[boykev]

Is there any update on this? I understand that CHM is not considered insurance so it seems to be kind of a gray area.

[JulieH1]

 Your situation is somewhat of a "hot topic" in tax law.

Several years ago, the answer to your question would be a "no" that you cannot deduct something that you did not pay or for which you were reimbursed later.

However, now the answer is a "maybe."

There was a ruling in the Judith Lang case that allowed  Ms. Lang to deduct expenses because the amount she received to pay the medical bills was a "gift" ( http://www.ustaxcourt.gov/inophistoric/la5ng.tcm.wpd.pdf ) 

Ms. Lang's mother paid her medical expenses and real estate taxes. Ms. Lang was not a minor. The Tax Court ruled that in effect the amount was a gift to the daughter, and deductible by the daughter as if she had paid it herself.

A key point in the case was “petitioner [Judith Lang] was not a minor, and Mrs. Field [Judith Lang’s mother] was not legally obligated to pay petitioner’s expenses.”  If Mrs. Field was obligated to pay the expenses, then her daughter may not have been able to deduct them, as they wouldn’t have been a gift. 

Like your situation, you are not a minor (I assume) and the organization had no obligation to pay on your behalf.

Unlike your situation, the mother, in that case, paid directly to the hospital which your organization did not.  

Would the IRS and tax court see your situation the same?  No one can be sure, so if you deduct the expenses and get audited then you would have to try to make the comparisons between your case and that one that the money from the charity was a gift. Then you may need to pay taxes on the gift which is a whole different issue.

[gregandjane]

Additionally, the monthly share amounts are not deductible as health insurance nor as charitable contributions.

[Firefly]

You would not owe taxes on the gift; gifts are not taxable to the recipient. The person giving the gift would need to pay taxes on amounts greater then $14,000 given to one individual. So gift tax would not come into the equation in this instance since the gifts are from multiple members of the health sharing ministry, no one member giving over $14,000 to another member.
This is how I look at it: The monthly share amount is not deductible as health insurance nor is it deductible as charitable giving since you are not giving it to a charity. So no one has deducted the amounts given. So that leaves the recipient of the share to be able to deduct the medical expenses he pays on his sch. A as medical expenses.

[JackieG8]

I'm just wanting an updated answer for 2023 taxes. Thanks

I have both reimbursed medical expenses and non-reimbursed medical expenses from my Health Sharing Ministry. Can I claim all of them?

I do pay for dental, vision and medical accident insurance. Can all of these premiums be deducted as well?

[DoninGA]

@JackieG8 You cannot enter a reimbursed expense as an itemized medical expense deduction.  Dental and Vision premiums paid are deductible.  Accident insurance premiums are not deductible.

Health care insurance premiums, including dental and vision insurance premiums, and other medical expenses that you paid with out of pocket funds and were not reimbursed are an eligible medical expense that you can deduct using Schedule A for itemized deductions. However, only your total medical expenses that are greater than 7.5% of your Adjusted Gross Income (AGI) can be deducted. Your total itemized deductions reported on Form 1040 Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

Standard deductions for 2023

Single - $13,850 add $1,850 if age 65 or older
Married Filing Separately - $13,850 add $1,500 if age 65 or older
Married Filing Jointly - $27,700 add $1,500 for each spouse age 65 or older
Head of Household - $20,800 add $1,850 if age 65 or older

[Opus 17]

@DoninGA Health sharing ministries may not be classified as "insurance."

[DoninGA]

@Opus 17 Thanks...

[Opus 17]

The answer is unclear, and you may want to speak to a tax professional who specializes in church and related issues.

Briefly, under current regulations, a health sharing ministry does not count as "insurance" and payments to HSMs are not deductible medical insurance premiums.   The IRS proposed a rule in 2020 that would allow HSMs to be classified as "insurance" but they have not moved to finalize or implement the rule (possibly because the rule was promoted by the former president, not the current president).

https://www.irs.gov/newsroom/proposed-regulations-address-direct-primary-care-arrangements-and-healt...

https://www.federalregister.gov/documents/2020/06/10/2020-12213/certain-medical-care-arrangements

Therefore, if the HSM is not insurance, are reimbursements for medical care considered insurance payouts or not?  That's complicated and I don't know the answer.  I have an analogy that suggests an answer, but I am not an attorney.

If you buy disability insurance with after-tax dollars, any disability income paid after an accident is not taxable, because the money you used to pay the premiums was already taxed.  However, if you pay for the insurance with pre-tax payroll deduction or your employer pays the premiums tax-free, the disability income is taxable, because you never paid tax on that money before.

By implication, since premiums to an HSM are not tax-deductible, the reimbursement might not follow the usual rules. Maybe you can deduct your medical expenses even though they were reimbursed, because you paid tax on the money you used to pay the premiums.  

Or, if the HSM is not insurance, is it a gift from the HSM?  And if it's a gift, then you can still deduct the expenses, because money is fungible and gifts are not taxable to you.  If you paid for medical care, and you get a gift of money, there's no way to say that the exact gift dollars were used for expenses, rather than the gift dollars were used for groceries and you used you own money for the medical expenses (this is what "fungible" means, more or less.)

So I think the answer is unclear.  You could take a chance, or be cautious and not deduct the expenses, or seek out professional assistance.