Broker Seeks Expansion of Healthcare Sharing Ministries Definition

July 14, 2020

CC: PA: LPD: PR (REG-109755-19)
Room 5203
Internal Revenue Service
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

Re: REG-109755-19 — IRS Proposed Rulemaking: Certain Medical Care Arrangements

Dear Sir or Madam,

My name is Bill Clevenger and I am the owner of Insurance Solutions in Tulsa, Oklahoma. I am writing in response to the IRS proposed rule from June 10, 2020, that would allow deductions for medical care arrangements such as direct primary care and health care sharing ministries. My 18 years of professional experience in the insurance industry gives me an experience-based perspective on this issue. I am, therefore, offering my suggestions in response to the IRS's request for public comments: I support the proposed rule but the definition of health care sharing ministries should be revised to ensure that all tax payers are able to benefit.

At Insurance Solutions I work almost exclusively with self-employed business owners. The majority of my clients do not qualify for a subsidy under the Affordable Care Act (ACA). A successful small business owner earns too much to be eligible for the tax benefits built into ACA plans making the plans overly expensive. My professional responsibility is to help each client find an effective solution, but this is exceedingly challenging to accomplish when many plans are priced at $1100 per month. Simply put, traditional health insurance plans are pricing small employers out of the insurance marketplace. As someone who has been a self-employed business owner for 25 years, I can attest to how frustrating and disconcerting this reality is.

In an attempt to find solutions that better fit my clients and myself, I've spent time exploring healthcare sharing ministries. While they are not insurance plans, health care sharing ministries are a legitimate way for employers and individuals to cost-effectively manage health care expenses. HCSMs can be a good fit for many of my clients. And at the end of the fiscal year, offering membership in a health care sharing ministry typically ends up being significantly less expensive for employers than traditional health insurance.

Today, I have a hard time marketing and selling medical cost sharing memberships to my clients for two reasons.

• First, one of my biggest sales tools is reminding self-employed individuals that they are eligible to fully deduct the cost of their insurance premiums for tax purposes. This incentive does not currently exist for contributions to health care sharing ministry memberships. The lack of tax benefits associated with HCSMs typically results in a net cost that is ~30% greater than it would be if a tax benefit were available.

• Second, many health care sharing ministries limit their memberships to members of certain religions or denominations. From an employer's point of view, it is unreasonable to assume that all employees share the same religious beliefs associated with one health care sharing ministry.

The IRS proposed rule excites me because it has the potential to effectively eliminate the two main obstacles I see to employers embracing HCSMs. As it is currently written, the proposed rule offers a tax incentive by allowing membership fees to healthcare sharing ministries to be deducted from an individual's income for tax purposes. This is a step in the right direction — the IRS should definitely embrace new regulations that would enable people to choose the health protection alternative that best meets their needs.

The second obstacle I discussed can be addressed with a simple revision to the proposed rule's definition of a health care sharing ministry. As the rule is currently written, only organizations founded before and continually sharing medical expenses since December 31, 1999 are eligible to be classified as health care sharing ministries for the purpose of tax benefits. This language is arbitrary and restricts eligibility to those ministries that just happen to satisfy the 1999 requirement. Unfortunately, all HCSMs that meet the December 31, 1999 requirement, restrict membership to individuals of a handful of specified religions. Do you really want a tax regulation favoring a few faith-based HCSMs?

Some newer, financially sound, health care sharing ministries do not restrict membership based on religious beliefs and are instead united by ethical beliefs, which the definition otherwise allows; but the proposed rule unfairly excludes them from eligibility for tax benefits. I strongly believe that health care sharing ministries are a valuable tool for individuals and employers to have at their disposal, and a simple amendment to the proposed rule would ensure that people of all faiths or of no religious affiliation will be able to take advantage of the tax benefits offered by this rule change.

In summary, I am asking the IRS to consider the following change to proposed rule:

• Remove the 1999 requirement from the proposed rule's definition of health care sharing ministries interpreting eligible expenses under Section 213(d) of the IRS Code.

Thank you for taking the time to read through my comments. I strongly encourage the IRS to make the revision listed above for the benefit of all tax payers.

Sincerely,

Bill Clevenger
Insurance Solutions