Company Opposes Restriction for Healthcare Sharing Ministries

July 13, 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 Madam or Sir,

As an insurance agent specializing in group medical benefits, I am writing in response to the recent IRS notice of proposed rulemaking regarding the treatment of certain medical care arrangements under Section 213 of the IRS code. I generally applaud the proposed rule but feel that it is very short-sighted to restrict section 213(d) to only include those health care sharing ministries founded before December 31, 1999.

I am a principal at Heritage Risk Management Group, an insurance agency with offices in Amarillo, Lubbock, and Synder, Texas with over 90 employees. Over the past 11 years, I have carefully helped employers navigate the complexities and significant cost increases associated with offering their employees group health insurance plans. Since I started working in the industry, deductibles have increased and underwriting procedures changed. As a result, many employers have been priced out of the insurance marketplace.

Medical cost sharing quickly became a viable option for employers who wanted to provide health care to their employees. Participating in these organizations has saved my clients hundreds of thousands of dollars per year. All of the employers I know who participate in health care sharing ministries praise the alternative that these memberships provide.

Given my position in the industry, I have been able to see the pros and cons of a variety of health care delivery mechanisms. While it is not insurance, healthcare sharing has continued to be a legitimate way for employers to pay for health care expenses. Health care sharing ministries deserve the same recognition and tax treatment because they offer a legitimate option for individuals and employers trying to navigate our broken health care system. Insurance companies focus on their bottom lines, but HCSMs focus on community and can address many of the problems that the average person or family experiences. At the end of the day, community-based, peer-to-peer sharing aligns fiduciary incentives more effectively than an entrenched, publicly traded insurance carrier will ever be able to.

While I support the proposed rule generally, I believe the definition of “health care sharing ministries” is short-sighted because it would restrict the effectiveness of the health care sharing marketplace. Specifically, choosing to only include organizations founded before December 31, 1999 in the definition of health care sharing ministries (found in Section 213(d)) is problematic for two obvious reasons. First, all of the legacy ministries that meet the definition restrict their membership to individuals of a specific faith. This limits the use of medical cost sharing for individuals and employers alike: it is illogical to assume that every employee of a given company shares and will continue to share the same religious beliefs, meaning many employers, like the ones I work with, cannot viably choose to provide medical cost sharing to their employees currently. Assuming the rule is finalized, the 1999 restriction would give an arbitrary and significant advantage to the small group of HCSMs that meet the proposed definition. These organizations serve only members of a few specified religion, meaning that the majority of employees and the self-employed would not be able to access the tax benefits associated with being a member of a qualifying HCSM. Second, the proposed language ignores that America's greatest strength is its ability to innovate. Just think of the transformative changes that have occurred in the technology, manufacturing, and service industries over the last 20 years. The health care industry should be similarly encouraged to reassess its traditional operating structures and cultivate alternatives like health care sharing wherever possible. The health care sharing model has proven that it is sustainable and fits a need — the IRS needs to let innovative communities build upon the existing structures and expand cost-sharing throughout the country.

On top of my professional experience, I can personally attest to my positive experience of membership in a modern health care sharing ministry, founded after the arbitrary 1999 date over membership in a legacy HCSM. The difference has been night and day.

In summary, the proposed rule must be revised. I ask the IRS to focus on modifying the proposed rule by incorporating this appropriate modifications:

• Amend the definition of health care sharing ministry by striking part (4), which includes the requirement that the entity has been in existence and engaged in sharing medical expenses at all times since December 31, 1999. This deletion would ensure that the health care sharing ministry market can continue to innovate and expand medical cost sharing as a feasible option for employers offering health care benefits to their employees.

I appreciate the opportunity to voice my concerns to the IRS and strongly encourage you to make revisions, as the currently written proposed rule would negatively impact the medical cost sharing industry. Health care sharing ministries help thousands of Americans manage their health care expenses and afford the medical services they need. Please amend the IRS rule to encourage the expansion of this highly practical and community-based option.

Thank you in advance for your consideration of this recommendation.

Richard Walton, GBA
Heritage Risk Management Company
Amarillo, TX