Are HealthShare contributions deductible as charitable donations?

[akhey]

I am a member of a HealthShare organization. I understand that the contributions that I make are not deductible as a health insurance deduction for my sole proprietorship or as any kind of medical expense. However I have yet to see anything talk about HealthShare contributions being deductible as a charitable donation. If my HealthShare organization is a registered 501(c)(3), which it is, wouldn't the monthly contributions be considered a charitable donation for tax purposes, as long as I'm itemizing my deductions? Also, is there a way to write this off under the LLC's taxes? (Again, as a charitable donation and not as a health insurance plan provided to the company workers... me).

 

[Taxing Matters]

In a typical religious health share set up people pool their money to provide for the medical care of the members of the group. It functions much like insurance, though advocates claim it lacks some of the fundamental elements of insurance and thus does not need to be regulated like insurance plans. Nevertheless, it functions in a similar manner in many key respects. The important thing here for tax law is that you are contributing the fee to the health share program to get the health coverage that the organization provides. You do not get a charitable contribution for monies paid to a charitable contribution to the extent of the value of what you get back from that organization.

In short, what you pay the organization for the health coverage benefit is not a charitable contribution.

 

[akhey]

You do not get a charitable contribution for monies paid to a charitable contribution to the extent of the value of what you get back from that organization.

If I may ask a follow-up question... I would argue that if we do not have any claims for the entire tax year, that I have not received anything for those contributions, and therefore the contributions are strictly a donation. Am I misunderstanding your response or missing a piece of the puzzle?

 

[Zigner]

If I may ask a follow-up question... I would argue that if we do not have any claims for the entire tax year, that I have not received anything for those contributions, and therefore the contributions are strictly a donation. Am I misunderstanding your response or missing a piece of the puzzle?

Your argument would be wrong. You received the benefit of coverage.

 

[Taxing Matters]

If I may ask a follow-up question... I would argue that if we do not have any claims for the entire tax year, that I have not received anything for those contributions, and therefore the contributions are strictly a donation. Am I misunderstanding your response or missing a piece of the puzzle?

You received coverage. Just like with insurance. You aren't paying for specific medical bills with these payments; you are paying for the benefit that the organization will pay the bills (or at least some portion of them) should you need it. Some years you may not need any bills paid. Other years you may need more than what you contributed that year. What bills are actually paid by the organization for you isn't what matters here. It is that you are getting the benefit of coverage. That coverage has value.

 

[akhey]

You received coverage. Just like with insurance. You aren't paying for specific medical bills with these payments; you are paying for the benefit that the organization will pay the bills (or at least some portion of them) should you need it. Some years you may not need any bills paid. Other years you may need more than what you contributed that year. What bills are actually paid by the organization for you isn't what matters here. It is that you are getting the benefit of coverage. That coverage has value.

Thanks for the replies! It was more of a hope than anything. I just didn't want to leave money on the table if it was there.