Oklahoma Proposes Tax Deductions for Health Care Sharing Ministries

Oklahoma legislators have advanced a proposal that introduces a state income tax deduction for participants in health care sharing ministries. These entities facilitate the sharing of medical expenses among members who share common ethical or religious beliefs. Operating as non-profit organizations rather than traditional insurers, they are governed by the Internal Revenue Service and state attorneys general.

The Alliance of Health Care Sharing Ministries reports that 107 entities are recognized under federal guidelines by the Department of Health and Human Services. As of January 2025, there are 10,832 individuals in Oklahoma participating in these ministries, representing 3,813 households. This figure only accounts for ministries within the Alliance, as other organizations operate independently.

Participants often enjoy lower monthly costs compared to standard premiums for major medical insurance. This has become especially appealing following the expiration of enhanced premium tax credits under the Affordable Care Act, which contributed to rising insurance premiums amid increasing healthcare expenses.

However, these ministries function outside the direct oversight of state insurance commissioners and have the right to deny coverage for certain bills. Louise Norris, a health policy analyst at Healthinsurance.org, highlights the limited consumer recourse available with these plans as opposed to traditional insurance.

Legislation Proposal and Financial Implications

House Bill 2942, sponsored by Rep. Derrick Hildebrant and Sen. Julie McIntosh, proposes allowing deductions for contributions to these ministries on state tax returns starting in 2027. The bill, known as the “Health Care Sharing Ministry Tax Parity Act,” suggests aligning tax treatment of these contributions with employer-paid health insurance premiums, which are already exempt from federal income and payroll taxes. A fiscal analysis predicts a $477,000 annual decline in state income tax revenues, based on current membership and average contributions of approximately $1,500 to $1,600 per member.

Rep. Hildebrant notes that these ministries, while based on ethical beliefs, are not obligated to be faith-based and mandates annual audits for these organizations. The legislation responds to requests from constituents utilizing these ministries. It draws inspiration from similar measures in Missouri and Indiana, aligning with broader trends in flexible healthcare coverage options.

Louise Norris advises potential members to thoroughly understand these plans since they differ significantly in coverage and regulatory protections compared to traditional insurance. Understanding plan specifics is crucial, especially given their non-compliance with the ACA.