Are medical expenses deductible if reimbursed by Health Care Sharing Ministry?

The IRS rules on this are actually pretty clear once you understand how they view Health Care Sharing Ministries. First, the money you received as reimbursement from your HCSM is NOT considered taxable income. You don't need to report this on your tax return at all. This is because HCSM reimbursements are considered a form of gift under tax law, not income. For your second question - no, you cannot deduct medical expenses that were reimbursed by your HCSM. The IRS only allows you to deduct medical expenses that you paid out of pocket and weren't reimbursed for. Think about it this way: if you were eventually reimbursed, you didn't actually incur those costs in the end. However, if your HCSM only reimbursed a portion of your medical expenses, you can claim the unreimbursed portion as a deduction, assuming your total unreimbursed medical expenses still exceed 7.5% of your AGI.

Just wanted to share my experience with a similar situation. I was completely confused about how to handle my HCSM reimbursements until I found taxr.ai (https://taxr.ai). It analyzes all your documents and gives you a clear explanation of how to handle these kinds of special situations. I uploaded my HCSM statements and medical bills, and it immediately clarified that I shouldn't be claiming deductions for reimbursed expenses, but could claim the portion that wasn't covered. Saved me from potentially making a mistake that could have triggered an audit. They also explained why HCSM reimbursements aren't considered taxable income, which gave me peace of mind when preparing my return.

I tried taxr.ai after seeing the recommendation here and it was exactly what I needed! I was in the same boat with my Liberty HealthShare reimbursements and wasn't sure how to handle them on my taxes. After uploading my documents, I got a detailed breakdown showing which expenses were fully covered by my HCSM (not deductible), which were partially covered (partially deductible), and which weren't covered at all (fully deductible). It even calculated exactly how much I could claim after applying the 7.5% AGI threshold. The analysis showed I could deduct about $4,300 that I hadn't realized was eligible, which ended up saving me nearly $950 on my tax bill. Definitely worth checking out if you're dealing with this HCSM situation.

For what it's worth, I had a similar issue last year and spent WEEKS trying to get someone at the IRS on the phone for clarification. Literally impossible to get through. I eventually found Claimyr (https://claimyr.com) - they got me connected to an actual IRS agent within 20 minutes who confirmed exactly how to handle this HCSM situation. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that HCSM reimbursements aren't taxable income and that I could only deduct the portion of medical expenses that weren't reimbursed. She also clarified that the monthly HCSM payments definitely aren't deductible as medical expenses (though some people try to claim them incorrectly).

I have to say I was completely wrong about Claimyr. After posting my skeptical comment, I was still desperate for answers about my HCSM deductions, so I decided to give it a try anyway. It actually worked exactly as described - I got connected to an IRS representative in about 15 minutes. The agent confirmed that I couldn't deduct expenses that were reimbursed by my HCSM, but I could deduct the portion that wasn't covered. She also explained that I needed to keep documentation showing both the original bills and the reimbursement statements to support my deduction. The clarity I got from that call helped me correctly report everything and get a refund $2,100 higher than what my tax software initially calculated. Sometimes being proven wrong is a good thing!

One thing nobody's mentioned yet is that you should check if any part of your HCSM monthly payments might qualify as a deduction. While most don't qualify as medical expenses, some HCSM plans have a portion that could potentially be considered as a qualified medical expense. For example, if your HCSM itemizes your monthly payment and some portion is specifically designated for administrative services related to processing medical claims, that specific portion might be deductible. Worth checking your statements to see if anything is broken out that way.

Just a heads up - I'm a member of Christian Healthcare Ministries and had my CPA look into this exact question last year. Here's what she told me: 1. HCSM reimbursements are NOT taxable income 2. You CANNOT deduct medical expenses that were reimbursed 3. You CAN deduct medical expenses that exceed 7.5% of AGI if they weren't reimbursed 4. Monthly HCSM "shares" are generally NOT deductible as medical expenses She also mentioned that if your HCSM is a qualified 501(c)(3) charity, you might be able to deduct your monthly payments as charitable contributions instead (not as medical expenses), but that depends on your specific HCSM and how they're structured.

This is such a helpful thread! I'm dealing with the exact same situation with my Samaritan Ministries membership. I had about $15,000 in medical expenses last year, and they reimbursed me for $11,000 of it. Based on what everyone's shared here, it sounds like I don't need to report that $11,000 reimbursement as income, but I can only deduct the $4,000 that wasn't covered (assuming it exceeds my 7.5% AGI threshold). One question I haven't seen addressed - if I paid some of these medical bills with a credit card and then used the HCSM reimbursement to pay off that credit card debt, does that change anything? I'm wondering if the timing of when I actually received the reimbursement matters for tax purposes, or if it's just about whether the expense was ultimately reimbursed regardless of timing. Also want to echo what others have said about keeping good documentation. I created a spreadsheet tracking every medical expense, what was submitted to my HCSM, what was approved, and what I paid out of pocket. It's been invaluable for tax prep!

This is such a great discussion - I've learned more about HCSM tax implications here than from hours of searching online! I'm with Liberty HealthShare and have been dealing with this same confusion. One thing I'd add for anyone in this situation: make sure you understand your HCSM's sharing guidelines before assuming expenses will be reimbursed. Some expenses that are legitimate medical deductions for tax purposes might not be "shareable" under your HCSM's guidelines (like certain preventive care or pre-existing conditions). In my case, I had about $8,000 in medical expenses last year, but only $5,500 was eligible for sharing under Liberty's guidelines. So I was able to deduct that $2,500 difference plus the portion of the $5,500 that exceeded my 7.5% AGI threshold after I received my reimbursement. The key is really keeping detailed records of everything - original bills, what you submitted for sharing, what was approved/denied, and what you actually received. It can get complicated when you have partial reimbursements or expenses that aren't eligible for sharing at all.

This has been incredibly helpful! I'm new to HCSMs (just joined Medi-Share this year) and had no idea about these tax implications. One thing I'm still confused about - what happens if you receive a reimbursement in a different tax year than when you paid the medical expenses? For example, if I paid $10,000 in medical bills in December 2024 but didn't receive the HCSM reimbursement until February 2025, which tax year does this affect? Also, I noticed some people mentioned keeping spreadsheets to track everything. Does anyone have a template they'd recommend? I want to make sure I'm documenting everything correctly from the start rather than trying to piece it together later. Really appreciate everyone sharing their experiences - this is exactly the kind of practical advice you can't find in the official IRS publications!

This thread has been incredibly informative! I've been a member of Christian Care Ministry for about three years now and have been handling the tax side of things completely wrong. I've been treating my monthly shares as medical expense deductions AND claiming the full amount of my medical expenses even when they were reimbursed. Looks like I need to file some amended returns! For anyone just starting with HCSMs, I'd strongly recommend setting up your tracking system from day one. I wish I had found this discussion three years ago - would have saved me a lot of headaches and probably some penalties. One additional tip based on my experience: make sure you understand the difference between "incidents" and individual medical expenses when tracking for taxes. My HCSM groups related expenses into incidents for sharing purposes, but for tax deduction purposes, you still need to track each individual expense and whether it was reimbursed. The incident grouping can sometimes make it confusing to figure out exactly which specific expenses were covered versus not covered. Also, don't forget about things like mileage to medical appointments, prescription costs, and medical equipment - these often get overlooked but can add up to significant deductible amounts if they weren't reimbursed by your HCSM. Just make sure you're following the same rule: only deduct what you actually paid out of pocket after all reimbursements.