Health Insurance or not??

[Bonnie]

Taxpayer uses a Christian based company for Health Insurance coverage of sorts. It's not really insurance but a group who pool their money (everyone paying a set amount each month) and any medical expenses are paid out of the group funds. Anyone know anything about this and if it can be used on Sch A as Medical Insurance? Also if it qualifies, would it also qualify as Self-Employed Health Insurance?

Thanks for any help anyone can give me.

[Burke]

I would have to know a lot more about it before classifying it as any kind of "insurance." What are the terms of the plan? Does anyone sign a contract of any sort? Are there deductibles? What happens if all claims exceed all the "premiums?" Do persons receive benefits in excess of their contributions? What happens to the funds paid by an individual if he/she does not have any claims?

[DaveO]

Sounds a bit like a VEBA except it's not for employees. Is there any sort of underwriting or is the only requirement adherence to the religious belief?

[Nashville]

Contributions

I think I've heard of that organization. According to the literature there are no formal premiums. If it's the one I'm thinking about the payments would qualify as contributions.

If so, this is a double-edged sword. Firstly, this means they could not be self-employed medical deduction, and cannot be a business deduction either. Secondly, if they can't itemize, then this is wasted. However, if they CAN itemize, then the amounts are not subject to the 7.5% restriction.

[taxmandan]

I belonged to such an insurance organization a couple of years ago, they have a deductible, it was not a voluntary contribution but a premium based on family size and no particular religious affiliation was required. Enrollement requirements and preexisting condition limits applied. There were restrictions on life style behaviours, what I call 'self-induced' illness or injury, medical issues that result from poor life style choices: obesity, alcohol, smoking, driving recklessly, maternity outside of marriage, etc. were not covered.

I deducted it as insurance coverage on the 1040, policy was in my name (Ltr Rul. 200524001).