Health Care Sharing Ministries Freedom to Share Act
Subject: Analysis of Ohio House Bill No. 21 concerning Health Care Sharing Ministries and related revisions to the Ohio Revised Code.
Summary: House Bill No. 21, titled the “Health Care Sharing Ministries Freedom to Share Act,” proposes amendments to sections 1716.01 and 5747.01 and the enactment of sections 1716.22 and 3333.96 of the Revised Code. The bill primarily focuses on defining and exempting health care sharing ministries (HCSMs) from insurance regulations within Ohio, while also modifying definitions related to charitable purposes, fundraising, and income tax calculations.
Key Themes and Ideas:
- Exemption of Health Care Sharing Ministries from Insurance Regulations:
- The central aim of the bill is to legally define and protect Health Care Sharing Ministries (HCSMs) in Ohio, ensuring they are not classified as insurance companies and are therefore not subject to state insurance laws.
- Section 1716.22 (A) explicitly states: “A health care sharing ministry is not considered to be engaging in the business of insurance and is not subject to the insurance laws of this state.”
- The bill grants the Attorney General exclusive authority to determine if an organization qualifies as a HCSM.
- It emphasizes that participation in a HCSM does not constitute insurance, and individuals remain personally responsible for their medical bills. The bill mandates HCSMs to provide a specific disclosure: “As such, participation in the organization or a subscription to any of its documents should never be considered to be insurance…you are always personally responsible for the payment of your own medical bills.”
- Amendments to Charitable Purpose and Solicitation Definitions:
- The bill refines definitions related to charitable organizations and fundraising activities.
- It defines “charitable purpose” broadly, referencing section 501(c)(3) of the Internal Revenue Code and including benevolent, philanthropic, patriotic, educational, and other objectives benefitting public safety.
- It clarifies the definition of “fund-raising counsel” and specifies exemptions for volunteers and certain employees who incidentally solicit contributions.
- The definition of “solicit” or “solicitation” is comprehensive, encompassing direct and indirect requests for money or property for charitable purposes. The bill provides a definition of “solicitation”: “(L)(1) “Solicit” or “solicitation” means to request or a request directly or indirectly for money, property, financial assistance, or any other thing of value on the plea or representation that such money, property, financial assistance, or other thing of value or a portion of it will be used for a charitable purpose or will benefit a charitable organization.”
- Modifications to Ohio Adjusted Gross Income Calculation (Section 5747.01):
- The bill proposes numerous adjustments to the calculation of Ohio Adjusted Gross Income, aligning it more closely with the Internal Revenue Code and addressing various specific income scenarios. These modifications include:
- Adjustments related to interest and dividends on obligations of states, territories, and the U.S. government.
- Deductions for disability and survivor’s benefits, social security benefits, and military pay and allowances.
- Adjustments related to medical savings accounts, depreciation expenses, and capital gains from Ohio venture capital companies.
- Deductions for qualified organ donation expenses, income from transfer agreements, and Ohio college opportunity or federal Pell grant amounts.
- Deductions for out-of-state disaster business or qualified disaster.
- Clarification of Trust Residency and Income Apportionment:
- The bill provides detailed rules for determining the residency of trusts for tax purposes, based on the domicile of the grantor, the location of assets, and the presence of qualifying beneficiaries in Ohio.
- It introduces the concepts of “modified business income,” “modified nonbusiness income,” and “qualifying trust amount” for trusts, affecting how income is apportioned and taxed.
- The bill provides detail definition of “qualifying investee”: “(5)(a) Except as set forth in division (AA)(5)(b) of this section, “qualifying investee” means a person in which a trust has an equity or ownership interest, or a person or unit of government the debt obligations of either of which are owned by a trust.”
Key Definitions:
- Health Care Sharing Ministry: Although not explicitly defined in this excerpt, the bill establishes legal guidelines related to such organizations and their operation.
- Charitable Purpose: A broad definition encompassing a range of benevolent and public-benefit objectives.
- Solicit/Solicitation: Any direct or indirect request for money or property represented as benefiting a charitable purpose or organization.
- Adjusted Gross Income: Federal adjusted gross income, modified by numerous additions and deductions as specified in the bill.
- Resident (Trust): A trust that resides in Ohio based on specific criteria related to the transfer of assets and the domicile of beneficiaries.
Potential Implications:
- For HCSMs: The bill provides legal clarity and protection, potentially encouraging the growth and operation of such ministries in Ohio.
- For Individuals Participating in HCSMs: Individuals would be clearly informed that HCSM membership is not insurance and that they remain responsible for their medical bills.
- For Charitable Organizations: The clarified definitions related to fundraising and solicitation could impact compliance requirements for charitable organizations operating in Ohio.
- For Taxpayers: The numerous adjustments to Ohio Adjusted Gross Income calculation will affect the tax liability of individuals and trusts in various specific scenarios.
Next Steps: Further analysis is required to fully understand the implications of the proposed changes to the Ohio Revised Code, particularly concerning the financial impact of the tax adjustments and the scope of the Attorney General’s authority in determining HCSM status. It’s also important to monitor the bill’s progress through the legislative process.