Oklahoma offers tax deduction for health care sharing ministry members

On February 10, 2025, the Oklahoma State Legislature introduced Senate Bill 736, a legislative proposal aimed at providing tax deductions for members of Health Care Sharing Ministries (HCSMs). This bill seeks to address the growing interest in alternative healthcare financing options, particularly among individuals who prefer to align their medical expenses with their ethical or religious beliefs.

The primary provision of Senate Bill 736 allows qualified individuals—defined as Oklahoma residents who have been active members of an HCSM for at least one month during the applicable tax year—to deduct their qualified health care sharing expenses from their Oklahoma adjusted gross income starting in the 2026 tax year. This deduction is intended to incentivize participation in HCSMs, which facilitate the sharing of medical expenses among members without assuming risk or providing a promise to pay for medical expenses, distinguishing them from traditional insurance companies.

Key components of the bill include requirements for HCSMs to provide quarterly reports detailing shared needs and contributions, conduct annual independent audits, and include disclaimers clarifying that participation is voluntary and not insurance. These measures aim to enhance transparency and accountability within HCSMs, which have been criticized for lacking regulatory oversight.

The introduction of this bill has sparked notable debates among lawmakers and stakeholders. Proponents argue that it offers a viable alternative for individuals seeking affordable healthcare solutions, especially in light of rising insurance premiums. They emphasize the importance of respecting personal beliefs in healthcare decisions. Conversely, opponents raise concerns about the potential for HCSMs to undermine the traditional insurance market and the implications for individuals who may not fully understand the risks associated with opting out of conventional insurance.

The economic implications of Senate Bill 736 could be significant, particularly for low-income residents who may find HCSMs more accessible than traditional insurance. However, experts caution that while the bill may provide immediate financial relief for some, it could also lead to long-term challenges if individuals face substantial medical expenses without the protections typically offered by insurance.

As the bill progresses through the legislative process, its future remains uncertain. Lawmakers will need to weigh the benefits of promoting alternative healthcare financing against the potential risks to consumer protection and the overall healthcare landscape in Oklahoma. The outcome of this bill could set a precedent for how states approach healthcare sharing arrangements and their integration into the broader healthcare system.