Press Releases
08/13/2020
AG Tong Joins Coalition of Attorneys General in Opposition to IRS Proposed Rule to Undermine the ACA
(Hartford, CT) – Attorney General Tong today joined a coalition of 19 attorneys general in submitting a comment letter opposing the Department of the Treasury and Internal Revenue Service’s (IRS) proposed rule that seeks to treat payments made to healthcare sharing ministries (HSMs) as deductible medical expenses.
Prior to the passage of the ACA, HSMs allowed people to pool their money with others who shared their religious beliefs in order to assist each other in times of medical crisis. When the ACA was passed, millions of uninsured Americans were insured and gained access to quality, affordable health insurance. However, many companies began to capitalize on the exemption of HSMs from many of the coverage mandates in the ACA by marketing them as a less expensive alternative to ACA-compliant health insurance. Unlike ACA-compliant health insurance, HSMs do not guarantee payment for covered services and fail to cover essential health benefits, like birth control, prescriptions, preexisting conditions, and mental health care.
“Healthcare sharing ministries are not the same as health insurance. Too many people have discovered this too late, after being left with massive medical bills for uncovered care,” Attorney General Tong said. “In the midst of a global pandemic, everyone needs access to real health insurance that covers all essential services, including pre-existing conditions, prescriptions and more.”
The letter argues that allowing tax deductions for payments made to HSMs undermine the ACA and leave consumers with junk coverage. This will lead to consumer confusion as more non-ACA compliant options enter the market, and increased health care costs as healthier people leave the market.
In their letter, the attorneys general argue the proposed rule will further increase consumer confusion and fraud in the healthcare marketplace. HSMs are not mandated by the ACA to provide the ten essential health benefits required of health plans sold in the individual market, including coverage for preventive care, services for mental health and substance use disorders, and reproductive care. The letter explains that many HSMs have chosen to capitalize on this by mirroring the structure of ACA-compliant insurance plans in order to market themselves as a less expensive healthcare option, while not actually providing full coverage insurance to their members. By treating expenses for HSMs as deductible medical expenses, HSMs will further resemble traditional health insurance companies while continuing to dodge the requirement to provide their consumers with essential health benefits.
The attorneys general also argue that the rule would create greater divides within the healthcare market. If the rule is implemented, companies will be able to use confusing marketing tactics that paint HSMs as a quality health insurance option and younger, healthier people will choose them over ACA-compliant coverage. The letter argues this will increase the cost of premiums for older and less healthy Americans who must remain in ACA-compliant health plans in order to receive full health coverage.
In yesterday’s letter, led by California Attorney General Xavier Becerra, Attorney General Tong along with attorneys general of Colorado, Delaware, Hawai’i, Illinois, Iowa, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont, and Virginia urged the Department of the Treasury and IRS to withdraw the proposed rule.
The letter can be found here.
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Media Contact:
Elizabeth Benton
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