SW Legal studies in Business

Religious Organization “Sharing” Plan Is Insurance Subject to State Regulation

Kentucky high court held that a medical “sharing” plan, where by people made regular monthly payments, based on actuarial tables, to help cover health expenses of other members, is in fact insurance subject to state regulation.

Topic Insurance
Key Words

Medical Care; Religious Organization; Licensing

C A S E   S U M M A R Y

Medi-Share is operated by the American Evangelistic Association and the Christian Share Ministry. It is called a “sharing ministry” because people join voluntarily to help pay the medical bills of other members and, then, those who have joined are eligible to receive donations from other members to help pay for their medical expenses. Members pay a $175 initial fee than an annual fee of $150 and are expected to make monthly “share” payments. Those payments are based on an actuarial risk analysis of the member. If payments are not made, the member is dropped. Payment of medical expenses is at the discretion of the oversight staff. Medi-Share is not licensed to sell insurance in Kentucky, so is not subject to any regulatory oversight. The state sued Medi-Share for the unauthorized sale of insurance. The trial court and court of appeals held that Medi-Share was not insurance and was exempt from state regulation under a religious exception. The state appealed.


Reversed and remanded. The agreement signed by members of the Medi-Share system is a contract for insurance. Hence, the operator of the system was engaged in the unauthorized sale of insurance. The fact that it claimed not to be health insurance does not control the reality. The agreement provided for shifting of risk of medical expenses. The operator pooled payments to help cover expenses and used actuarial tables to calculate the amount of member payments. It advertized that it was an economical alternative to conventional health insurance programs. The fact that it was operated by a religious organization does not exempt it from the state insurance code.


Kentucky v. Reinhold, ---S.W.3d--- (2010 WL 33744232, Sup. Ct., Ky., 2010)

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