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Bill

HB 1698

TO AMEND THE LAW CONCERNING THE INCOME TAX TREATMENT OF EMPLOYER CONTRIBUTIONS FOR AN EMPLOYEE'S MEMBERSHIP IN A HEALTHCARE SHARING MINISTRY OR OTHER MEDICAL COST-SHARING PROGRAM.

2025 Regular Session Introduced by Jim Petty and 1 co-sponsor

HB 1698 aimed to exempt employer and self-employed contributions to healthcare sharing ministries from income tax, offering tax deductions to support alternative healthcare funding.

Died in House Committee at Sine Die adjournment.
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WeVote Research Nonpartisan
Bill Summary · HB 1698

Summary of House Bill 1698 (HB 1698)

Purpose and Intent

House Bill 1698 (HB 1698) aimed to amend the income tax treatment of employer contributions for an employee's membership in a healthcare sharing ministry or other medical cost-sharing programs. The bill sought to provide tax benefits both to employers and self-employed individuals by excluding these contributions from gross income and allowing for tax deductions.

Key Provisions

  1. Exclusion from Gross Income:

    • The bill proposed that employer contributions made for an employee's membership in a healthcare sharing ministry or medical cost-sharing program would be excluded from the employee's gross income.
    • Self-employed individuals would also be eligible for this exclusion for their own contributions.

  2. Tax Deduction:

    • HB 1698 included provisions for an income tax deduction for employers contributing to an employee's membership in these programs.
    • Self-employed individuals could similarly claim this deduction for their own contributions.

  3. Definition of Healthcare Sharing Ministry:

    • The bill defined a "healthcare sharing ministry" as a faith-based, nonprofit organization that:
      • Is tax-exempt under the Internal Revenue Code.
      • Limits participation to individuals of similar faith.
      • Matches participants with medical needs to those who can assist.
      • Establishes contribution amounts without guarantees of return.
      • Provides monthly statements and disclaimers indicating it is not an insurance company.
      • Transfers contributions to cover qualified medical needs of participants.

  4. Effective Date:

    • The provisions of the bill were set to take effect for tax years beginning on or after January 1, 2026.

Fiscal Impact

  • The estimated fiscal impact of HB 1698 included:
    • A reduction in general revenue of $365,000 for FY2026.
    • A reduction of $730,000 for FY2027.
  • An estimated cost of $8,000 was projected for necessary updates to the Arkansas Integrated Revenue System (AIRS) to accommodate the changes.

Procedural Aspects

  • The bill was introduced on March 6, 2025, and underwent several amendments before being placed on second reading for further consideration.
  • It was reported correctly engrossed on March 31, 2025, after the adoption of two amendments that clarified definitions and terms within the bill.
  • Unfortunately, HB 1698 died in the House Committee at sine die adjournment on May 5, 2025, meaning it did not progress to a vote.

Conclusion

While HB 1698 proposed significant changes to the tax treatment of contributions to healthcare sharing ministries, its failure to advance through the legislative process means that these potential benefits for employers and self-employed individuals will not be realized. The bill's intent was to support alternative healthcare funding arrangements, reflecting a growing interest in non-traditional healthcare solutions.

Compiled from official sources — confirm details with the bill’s official record.

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