## Facts

- Medi-Share operated a health-care cost-sharing program associated with religious entities and marketed “Affordable, Biblical Healthcare.”
- Prospective members completed an application, paid an enrollment fee, and entered a commitment contract agreeing to follow program rules.
- Members made regular payments under structured categories, and program funds were used to pay qualifying medical expenses of members under stated guidelines and exclusions.
- The program used eligibility screening and coverage limitations resembling underwriting practices, including preexisting-condition limits.
- Program materials included disclaimers stating it was not insurance and that neither the administrators nor members were legally obligated to pay a particular bill.
- The Commonwealth brought an enforcement action alleging the program unlawfully transacted insurance without authorization under Kentucky’s Insurance Code.
- The trial court ruled the program was not insurance; the Court of Appeals affirmed.
- The Kentucky Supreme Court granted review to decide whether the program was a “contract for insurance” and, if so, whether a statutory religious-publications exemption applied.

## Issues

1. Whether the Medi-Share arrangement constituted a “contract for insurance” under KRS 304.1-030.
2. If it constituted insurance, whether it fell within the “Religious Publications Exemption” under KRS 304.1-120(7).

## Decision

- The Kentucky Supreme Court reversed the Court of Appeals and remanded for entry of an appropriate judgment.
- The court held the program provided a “contract for insurance” under KRS 304.1-030.
- The court held the program did not qualify for the KRS 304.1-120(7) Religious Publications Exemption.

## Legal Principles

- Statutory classification as “insurance” turns on substance and function, not on the labels, religious framing, or disclaimers used in program materials.
- An arrangement may be insurance where participants pay money into an organized scheme designed to pay covered losses upon specified contingencies, even if the promoter disclaims traditional insurer liability.
- Disclaimers that payment is “voluntary” do not control when the program’s structure and marketing create an expectation of contingent benefits funded through collective contributions.
- The KRS 304.1-120(7) Religious Publications Exemption is construed narrowly and does not cover an ongoing program whose primary activity is administering structured payments for medical expenses rather than soliciting funds incident to distributing a religious publication.
- Kentucky’s insurance statutes are applied to prevent avoidance of licensing and oversight when an entity operates like an insurer in practice.

## Conclusion

The court treated the health-care sharing ministry as insurance because its organized, contribution-based mechanism was designed to pay members’ medical expenses upon defined conditions, and it rejected a religious-publications exemption that did not fit the program’s operational model.


Commonwealth v. Reinhold, 325 S.W.3d 272 (Ky. 2010)