Many people have asked what the difference is between Health Share Plans and traditional Health Insurance. We’ll answer many questions about the medical cost sharing industry in this article.
- What’s the Difference Between Medical Cost Sharing and Traditional Insurance?
- How Long Has Medical Cost Sharing been around?
- What types of things do cost-sharing programs cover and not cover?
- How much can you save with Medical Cost Sharing programs?
- Who are the biggest players in Medical Cost Sharing?
- See an example of what a large medical expense would cost you with a cost-sharing account.
It happens over and over again. People crying at appointments as they sit in an insurance agent’s office. You might think it was because of the high cost of insurance after the passage of the “Affordable Care Act,”(ACA).
It was actually because they finally could get an affordable health insurance policy through the marketplace.
This includes folks like nursery workers whose husbands have cancer and families who have experienced bankruptcy because of medical bills. Another high-income family was paying $4000 in monthly premiums due to pre-existing conditions. When the ACA was finally passed their premium dropped down to a much more sustainable level.
The ACA is in no way perfect. It is not as bad as some would say and not as good as others would want.
It’s all a matter of perspective, but at this point, the affordable care act is not very affordable for many families.
For people with lower incomes and/or poor health, the ACA has been a life-changer. They are finally able to afford health insurance and have access to care.
For those who are middle class and small business owners, ACA has proved difficult. If you do well as a small business and do not qualify for tax credits, the cost of insurance is out of control. A family of four with no tax credit might have to pay $2232.84 a month in premiums. That is almost $27,000 a year just for health insurance. This doesn’t include deductibles or CoInsurance!
It is a horrible situation.
An Option to the Affordable Care Act
Thankfully there are other options besides the Affordable Care Act.
The best options are Health Share Plans or health care bill sharing organizations.
What Are Healthcare Bill Sharing Programs?
Healthcare Bill Sharing programs are where a group of people share their financial resources to pay each other’s medical expenses. There are several Health Share organizations in the U.S. including:
- Altrua HealthShare
- Christian Healthcare Ministries
- Aliera Healthcare
- Liberty HealthShare
- Medi-Share (we have many friends who currently participate in this program)
- Samaritan Ministries Health Share
- Solidarity Health Share (for Catholics and Christians)
- United Refuah (the first and only Jewish Health Share organization)
Some of these health sharing organizations have been around, weathered recessions, negotiated payments, and have built remarkable and sustainable companies. These companies are non-profit and several have been in existence for over 25 years.
Each company has different ways of doing business, but the bottom line is to help people reduce the cost of medical care. Some health share plans require individuals to sign a statement of faith.
Unique Things Health Share Organizations Do
One of the impressive things these companies do is to go beyond helping people share resources for medical expenses. Some have options for helping with burial and memorial service expenses (within limits of course). And at least one has a provision that allows funds to be given to those that adopt children.
Are Cost-Sharing Plans ACA Compliant?
One of the provisions of the ACA (The Affordable Care Act i.e. Obamacare) was that everyone is required to have health insurance. Without insurance, families face a penalty on their taxes (unless they are low income).
The penalty provision has been repealed but is still in effect for 2018. Unless of course, you are a member of a cost-sharing ministry. The Cost Sharing ministries have an exemption to that provision and its’ members will not see a penalty on their taxes in 2018.
The Difference Between Health Sharing & Insurance?
Legally there are a lot of differences between medical cost-sharing companies and traditional insurance companies.
Traditional Insurance Companies
A medical insurance company is compelled to pay the bills that your contract requires. Your policy documents are your contract and state the coverage and rates that the company will pay.
An insurance company is required to have a certain amount of financial reserves. There are laws from state to state that have to be followed. There are also state guarantee organizations that provide for policyholders in case the insurance company becomes insolvent.
Health Sharing Companies
A non-profit bill sharing organization does have to be audited annually. It has to meet some mandated financial rules.
However, it is not contractually bound to pay anything at all.
This might sound shocking, but let’s draw a parallel.
Let’s say your church were to sponsor a soup kitchen for the poor.
That soup kitchen would definitely have to meet certain health codes – that’s a given. But as a ministry, there would be no legal obligation that it has to feed everyone who comes. It could even choose not to serve anyone for a period of time. There would be no legal obligation for it to be open seven days a week. There would be no legal obligation that the food had to be good.
But, if the church really wants to minister to the needy then it will have regular hours. It will also post those hours so people will know when they can come in for help. The soup kitchen might not serve 5-Star rated meals, but if the food isn’t good it will definitely reduce how many people come for help.
Medical Cost Sharing Has Rules
In the same way, cost-sharing organizations are going to have rules for what they will and will not cover (their menu). They might not cover everything, but if they didn’t cover things people felt were important, no one would join.
Most importantly, if these organizations were not actually helping people with their medical bills then they wouldn’t have survived for 25+ years. So, while they may not be legally required to pay, but just like the soup kitchen, they want to be there to help people.
Pre-Existing Conditions with Cost-Sharing Groups
One of the drawbacks to medical cost-sharing groups is that they do not generally cover pre-existing conditions. Or if they do cover them, there are waiting periods.
Some of these groups do allow extra donations to go towards paying bills on pre-existing conditions.
Other groups have a twenty-four month (two years) waiting period before they will pay bills from pre-existing conditions. And some have a thirty-six-month wait (three years).
It can get even more technical from there as some don’t cover the pre-existing conditions unless there are no claims against that pre-existing condition during the waiting period.
If you have pre-existing conditions you need to make sure you understand the policy of the group you join.
The Logic Behind Pre-Existing Restrictions
What the delay in covering pre-existing conditions means is that you need to be a good steward of your money and your health.
Membership in health share plans is not for everyone.
It is for people who are going to take charge and take responsibility for their health.
- It is not for tobacco users. Tobacco can kill you in several different ways. Nicotine can lead to cardiovascular disease (heart attack and stroke). The tar can give you various cancers.
- These groups are not for you if you abuse drugs or are promiscuous.
If you are overweight or have certain health conditions some organizations require intervention. The goal is to help bring your weight or other health metrics back to where they should be.
Some might look at this as meddling a little too much in our personal lives.
Why Cost-Sharing Plans Have Membership Restrictions
Their thinking is that if people stay healthier they’ll have fewer medical costs. This will result in lower costing coverage AND lower costs for medical care.
This type of thinking is all about prevention and compared to how health insurance was before the ACA, it is drastically different, and really a good idea.
Before the ACA they (health insurance companies) could reject you and not give you a policy. Or if they did offer you coverage, they could charge you astronomical premiums.
The health insurance companies could also permanently exclude coverage for specific conditions.
When considering the things that health insurance companies did to people with pre-existing conditions; the policies of the health share organizations seem pretty reasonable.
What About Pregnancy?
Another important thing to be aware of is you might not want to join if you are already pregnant.
If you are not pregnant most have solid sharing on maternity charges. Make sure you research how the health sharing plan you are considering handles pregnancy and maternity costs if you are planning on having children.
Are Health Share Plans Financially Sound?
It is a real testimony to the founders of these groups that they have built such robust organizations. As of this writing, health sharing groups have around 1,000,000 members nationwide.
Understanding Risk Pools
While risk pools are part of the health insurance world, they are not part of Health Sharing groups. We’re just presenting this as a comparison so you can understand how the membership restrictions of health sharing groups result in lower risks because health share members are healthier.
Most people think that every one insured with a traditional medical insurance company is in that particular company’s risk pool. That makes sense, except that it doesn’t work that way at all.
First off, traditional health insurance is a state-based product. As a result, there are at minimum 50 different risk pools: one for each state.
Then within each state, there are multiple risk pools.
- There are Medicare risk pools
- Self-insured risk pools
- Large group risk pools
- Small group risk pools
- Individual policy risk pools.
At the end of the day, there are thousands of health insurance risk pools.
Risk Pool Math
Let’s do some math on Risk Pools.
We have a population in America of about 330,000,000 million people.
Let us say that there are 2500 separate risk pools. That would mean an average risk pool is about 132,000 people.
At this time, there are eight major health share plans or medical bill sharing organizations. These groups serve about 1,000,000 people in their memberships.
On average that would be about 125,000 members in each organization.
When considering the financial risk associated with health sharing groups vs a traditional health insurance risk pool, those numbers tell us that health-share membership is robust enough to be financially legitimate.
In addition to the size of health sharing organizations, remember that these groups are going to be healthier compared to other groups.
Because many of these organizations have waiting periods for pre-existing conditions, many people will stay with traditional health insurance instead of membership in a cost-sharing organization.
This also makes health sharing organizations more stable and less expensive.
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The Value of Preventive Care
For a minute we want you to think not of healthcare, but of your auto insurance. Let’s look at an example:
Auto Insurance Analogy
Auto insurance protects you financially if you have a wreck. It also protects you if you hit someone or something, or if someone else hits you.
What it doesn’t cover is a new engine or transmission after 300,000 miles. Nor does it cover new spark plugs, tires, and oil changes.
Keeping up with your maintenance will help your car last longer. But your auto insurance is not designed to cover routine maintenance.
You plan on getting your oil changed every so often. It’s not an accident, it’s a planned expense.
Paying for Preventative Care (Well Checks)
Paying for preventative health care, like auto insurance, is an expense you should plan for.
However, health insurance is a little different. Your cardiopulmonary systems and digestive systems are the engines for your body. Health insurance does cover that engine and transmission…even when it has 87 years on it!
Keeping up with preventive care helps our body’s systems last longer. When medical conditions are found, it is many times easier to fix them (because the will get caught earlier).
That is why preventive care was included in policies for the ACA (i.e. Obamacare). But, it’s also one of the main reasons that those policies are now more expensive.
The reality is if something is a planned expense then it shouldn’t be a surprise. If it’s not a surprise, then it’s not being insured…it should be budgeted for.
When it comes to health share plans and preventive care you are going to have to budget for it and pay it out of pocket because these types of bills won’t get shared.
The point we are trying to make is that since these things are not “built-in” costs for preventative care:
- Need to be budgeted for above and beyond the cost of membership
- For the most part, it should be affordable to pay for your preventive care with the money you save each month due to lower “premium” costs.
How much do I pay out of pocket?
With most health share ministries there is a certain dollar amount of bills that you pay first (similar to a deductible). In that regard, it is similar to medical insurance.
With car insurance, if you pay the first $1000 of a wreck instead of the first $500 then you will have a lower monthly premium.
Health share plans are like that as well.
Most of the time you have several choices in what you want that number to be. Your monthly contribution will be higher if dollar amounts paid at first are low.
The higher the amount of care that you pay for upfront, the lower your monthly contribution will be. After reaching your agreed-upon threshold, the health share plan will start sharing your bills.
What are the Drawbacks to Health Share Plans?
We want to touch on two of the most distinctive disadvantages of health sharing.
- There is a lack of mental health services with most of the faith-based health sharing organizations.
- There are financial limits on certain prescription drugs.
Mental Health Services
When it comes to mental health care, many of these faith-based health sharing organizations offer little to no sharing. Why? We don’t know. We do believe that the lack of mental healthcare is a very limited and uninformed viewpoint to have.
Perhaps they believe that a pastor with bible knowledge or a seminary degree is all that is needed to help someone with emotional issues or abuse and dysfunction in their past.
We know that many seminaries attempt to equip pastors for all they might encounter. But a few classes in this subject cannot compete with the training of a faith-based licensed counselor.
A faith-based licensed counselor has hundreds of hours in training, education, and experience. And they have tools that a pastor just does not have. It is unfortunate that faith-based sharing organizations do not see this as a valuable or necessary part of their covered treatment.
We believe this is very short-sighted and behind the times for keeping up with our culture.
More and more families are repeating dysfunctional patterns within their families and abuse is occurring in many homes that attend church on a regular basis.
The second disadvantage for health sharing organizations is how they deal with prescriptions.
There is coverage for some prescriptions.
- For diagnosed conditions (i.e. not pre-existing) they will share 6 months of the cost of the prescriptions needed.
- Luckily, there are resources to help you find the least expensive places to buy prescriptions.
- Discount cards can be found and are available.
- Most can also direct you towards resources for Patient Assistance Programs.
Related Article: Ways to Save on Prescription Drugs
Getting a fair deal on prescriptions is a tough thing to do, even with health insurance companies! Traditional health insurance companies are many times at the mercy of pharmaceutical companies.
And the pharmaceutical companies are known for regularly producing new drugs that are very costly or raising prices on old drugs when they can get by with it!
Your monthly “payments” to a health sharing company could save you a large amount of money each month, compared to traditional health insurance. If you use a money management system (budget system) you should have the money for your non-covered prescription costs.
As we mentioned before, a health share membership is for people who want to take charge of their health. By being active, eating right, and not putting their health at risk you can spend less on your health care costs.
Which Doctors Work With Health Share Plans?
With traditional medical insurance, one of the biggest issues could be the dreaded “In-Network” and the “Out-Of-Network” issue. Because health insurance is state-based, networks are generally state-based as well.
What hasn’t been communicated is that there are companies out there that are nothing but networks. Some companies exist whose whole business model is building networks and negotiating prices.
Traditional health insurance companies pay these network companies to use their services. Health Share organizations are not like health insurance companies that are subject to state insurance laws.
And since they are not insurance plans which are bound by state insurance laws, everyone who enrolls in them gets to use one network system that includes the entire nation. This is a huge advantage.
When you go to your doctor, the doctor’s office might not recognize the name of the medical sharing organization on the card. They will most likely recognize the name of the network on the card. Two of the medical cost sharing organizations use the PHCS PPO network.
So essentially the “providers” or doctors you use, could be exactly the same ones you use now. Click on the link in this sentence to see if your doctor is in the PHCS PPO Network for a medical sharing organization.
How Medical Video Consultations Saves Money
As we mentioned, Health share plans are going to be an option for people who take control of their health and healthcare costs. One way to keep costs down is to use technology.
We are referring to a service that some medical cost-sharing organizations offer at no cost to its members. This service is a Telehealth or Video Consultation with a doctor.
There is actually quite a bit of care that can be provided via Telehealth. Some diagnoses can be made and prescriptions can be written over the phone or the internet.
This is something new that you will start seeing from traditional health insurance companies soon. But it is already happening with the cost-sharing organizations. In this respect, the health share plans are on the cutting edge of new technology for medical care.
Maximum Lifetime Benefit Limits
Before the ACA, insurance companies often had annual and lifetime maximum benefits. Generally, those were between $1,000,000 to $2,000,000.
It was rare to hit these limits except in cases of an organ transplant, an extended bout of cancer, or a recovery from severe burns.
Well, what about maximum benefits for health sharing company patients? Are these groups going to limit the dollar amount that can be covered either annually or over your lifetime?
The answer to that is going to vary depending on what medical sharing company you use.]
Is it Difficult to Work with a Health Share Plan?
As a health share member, you will be very impressed with the responsiveness and care you receive on the phone.
The service representatives are never rushed to finish a call. They are very well trained and totally understand how their coverages work.
Also, if you are working with one of the faith-based medical sharing organizations, it is not unusual for a service representative to ask if they can pray for you. This could seem weird and wonderful all at the same time.
RELATED AUDIO RESOURCE: MoneySmart Health & Medical Benefits
An Example of How Cost Sharing Works
Below is a brief example of what you could experience if you have significant medical expenses while participating in a health share plan.
For this example, we don’t know the negotiated rates for specific procedures and care. This is based on general information so you can get an idea of how medical bills get reduced and then shared with other members.
Let’s say you have a health care incident and the total of all your medical bills is $65,000.
- If you are a member of one of the groups that use the PHCS Multiplan Network the negotiated rates on average would save you 35%.
- The amount owed would drop to $42,250.
For this example, we are going to say that your family ‘s share (remember that’s kind of like your deductible) is $4500.
You would pay the first $4500 of those medical expenses.
$42,250 minus $4500 equals $37,750 remaining.
That remaining $37,750 would be shared with other health sharing members. Their monthly contributions will pay those bills completely.
Though they are not for everyone, health share plans are a growing segment of the healthcare industry and how families deal with the cost of healthcare. They are financially robust, and much more affordable than insurance.
They will provide the financial protection your family needs if a major health event should befall you.
For more information and to contact Andrew Bennett visit InsuranceThatFits.com or call 865-712-5711. No matter where you live in the U.S. Andrew can help you with understanding the ins and outs of health share plans.
This article was written as a collaboration between Steve & Annette Economides from MoneySmartFamily.com and Andrew Bennett from InsuranceThatFits.com.