Whether you are self-employed or recently lost your job, health insurance and how to get coverage is an important consideration. In a previous article, we covered the more traditional ways to get health insurance, namely COBRA, a spouse’s policy, the healthcare marketplace, or using an insurance broker. In this article, we will look at medical cost-sharing programs. These programs, frequently called health sharing ministries, provide a way to share risk without actually being insurance. Consulting with a financial planner near you can provide personalized guidance to ensure you’re making the best choices for your healthcare coverage and overall financial well-being.
How Healthcare Cost-Sharing Programs Work
Rising health insurance costs and a repeal of the Tax Cuts and Jobs Act of 2017 have made many people more open to alternatives to health insurance. Healthcare cost-sharing programs are typically organized under the auspices of a ministry or a religious organization. These faith-based programs facilitate the voluntary sharing of financial resources among members to pay for eligible medical expenses. They are usually set up as 501 (c) (3) nonprofit organizations.
Each member pays a monthly contribution, much like an insurance premium. This money is banked and distributed to pay for members’ medical expenses according to the program guidelines. Essentially, it is a group of people coming together to share risk. Healthcare cost-sharing programs are modeled after the risk-sharing that defines insurance. Besides “premiums,” many programs require members to pay a certain amount of money out-of-pocket before the program pays for their medical costs, much like a deductible in the insurance world.
Coverage and Restrictions
Members enrolled in healthcare cost-sharing programs see their healthcare providers as uninsured, cash-paying customers. In many cases, providers will offer discounts to cash-paying customers who do not need to submit insurance claims. This can contribute to the lower costs of these programs when compared to traditional insurance coverage.
Healthcare cost-sharing programs cover many medical expenses. However, they tend to have a longer list of uncovered expenses as well. For example, they may not cover birth control, abortions, and injuries related to drug and alcohol use. They also have restrictions and waiting periods for coverage for pre-existing conditions.
Points to Consider
Since healthcare cost-sharing programs are not insurance, they are not subject to regulations such as those under the Affordable Care Act. As a result, there may be a limit to the number of costs the program will cover. Traditional insurance providers must provide the services stipulated under the Affordable Care Act and cover pre-existing conditions. Healthcare cost-sharing programs do not have to meet these requirements. In addition, the monthly payments for healthcare cost-sharing programs are not tax deductible for those who are self-employed, unlike traditional insurance.
Making A Decision
Cost
Even though healthcare cost-sharing programs do not traditionally use insurance terms, it is fairly easy to compare these programs to traditional health insurance programs on the Marketplace in terms of out-of-pocket costs. Look at the premiums, deductibles, coinsurance, and out-of-pocket limits. Call your healthcare provider’s offices and ask whether they offer any discounts for cash-paying patients.
Coverage
Read the restrictions for healthcare cost-sharing programs to verify that they meet your needs. Four of the most popular healthcare cost-sharing programs are:
- Christian Healthcare Ministries (CHM): says they are a budget-friendly, biblical, and compassionate healthcare cost solution for Christians worldwide. They have shared over $6 billion in their member’s healthcare bills. There are three levels of service as well as an optional Brother’s Keeper program, which provides catastrophic coverage. Participants in the program are expected to negotiate lower prices with their providers to keep program costs under control.
- Liberty HealthShare: is a Christian membership-based, nonprofit that shares medical expenses between its members. They report that they have shared more than $1.2 billion in costs in the last four years. They offer several programs to their 220,000 members.
- Medi-Share: is a Christian care ministry that offers telehealth visits for non-emergency needs. They have a network of doctors to treat other illnesses and emergencies. Unlike other programs, Medi-Share helps you negotiate medical expenses with your providers.
- Samaritan Ministries: is a Christian ministry that pays its member’s medical bills. Members send checks to other members to pay their bills and fulfill their share requirements.
Summary
All four programs seem to be very transparent about their requirements and restrictions. Most programs have morality clauses that require a statement of faith as well as abstention from smoking, excessive alcohol use, and engaging in hazardous activities. Some of these plans do not cover prescription medications or pre-existing conditions. Most of the programs require their members to negotiate their medical bills down to an acceptable level. If you are not comfortable doing so, healthcare cost-sharing programs may not work for you.
Healthcare sharing programs can decrease your medical costs. However, they come with significant risks. Your wealth advisor can help you work through scenarios to help you decide whether you are financially able to take these risks.
