Health Sharing Ministries: Are They a Good Idea?
Have you heard of Health Sharing Ministries? They have exploded in popularity over the past 10 years. In 2010, there were an estimated 100-200,000 members enrolled in Health Sharing Ministries. By 2018, that number had ballooned to well over 1 million members![i]
Some of the largest Health Sharing Ministries (aka Health Sharing Plans) include:
· Christian Healthcare Ministries
But is the hype warranted? Are Health Sharing Plans (HSPs) a good alternative to traditional health insurance? Before you decide to enroll, there are some key details you need to know about HSPs.
Remember that health care coverage is one of the most important financial decisions you make every year and one of the biggest line items in your budget. The average yearly cost for health care in 2019 was $5,193/person![ii]
An important clarification: health-sharing plans are not health insurance. Though they usually function very similarly there are some important differences you need to be aware of before joining.
Why have Health Sharing Plans seen such tremendous growth?
In 2010, the Affordable Care Act (ObamaCare) was passed. This pivotal legislation included an “individual mandate” requiring every American to have health care coverage or be forced to pay a fine. The ACA also stipulated that health insurers could not deny coverage to any applicant because of a preexisting condition.
Under the new law, any American who did not have health insurance coverage through an employer could apply for health insurance through a newly created government marketplace website. If the applicant’s income was below certain thresholds, they could be eligible to receive free health care through programs like Medicaid or CHIP, or they could be eligible to choose a private health insurance plan and get a special tax credit to help pay part of their monthly premiums.
The individual mandate was designed to help insurance companies compensate for the added expenses of covering new members with pre-existing conditions.
However, many middle-to-high income Americans without health insurance from an employer were put in a difficult spot. They had to get coverage (or pay a penalty), but the monthly premiums they were being quoted were often very expensive.
This is where health sharing plans came in. It was ruled that membership in a health-sharing plan would satisfy the individual mandate. For many families, the monthly cost of a health sharing plan was much lower than the options available through the health care marketplace. Thousands of Americans signed up as a result.
How does a health sharing plan work?
HSPs operate very similar to health insurance plans though they don’t always use the same terminology.
“Premium”
Similar to a health insurance “premium”, you have a monthly “share amount” as part of your membership. You must pay your monthly share amount in order to receive coverage. The amount is based on number of people covered, ages of people covered, and the level of coverage. Monthly share amounts typically range between $75-250/month per person.
Here is a cost breakdown from Christian Healthcare Ministries' website:
“Deductible”
Similar to a health insurance “deductible”, you have a yearly “personal responsibility” or "unsharable" amount that you must pay before your health sharing plan will cover any costs. This amount also varies based on your plan and level of coverage. These amounts usually range anywhere from $400-$15,000/year.
Overview of the "Classic Plan" from Samaritan Ministries' website:
“Copay”
Some HSPs may require you to pay a set amount for certain types of care (doctor visit, specialist visit, emergency room, etc.). However, as far as I can tell, none of the major providers that I looked into have copays.
“Coinsurance”
Some HSPs require you to split the cost of your medical bills. This means that even after you have paid your deductible (personal responsibility) your provider is only going to pick up part of the bill.
EXAMPLE: The remaining medical bill is $5000 and your coinsurance is split 70/30. This means that your plan will pay 70% ($3500) and you are responsible for 30% ($1500).
Most of the HSPs I looked into did not require coinsurance but some do.
“Out of Pocket Limit”
Health insurance plans list the maximum amount you will have to pay per year before the insurance company pays 100% of all additional medical bills. By contrast, most HSPs have a cap on what they will pay "per incident". This is a very important distinction! In the event of a catastrophic health emergency, the HSP may only pay up to a certain limit leaving you to foot the rest of the bill!
Who can use a health sharing plan?
Each health sharing plan can set their own membership requirements.
Most health sharing plans are Christian organizations designed for Christians to share each other’s medical bills. For this reason, many of these organizations ask for you to agree to a statement of faith in order to be considered for membership.
As mentioned previously, health sharing plans are not health insurance. This means that they are not required to accept members with preexisting conditions.
Why might someone opt to use health sharing plan over traditional insurance?
1. Cost
If your only health insurance options come with hefty monthly premiums then health sharing plans can seem like an attractive alternative.
It’s important that you apply through the healthcare marketplace (https://www.healthcare.gov) and review your options there first before even considering a health sharing plan. Most Americans can find good coverage at a reasonable cost this way.
Don’t just assume that health insurance coverage is going to be too expensive. Typically, only those with relatively high incomes will find health sharing plans to be a significantly cheaper option.
2. Faith
A big part of the appeal of health sharing plans is that you are pooling your resources with fellow believers.
The idea of Christians working together to help take care of one another’s costs is powerful. Some health sharing plans encourage members to pray for each other, and they let you know who your monthly amount is going to help.
3. Choice
With an HSP, you can go to the provider you prefer. In some cases, you can present your HSP card and the HSP negotiates with the provider on costs. In other cases, you pay for the care directly and are later reimbursed by your HSP.
Also, you are typically month-to-month with the HSP. This makes it easier to switch to a different provider if/when you want to.
Why should you try to get affordable traditional health insurance before opting for a health sharing plan?
1. Cost
Usually, the best and most cost-effective way to get health insurance coverage is through your employer (or spouse’s employer).
If that is not an option for you, then your second step should be to apply through healthcare.gov and see what your options are there. If your income is below the federal poverty level, you or members of your family could receive health care coverage for little to no cost to you through Medicaid or CHIP. If your income is between 100-400% of the Federal Poverty Level, you can choose you can choose a private health insurance plan and receive a tax credit that helps offset your monthly premium (the higher your income the less of a tax credit you would receive)[iii].
Many applicants will find that they can get health insurance coverage for around the same cost or less as an HSP.
Important reminder: HSPs often make you pay for your own care out of pocket and then reimburse you later. But the reimbursement period can take weeks or even months! This puts you under a lot of financial pressure and can be extremely inconvenient.
2. No coverage limits
This is a key difference between health insurance and HSPs. Most health sharing plans cap how much they will cover per incident (usually between $125k - $1mil). That means in the event of a catastrophic health emergency, your health savings plan may still leave you with massive medical bill. Of course, most medical treatment will never reach those limits, but being covered in case of a catastrophic health event is kind of the point of having health coverage in the first place!
For an extra cost, some HSPs offer plans with no cap per incident.
3. Greater eligibility for care
If you have a pre-existing condition, you may not be able to get on a HSP in the first place. It’s possible to still get coverage but it may be a little different application process.
Remember that most health sharing plans are Christian organizations that have membership restrictions and don’t cover treatment related to things like smoking, alcohol, drugs, abortion, etc. Make sure you carefully read the fine-print to understand what is and is not covered.
4. Regulatory oversight
Any complaints or disputes are handled through the HSP’s appeal process. If you disagree with the HSP’s decision to deny your coverage or claim then you must abide by their guidelines. If they rule against you then you will have little to no options at your disposal since HSPs do not fall under the same oversight as health insurance companies.
5. Eligible to contribute to a health savings plan
One of the best savings tools out there are health savings plans. In 2021, the contributions limits for an HSA are $3600/individual, $7200/family. HSAs provide a triple tax benefit: contributions are tax-deductible, any interest earned inside the HSA is tax-deferred, and any distributions used for qualified medical expenses are tax-free!
However, in order to be eligible to contribute to an HSA, you have to be covered under a high-deductible health insurance plan. If you are covered under a health sharing plan, you do not qualify.
Conclusion
Health Sharing Plans can be very useful alternative in the right situations. However, I would highly recommend trying to get health insurance for a reasonable cost through an employer or through healthcare.gov before considering an HSP.
And if you do opt to join an HSP...
Choose a health sharing plan that does not cap how much they will pay per incident
Read the fine print to know what types of treatments/procedures are not covered
Have a fully stocked emergency fund for those times when you will have to pay out of pocket and wait to get reimbursed
[i] https://www.commonwealthfund.org/publications/fund-reports/2018/aug/health-care-sharing-ministries [ii] https://www.bls.gov/news.release/pdf/cesan.pdf
[iii] https://www.healthcare.gov/glossary/premium-tax-credit/