Healthcare Sharing Plans: An Affordable Health Insurance Alternative?

Today’s article is a guest post from Kate Phillips and an update to our previous articles about healthcare sharing plans. Kate uses a healthcare sharing program called Liberty HealthShare that we have previously covered on our website. Since there have been recent challenges with healthcare sharing ministries, it’s time for a fresh look at both the promise and potential problems of medical cost-sharing programs. This article outlines the pros and cons of healthcare sharing plans and may help you determine if they are worth your consideration.

The Search for Healthcare Alternatives

Open enrollment for health plans through the Affordable Care Act (ACA or Obamacare) insurance exchange runs from November 1 until December 15. While the majority of people with ACA plans receive subsidies—87 percent, according to Kaiser Health—an income of roughly $50,000 for an individual or more than $100,000 for a family of four will disqualify you. And if you’re in that boat, there’s nothing “affordable” about health insurance these days.

According to ehealthinsurance.com, in the four years from 2013 to 2017, health insurance premiums increased by 99% for individuals and a stunning 140%—from $426 to $1,021—for families that did not qualify for subsidies via the ACA. Families with children can expect to see premiums as high as $20,000 per year—or more.

For people living in areas with little competition for insurance plans, the costs are staggering—especially for those old enough to pay higher premiums but not old enough for Medicare. The interactive chart in this article on KFF.org (Kaiser Family Foundation) shows the cost of health insurance for a 60-year old person in various counties across the U.S. With an income of $50,000—just above the cut-off point for subsidies—a 60-year old individual would pay well over $1,000 month in many counties across the country. In Nebraska, premiums run as high as $1314/month, amounting to a brutal 32% of a $50k income.

Why I Opted Out of Obamacare

Four years ago, I stopped paying for my ACA plan, determined to find another option. Of course, the plan I was previously on was no longer available. Then in three short years, my health insurance premiums had doubled while my deductibles had tripled. I was paying more than ever and my only remaining benefit—unless I paid out an additional $6,500 in costs to meet the annual deductible—would be my annual exams and mammogram. In addition to thousands more in premiums, I had also paid my own healthcare costs for:

• x-rays and treatment for a broken foot
• rehabilitation from a sprained knee
• thyroid medication
• chiropractic care visits
• x-rays and diagnosis following a hand injury
• dermatologist visits for health (non-cosmetic) concerns
• and doctor-prescribed supplements.

Finally, it hit me. Although I technically had healthcare coverage, it provided me with almost no actual health care. Quite the opposite—I was cutting BACK on preventative care and supplements to afford it! I decided I wanted out.

Determined to find healthcare coverage at a lower cost, I eventually found an alternative route: healthcare sharing plans. (They are also described as medical cost-sharing plans, medical bill-sharing programs, health share ministries, health sharing programs, healthcare cost-sharing groups, and other similar names.) Healthcare sharing plans are not without challenges and they aren’t for everyone, but they have worked for me—at least so far.

Healthcare Sharing 101: What is it, exactly?

Healthcare sharing ministries or groups are faith-based non-profit organizations that pool members’ money to share medical expenses. The practice of “bearing one another’s burdens” in a practical, financial way has been practiced for centuries in many religious communities.

Modern day medical cost sharing began when a beloved Ohio pastor was involved in a terrible auto accident in the early 1980’s. His whole community banded together and paid his significant medical bills, in full, within 45 days. That pastor went on to begin the first modern-day health cost sharing ministry.

While healthcare sharing looks a lot like “insurance”—everyone pays monthly, risk is distributed amongst members of a group, reimbursements are issued for costs incurred beyond a certain amount—it is not. These communities have existed outside of government regulations for decades, offering an insurance alternative within systems that reinforce the values of particular communities.

Healthcare cost sharing has been most popular with Anabaptist Christians (Amish-Mennonite) and Evangelical Christians. It has also taken root recently in Catholic and Jewish communities. Some healthcare sharing ministries restrict membership to church members only. Other organizations, such as Liberty HealthShare and Aliera/Trinity Healthshare, are more inclusive. There are significant differences among them, but they all value healthy living and uphold the right of people to direct their own healthcare decisions free from government rules, restraints, and oversight.

Though widely used in some circles, healthcare cost sharing remained relatively unknown until rising costs and the individual mandate penalty sent people scrambling for alternatives. People bailed from ACA policies in droves and membership in healthcare sharing plans increased 500% in less than a decade. Programs that previously served modest-sized groups of people exploded. According to Dispatch.com, Liberty Healthshare went from sharing $67 million for medical bills in 2017 to more than $300 million in 2018—that’s a about a 350% increase in one year. Now, more than a million Americans use healthcare sharing plans, according to the Alliance of Healthcare Sharing Ministries.

This exponential growth has brought growing pains for many healthcare sharing ministries. Organizations and management have been challenged and member expectations have not been met. They have encountered long waits for payments, administrative delays, and other problems. Some members have had medical bills go to collections or claims rejected that should have been approved. Complaints on social media and the BBB have multiplied. Some are tales of valid frustration, others demonstrate that members don’t understand healthcare sharing or organization guidelines.

Healthcare sharing plans are not health insurance.

This fact is often repeated by healthcare sharing ministries and their websites, yet not always grasped by members. Because healthcare cost sharing is not government sponsored or state regulated, it does not operate by the same rules. Healthcare sharing plans are free-market wonders that cost less because they don’t cover all that ACA-compliant insurance plans must cover—by design.

If you consider a healthcare sharing program, read the fine print—carefully. Not everybody qualifies. Pre-existing conditions and member behaviors matter. The sharing guidelines also align with each ministry’s values—as readily stated in marketing and agreements.

For instance: Your Catholic healthcare sharing program won’t cover birth control. Abortion is only covered in cases where the mother’s life is endangered by the pregnancy. Maternity care is generally covered (sometimes at a higher cost), provided that your pregnancy begins after enrollment and—for some healthcare sharing ministries—after a wedding. Mental health services might not be included. A drunk driving accident or rehab for drug addiction won’t be covered if you signed an agreement saying you don’t abuse alcohol or indulge in illegal substances. Same with tobacco use… ailments caused by smoking aren’t covered. Injuries from bungee jumping, skydiving, cycling without a helmet or driving without a seatbelt might also be excluded.

Think carefully about situations that could arise. Could an insured in your family theoretically become pregnant out of wedlock? Are there pre-existing conditions? Do you engage in behaviors outside of the allowed scope of the program? Be honest with yourself. Don’t let a low monthly payment convince you to give up critical coverage elsewhere.

With that in mind, let’s examine some advantages and disadvantages of medical cost-sharing programs.

The Pros and Cons of Healthcare Sharing plans:

Some things that attracted me to a healthcare sharing ministry:

Control: I don’t want to the government, an insurance company, or an HMO to dictate my choices. I’d rather be a self-pay patient than railroaded into treatment I don’t want, or prevented from seeking treatment I do want.

Freedom. There are no networks. You choose your doctors and specialists. Programs are not dependent on employment or employer. You can change jobs, move towns or to another state, start a business… your plan goes with you.

Flexibility: No enrollment periods. Join anytime. (I started in March of 2016.)

Affordability! My monthly share payments are now less than half of what ACA plan premiums would be for a high deductible plan, and about one third of an ACA plan with a similar low ($1,000) deductible—referred to as an “unshared amount” or “member responsibility.”

And just like insurance, healthcare sharing programs often substantially re-price healthcare services to reduce the costs I pay myself.

Smart Stewardship: I am ultimately responsible for both my health and my finances. The more money I can keep to spend on preventative care, yoga, supplements—or whatever I know will benefit me and my health—the better!

On the minus side, disadvantages of health care sharing programs include:

Limitations. Pre-existing conditions are typically either not eligible for a time, never fully eligible, or benefits are capped. Coverage for prescription drugs is typically limited, if covered at all. Injuries caused by certain activities may not be covered.

Not inclusive. All healthcare sharing plans are not open to all people. Sponsoring ministries require agreement with statements of values or faith. Some require regular church attendance. Same sex couples might not be covered—or not at “couple” rates, depending on the healthcare sharing ministry. The values and statements of faith won’t ring true for many. And even if they does for you… they might not for another family member.

No tax benefit. Monthly shared amounts are not tax deductible as a medical expense or as health insurance premiums. Currently, healthcare sharing plans are not eligible for HSA savings plans.

Many providers won’t accept it. Just because there are no networks doesn’t mean that providers will want to work with your health sharing ministry! You could even be denied treatment if a provider isn’t confident they will be paid.

Get used to explaining what it is. Oftentimes, doctors’ offices are unfamiliar with healthcare sharing plans. It can take a bit of explaining or an extra call to confirm coverage. (And after you explain it… people still won’t “get it.”)

My Experience with a Healthcare Sharing Program

They haven’t paid every bill—but they have paid quite a few, and re-priced most of the rest. My annual “unshared amount” (deductible) is very low (just $1,000) and my particular program pays up to $400/year for an annual exam or tests. (Not all programs do.)

My monthly payment (“shared amount”) has risen by $50/month and I believe it is going up another $50 soon (because that’s what new members are paying). But the ACA plans have inflated much faster. This week I looked up what I would pay for something similar through the insurance exchange, and I could be saving as much as $7000 per year on premiums! For that, I can easily pay for my chiropractor, massage therapy, or prescription myself. (And my latest ACA plan no longer covered those things anyway!)

It hasn’t been perfect, but for me, it’s been worthwhile. There have been a couple miscommunications and occasional frustrations. Although I can’t say that working with typical health insurance was necessarily any better! And there’s the rub. There may be customer service issues or coverage gaps with a healthcare sharing program… but what are you comparing it to?

Right now the public reviews for the healthcare sharing ministry I’m with are dismal. The growing pains are real and there are many reports of poor customer service or very slow reimbursements. My experience has been positive, overall, and I plan to stay with the organization, especially after reviewing options. But for now, the Yelp reviews and the experience of a friend have made me think twice about recommending it.

Then… I looked up Yelp reviews for insurance companies that offer plans in my state. Guess what? The reviews were WORSE! So it helps to put it in context. There are big problems in our healthcare system, and there is no perfect solution.

Some Things to Consider…

Traditional plans, employer-sponsored plans and ACA policies are a better fit for those with pre-existing conditions or those who prefer the simplicity of working with a Preferred Provider Organization or an HMO (Health Maintenance Organization) such as Kaiser. (And you’d never have to submit your own claim.) But if you are young, healthy, active in a faith community that offers a healthcare sharing plan, or perhaps self-employed, used to being self-insured, or simply can’t afford health insurance, look at your options carefully.

Kim Butler always says to measure opportunity costs. And perhaps that’s what sold me on trying something new. If you could reduce your regular monthly payments by $300 or $500 a month, perhaps even $1,000/month or more for a family, what else could you do with that money? Could you save it? Invest it? Start a business or side income with it? Or perhaps, you’d just enjoy more of whatever keeps you happy and healthy!

You’ve got to research your options and make a decision that feels right to you. For me, typical health insurance was no longer a fit. I was generally healthy and it felt like money down the drain. But for you, it may feel risky to try a health sharing plan. Or you might not be able to adopt a statement of faith or values in good conscience. Or you might have a chronic or pre-existing condition you are concerned about.

For those who would like to try a health sharing ministry, I would suggest the following:

Do your due diligence. Ask questions. Read the fine print. Inform yourself. And be realistic about the pros and cons of all of your options… including the opportunity cost.

Be prepared to self-pay (and be reimbursed later) if necessary. This solves the problem if a provider does not wish to accept a certain plan. (Of course, ask for a cash discount.) Obtain paperwork to submit your own claims. (And since you’re not experienced at medical billing… be prepared to educate yourself on the process.)

There is actually power in being a self-pay patient. Oftentimes, cash patients receive discounts of 40% or more. (Nobody really wants to deal with insurance, and the first thing most insurance companies do anyway is reprice the service!)

Consider supplementing. If you use a healthcare sharing ministry, you can supplement with savings or use supplemental coverage from a company such as Aflac. Supplemental policies aren’t health insurance, but they can help fill coverage gaps. Temporary policies or travel insurance policies or can also provide you with more robust coverage for certain situations and time frames.

Save more money in a health-savvy way. When you save with whole life insurance with certain policy riders, you actually set yourself up to be able to utilize your life insurance policy in the event of certain health challenges. Riders to consider:

• Waiver of premium. The life insurance company will pay your premium for you should you become disabled before age 65.
• Accelerated death benefit. This rider allows you access to part of your own death benefit if you are ever diagnosed with a terminal illness.
• Critical illness. The insurer pays a lump sum if you’re diagnosed with a critical illnesses specified in the policy, such as cancer, heart attack, stroke, Alzheimer’s or kidney failure.
• Long-term care benefits. This rider can be used to provide caregiving assistance not covered by health insurance or Medicare.

And if you remain healthy… great! You can annuitize your policy to create a guaranteed income stream… even to age 100 and beyond.

Manage your expectations. Realize there is no such thing as “free health care,” “cheap health insurance,” or a healthcare sharing plan that will always cover everything you want it—on demand and with no effort. There are pros and cons to any solution. Healthcare sharing programs are not for everyone, but they are very helpful to some.

While you’re making decisions, do all you can to stay active, happy and healthy. That’s the best insurance you can buy!

This information is provided for educational purposes only and contains no affiliate links. If you have additional questions, you can reach the author, Kate Phillips, through TotalWealthCoaching.com. If you decide to try Liberty HealthShare, she’d be happy to make a referral.