12/1/2017 By Agent Ken CobbBy Agent Ken Cobb
"Share one another’s burdens.” The numbers are growing of people who find this philosophy appealing - much more appealing than continuing to pay more for health insurance than they pay for their mortgage. And so many people who have carried traditional insurance all their lives are now choosing faith-based health sharing plans, such as Medi-Share, Samaritan Ministries, Christian Healthcare Ministries and others. But how do these compare with traditional health insurance, and are they a financially safe alternative?
How do these plans work?
Instead of paying a monthly premium to an insurance company, you pay your monthly membership to other members of your healthcare sharing plan who’ve incurred medical expenses deemed eligible for “sharing” by the plan. The plan may also ask for a small amount of your membership share to cover its administrative costs. Because recognized healthcare sharing ministries in existence prior to 1/1/2000 have a special exception in the Affordable Care Act, if you are a member of such a plan, you are not subject to the Obamacare penalty for being uninsured.
Reasons people like these plans better
The single major reason the many people are joining faith-based health sharing plans is that they are usually much more affordable. Your monthly membership cost in such a plan might range from $300 to $800 a month for an average family, versus $1000 to $1500 a month to enroll your family in the cheapest health insurance option (which comes with a much, much higher deductible).
So, how are faith-based health sharing plans able to charge that much less? I'd suggest that the obvious answer is that it is mainly healthy people who enroll in them. Why? For one, these plans tend to restrict coverage for pre-existing conditions, so they aren't nearly as attractive to individuals with expensive chronic conditions. And people with ongoing medical needs are more likely to value the security of real insurance. This isn't rocket science; having a healthier membership means lower medical costs per average member, which means members don't have to pay as much. These sharing plans may also point to lower administrative costs, the assumed healthier lifestyles of their church-going members and available discounts when paying for medical bills in cash.
Secondly, not only is your monthly payment lower with a healthcare sharing plan, your out of pocket medical cost may be lower as well. While many people are now buying health insurance with $6000 or $7000 deductible, the average healthcare sharing plan might start paying after as little as a few hundred dollars out of your own pocket.
Beyond basic affordability, the whole concept of direct sharing can be appealing. Many families find it much more acceptable to write a large monthly check directly to another member in financial need than it is to fork over those same hard-earned dollars to a big insurance company. It can be argued that it is far more in keeping with American values for citizens to freely associate to help each other in time of need, rather than being told they must buy a product or face a tax penalty.
Reasons for caution
As these healthcare sharing plans disclose in the fine print and usually even the big print, they are not insurance. What does that mean? In simple terms, it means that there is no contract in place guaranteeing that your bills will be covered. Your medical expenses being paid for is wholly dependent on the continued voluntary participation of other members. These plans are quick to point out that “so far, so good” – they’ve always remained solvent to date. But, without question, the plan would fail if some natural or man-made disaster occurred or a terrible virus spread that caused a high percentage of members injury or major sickness. This is a risk you take with such plans. Since these plans are not insurance, there is no state guarantee fund backing them in the event the plan becomes insolvent.
In addition, because these plans are not insurance, they are also not regulated by government. Not only does this mean that you can’t appeal to the Department of Commerce to resolve a dispute, but it also means they are not required to “cover” everything that a regular major medical insurance policy covers. Most of these plans have caps on how much they will pay for – per medical incident or per year. I noticed one plan with a cap as low as $125,000 in some cases, which is definitely a cause for caution. (You may be able to add an additional level of protection for an extra monthly or annual cost.)
Since they aren’t regulated as insurance, these plans may also have unexpected exclusions. In addition to excluding medical costs arising out of activities deemed immoral (such as sex outside of marriage), the plan could also exclude other seemingly random procedures or activities. For example, a given plan might exclude injuries resulting from riding an ATV or rock climbing. And as mentioned earlier, unlike today’s health insurance policies, these plans generally exclude or restrict pre-existing conditions. (This even means the plan might not cover a pregnancy which began before you signed up.)
To switch or not to switch?
So, is a Christian healthcare sharing plan worth the risk and uncertainty of not being insured? Ultimately this is a decision you will have to make. One thing I can say for sure: more and more families and individuals feel that they don’t even have a choice, as the cost of health insurance rises further out of reach with each annual rate hike. At the end of the day, you have to be able to afford to pay the monthly cost of whatever you enroll in.
If you are considering taking the leap to healthcare sharing, I hope this post helps you make an education decision. If you move forward, it's important to do so with your eyes open, understanding both the risk as well as the benefits.
Pine Country Insurance is an insurance agency offering insurance products. As such, we are not an expert in the subject matter discussed herein, and we are providing this high-level commentary for general thought-provoking purposes only. Pine Country Insurance does not offer or endorse any non-insurance plans or products.
About the Author
Agent Ken Cobb
Ken is the owner and principal agent at Pine Country Insurance in Bemidji. Active in the insurance industry since 2000,Ken uses his years of personal insurance knowledge and experience to assist clients in customizing insurance coverage to fit their needs. Ken considers himself a "farmer" rather than a "hunter"; rather than focusing on writing a lot of new policies as quickly as possible, he works on cultivating long term relationships based on trust with his clients. When writing new policies and meeting for annual reviews, Ken spends time with his clients explaining and helping them understand their insurance, and he is also pleased to share his knowledge with his blogging audience as well.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.