It’s no joke that health insurance premiums and deductibles continue to rise at an unprecedented rate. For those of you fortunate enough to have employer-provided coverage, congratulations! Even a mediocre employer-sponsored plan typically offers lower premiums and better coverage than plans you find on the individual exchange.
Repeal of the Individual Mandate
The Tax Cuts and Jobs Act of 2017 repealed the Individual Mandate, so you will no longer pay a tax penalty for not carrying health insurance in the U.S. (starting in 2019). Nonetheless, avoiding health insurance coverage altogether may not be the wisest decision. You will be on the hook for all medical bills, possibly ruining your credit history if you don’t have cash to pay them. Medical organizations typically offer payment plans but they are just like any form of debt: you should carefully analyze interest rates and the impact those payments will have on your budget.
With the Individual Mandate repeal, premiums will be even higher. People who think they are healthy enough to go without insurance will opt out, and those who are willing to pay higher premiums stay on plans because of their medical needs.
The gig economy and entrepreneurship is prevalent as technology accelerates and people increasingly opt for work-life balance. Gone are the days of spending 30+ years working for the same company in a desk job. Faced with competing pressures of skyrocketing health insurance costs and your desire to have flexibility in your work life, how do you move forward?
An Alternative to Traditional Insurance
Healthcare sharing programs offer an alternative to traditional health insurance and are often more cost effective. They are faith-based programs that facilitate voluntary sharing of eligible medical expenses among members. Two crucial caveats include:
1) Healthcare sharing programs are NOT insurance. The ministry program is not legally required to pay for a member’s medical expenses. However, larger ones typically have a strong historical track record (99% or more) of paying eligible medical expenses once the family has met their equivalent to an annual deductible.
2) My family moved to a healthcare sharing program earlier this year. I heard about these programs through an XY Planning Network member forum and conducted additional research on one program in particular, Medi-Share. Although we selected Medi-Share for our family, this is not an endorsement for Medi-Share. Each family should conduct independent research on faith-based programs and make the best decision for their particular family.
Here’s the history behind my family’s health insurance decisions. In 2017, my husband was employed by a large corporation that offered solid medical plans. Since I am self-employed, it made sense for our entire family to use health insurance coverage offered by my husband’s employer in 2017. The premiums for our family of five ran $5,400 annually for both medical and dental care. We had relatively low deductibles and out-of-pocket costs.
When my husband quit his job so we could pursue our dream of living abroad in Spain in early 2018, we needed to find alternate coverage. COBRA premiums would have exceeded $2,000 monthly for our family of five. On the individual exchange, medical insurance premiums for silver or bronze level policies with much higher deductibles still averaged $1,500 monthly. The government’s premium assistance only happens at certain income levels, and we did not have a clear idea of our family’s 2018 income. We would have tripled our medical insurance cost by pursuing one of the individual exchange plans!
Medi-Share is a saving grace for our family. Although the terminology is slightly different, our monthly premium (known as “monthly share amount” by Medi-Share) is $788 and annual household deductible (“annual household portion”) is $3,000. The doctors we regularly use (i.e. kids’ pediatricians, general practitioners, etc.) are within Medi-Share’s preferred provider network. Medi-Share negotiates a discount directly with the medical provider and sends me an Explanation of Sharing after the service is rendered. Then the medical provider bills me directly.
Considerations for Healthcare Sharing Plans
Answer the below questions prior to joining any healthcare sharing program:
1. Does anyone in the family have pre-existing medical conditions?
In our family, the answer is no and that is beneficial.
2. Do we NEED coverage for preventative care visits, or are we simply looking for catastrophic assistance?
Medi-Share does NOT cover preventative care but will theoretically be there for us if an unforeseen medical emergency happens. In that case, we will get notes of encouragement and prayers from other Medi-Share members whose monthly share amounts will go towards paying our eligible medical bills.
If you are planning a pregnancy, keep in mind that your out-of-pocket costs will be greater due to the sheer amount of prenatal visits recommended by physicians. Medi-Share recently made their standards more stringent, requiring families to be Medi-Share members for longer time periods if maternity fees are to be covered. This prevents a family from joining Medi-Share for a few months, getting pregnant, having the baby, and then leaving the plan immediately.
3. What is the track record of the healthcare sharing program?
Medi-Share began in 1993, and members have shared and discounted more than $2 billion in medical bills since inception. It is one of the largest health sharing programs and has a history of paying 100% of eligible medical expenses beyond the Annual Household Portion. We took comfort in Medi-Share’s track record, similarity to traditional insurance, and increasing membership count.
4. Does the program align with our values?
Our family’s overwhelming answer is YES. We love the idea of sharing one another’s medical burdens. Additionally, many healthcare sharing programs do not cover “unbiblical” expenses such as abortion, birth control, and injuries related to drugs and alcohol. These exclusions make us feel good about the choices we are making on a daily basis.
The Downsides of Healthcare Sharing Programs
I am painting a pretty optimistic picture, huh? There are two significant downsides to healthcare sharing programs, outlined below:
1) You don’t know what you don’t know.
Similar to traditional insurance plans with high deductibles, you likely have no idea what your out-of-pocket cost will be for a prescription medication or procedure. Your level of financial responsibility is unclear until the service is rendered, Explanation of Benefits is provided, and the bill arrives. Going into Medi-Share, we did not know the out-of-pocket cost for our kids’ annual well visits. According to our Explanation of Sharing, each well visit is just under $130. Also, I had a strange-looking bug bite under my eye in May that became worse over the weekend. Rather than going into an urgent care center, I consulted virtually with a doctor (a free Medi-Share member benefit). She prescribed two medications totaling $140. Those bills were more than expected!
2) Employer-sponsored plans are usually a better deal, especially at large employers.
Although faith-based sharing programs typically offer lower premiums than plans on the individual exchange, they are usually more expensive than insurance offered by your employer. When my husband is eligible for benefits at his new employer, we are likely going to switch away from Medi-Share to a traditional health insurance plan.
Do Your Homework
If the faith-based programs interest you, please conduct additional research. Reading this Nerd’s Eye View article will help you understand the nuances between the most popular healthcare sharing programs, namely:
If you are still torn between a healthcare sharing program and traditional insurance, consider visiting Take Command Health. They act as an insurance broker for families, helping you compare traditional policies with faith-based programs like Medi-Share.
Small business owners who want to offer medical benefits to employees may be interested in Take Command Health’s QSEHRA, which stands for Qualified Small Employer Health Reimbursement Arrangement. As the employer, you don’t select a specific medical plan for your employee but rather pay an amount towards each employee’s medical needs (i.e. $300 monthly). Each employee chooses his or her medical plan, and Take Command Health facilitates the reimbursement process.
Where to Go From Here
In closing, healthcare sharing programs are not intended for everyone. Traditional insurance is a viable option for many families, particularly for those with pre-existing medical conditions. But if you are frustrated with traditional insurance and had no familiarity with these programs prior to reading the article, I encourage you to explore them further.
As a fee-only advisor, my only source of compensation comes directly from clients through a stated, transparent fee. There is absolutely no financial incentive for me to recommend faith-based programs, Medi-Share, or Take Command Health. In the conversations I’m having with clients, prospective clients, and friends, medical insurance costs continue to be a hot topic. Perhaps one of the healthcare sharing programs will ease that burden.