Currently, health care costs account for a higher share of the average family’s income in the United States than ever before. A study from the Economic Policy Institute released in 2018 found that in 1999, workers in the bottom 90% of the income distribution contributed 6.8% of their pay into a family health plan offered by their employers.
In 2016, this share of revenue had increased to 15%. Health insurance plans with government subsidies under the Affordable Care Act (ACA) are a cheaper choice for some clients.
To help defray these costs, some families are joining health care sharing ministries (HCSMs). These groups are motivated by religious principles and pool resources to help members with healthcare costs. More than a hundred HCSMs in the United States, according to the Alliance of Health Care Sharing Ministries, treat over 1.5 million people.
Like insurance, HCSMs aim to reduce the likelihood of catastrophic costs by spreading them across a large population. The law does not treat HCSMs the same as it does insurance products. This is because they don’t safeguard the same people or follow the same rules. As a result, the benefits and drawbacks of HCSM differ greatly from those of a traditional insurance plan.
How Do Health Care Sharing Ministries Function?
Healthcare systems management organizations (HCSMs) are neither for-profit nor non-profit organizations. They are religious non-profits that help its members pool medical costs and comply with the law. To explain how they function:
- A “share,” or premium, is paid by each member every month to cover medical costs. These holdings are often placed in a pooled account overseen by the HCSM.
- The HCSM uses this fund to cover the expenses incurred by its members when they undergo medical treatment. Certain medical professionals are set up to charge the ministry directly for the care of members. In other circumstances, members must pay for services out of pocket and then submit receipts for reimbursement from the HCSM.
- Every month, several HCSMs offer its members a list of the names of other members who have gotten treatment. This way, they can see exactly how the money they provide every month is being used.
Christian Healthcare Ministries, Medi-Share, Liberty HealthShare, Samaritan Ministries, and Altrua HealthShare are all examples of large HCSMs in the United States. The fees, services provided, and eligibility requirements of these plans are not uniform. However, they have a number of similar characteristics.
How Much Do HCSMs Cost?
Many of the expenses covered by HCSMs are also covered by conventional insurance, but the terms are renamed. These costs consist of:
- Deductibles. The majority of HCSM plans require you to pay an out-of-pocket maximum (similar to a deductible) before the plan begins covering any more expenses. This deductible is known as the “annual household portion” (AHP), “annual unshared amount,” or “member responsibility amount” (MRA) depending on your HCSM (MRA). While the deductible for some HCSMs is a flat fee each year, others require you to pay a new deductible for each medical “incident,” or each time you see a doctor for a new medical condition. Your deductible may range from $1,000 to $12,000 annually, or from $400 to $5,000 per occurrence, depending on the plan you select.
- Premiums. Your monthly share is what HCSMs term your premium, as said up top. While some health maintenance organizations (HCMOs) charge the same share price to all members, others factor in your age when determining the cost per share. Many HCSMs provide a menu of plan options, with larger share prices netting you reduced deductibles or higher maximums. With a high deductible, the monthly cost of a single share is as little as $75, while with a low deductible, it may be as much as $500.
- Partitioning of Expenses. There may likely be a copayment required at the time of service when you see a provider who is part of your HCSM’s network. After that, the HCSM will get the remaining balance. Compare this to your yearly deductible to see how similar it is. To illustrate, the “provider fee” that Medi-Share members must pay for a doctor’s appointment is $35, whereas an emergency hospital visit is $200.
- Charges Extra. The initial membership price is sometimes higher with some HCSMs. When you first enroll in the program, for instance, you may be required to pay an application fee in addition to any other fees associated with the creation of your payment account. The government may assess a switching fee if you decide to change health insurance policies. In order to defray operational expenses, HCSMs may additionally assess a periodic membership fee. People with certain untreated health issues, such obesity or hypertension, may be required to pay a surcharge to participate in certain programs. On the other hand, some plans incentivize healthy behavior by providing a reduction in the monthly contribution amount.
What HCSMs Cover
The scope of care provided by HCSMs varies widely. They are not insurance providers and hence are exempt from the ACA’s mandate that all essential health benefits be covered. In most cases, though, HCSMs will pay for:
- Healthcare provided by a physician or hospital
- Treatment in a Hurry
- Medical procedures and temporary medication regimens used to address chronic or
- acute conditions
When compared to insurance policies, HCSMs often only cover a fraction of the expenditures. Most of them, for instance, don’t pay for any sort of mental health treatment, and they hardly cover any sort of medication you could need. Regular exams and vaccinations are examples of preventive care that many of these plans do not pay for.
Moreover, HCSMs have more leeway than health insurers to decline to pay for treatment of prior conditions.
And most HCSMs have a blanket policy of not paying for whatever they see as being against their moral compass, the Bible. This is why many insurance providers won’t pay for services related to abortion, contraception, illegitimate births, STD testing and treatment, alcoholic and drug rehabilitation, or injuries stemming from either. Injuries sustained while participating in what they see as inherently risky pursuits, such as rock climbing, are not covered by many insurance policies.
In conclusion, many HCSMs limit the total amount any one member may receive in benefits. Such limits might be calculated on a monthly, annual, incidental, or even lifetime basis. Depending on the cost of the plan, the maximum amount of coverage per disease might be anywhere from $125,000 to $1,000,000.
Which Doctors Are Included in HCSMs?
When you join an HCSM, you have the freedom to visit any doctor or hospital in the network for treatment. There is, however, a catch. Healthcare providers may refuse to treat you if they learn that you are utilizing a health care escrow account (except in an emergency).
Many hospitals and physicians’ offices treat HCSM users as cash-paying patients because HCSMs are not insurance. In cases where the patient can pay the bill in full and immediately, having the option to be paid in cash may seem like a boon to doctors. It may be too hazardous for the physician to take on a patient without insurance if they anticipate the patient would require thousands of dollars in care.
To some extent, you are free to visit any doctor you choose, but many HCSMs instead prefer to work with a select group of doctors and hospitals known as a “network” (PPO). In order to avoid having to negotiate with an insurer, these service providers are typically ready to offer discounts to HCSM members. Therefore, it is always more cost effective to choose a service provider that is part of your HCSM’s network.
Who is eligible for coverage?
Most HCSMs restrict membership to Christians, who must demonstrate their faith in more nuanced ways than just marking a religious preference box. New members of many HCSMs are expected to sign a declaration of faith and commit to frequent church attendance.
Furthermore, most HCSMs require members to commit to acting in a “Biblical” way. This need can be understood in a variety of ways across HCSMs, although most of them do restrict the actions of its members in some way. A few examples of them are:
- Keeping away from cigarettes and narcotics of any kind. Even in states where it is legal, this usually includes using marijuana. It is also against the rules of certain plans to abuse medically necessary medications.
- Taking care when drinking.
- Keeping fit and eating right.
- A life free of extramarital sex. Most policies restrict membership to heterosexual couples because they consider marriage to be between a man and a woman.
- Further, there are many who forbid anything that may be seen as “rejection of one’s biological sex.”
There is a wide range of membership criteria across HCSMs. Some are restricted not just to Christians in general, but to members of a certain Christian sect in particular. The Christ Medicus Foundation, as just one example, serves just the Catholic faith. Some HCSMs, like Liberty, allow members of religions other than Christianity so long as they “worship the God of the Bible” and conform to certain ethical guidelines.
The Benefits of Health Care Sharing Ministries
Traditional insurance plans tend to have stricter regulations than HCSMs. The Commonwealth Fund found in 2018 that 30 states have approved legislation exempting such ministries from their insurance requirements. Most of these jurisdictions additionally mandate that HCSMs provide a written disclaimer indicating that the services they provide are not insurance.
In the opinion of some, this is a positive development. This implies that rather than being operated as enterprises, these initiatives are managed by groups of Christians who look out for one another in the name of the faith. Some of the benefits members enjoy when they switch to an HCSM from a more conventional health insurance policy are listed below.
- Costs Could Be Reduced
The desire to cut costs is a major motivation for many people to join HCSMs. A silver plan on the ACA Health Insurance Marketplace would cost an uninsured 50-year-old single person an average of $630 a month, as reported by the Kaiser Family Foundation. In contrast, if they enrolled in an HCSM, their monthly contribution may range from $80 to $400, depending on the specifics of the plan and the individual’s health status.
Those savings can multiply significantly for households. Buying a silver plan on the marketplace without a subsidy would cost a family of four (two parents in their 50s and two children in their teens) an average of $1,842 a month. Health care sharing ministries offer coverage for the same family for $250 to $950 monthly. In addition, the monthly share payments for many HCSMs would not increase for the family even if a member was diagnosed with a major disease.
It is important to remember, however, that the Affordable Care Act does provide financial assistance to the vast majority of middle-class individuals and families who purchase health insurance.
This same family of four with an annual income of $100,000 would pay just $819 per month in premiums after subsidies, which is less than the monthly contribution for several HCSMs. They could afford the monthly contribution for HCSMs for only $379 on an annual salary of $60,000. They would have better coverage than an HCSM under an ACA-compliant policy.
However, not everyone has access to these grants. Ineligible are those whose household income is either less than 100% or more than 400% of the federal poverty line. The coverage gap refers to the fact that persons with incomes below the poverty line are not eligible for Medicaid in certain states.
Furthermore, the Obamacare family issue means that many workers who are unable to provide affordable care for their families are not eligible for subsidies. An HCSM may be far more affordable than a health plan that complies with the Affordable Care Act, especially for people who do not qualify for subsidies.
- They may pay for some non-medical expenses.
In contrast to health insurers, HSCMs may be ready to assist with expenses that are unrelated to medical care. A 2012 Samaritan Ministries participant, for instance, complained to The Atlantic that her dental care costs were not covered by her policy. Nonetheless, some people contributed to her dental expenses after she submitted a particular appeal for assistance. In addition, some HCSMs offer adoption expense coverage to members.
- You are welcome to join at any time.
The Health Insurance Marketplace’s yearly open enrollment period is from November 1st to the 15th, so that’s when most people sign up for new plans. Outside of these enrollment periods, you need to have experienced a “qualifying event” to be eligible for enrollment.
Things like getting married, divorcing, having a kid, relocating, or accepting a wage reduction are all life events that might result in a loss of health insurance coverage. However, HCSMs allow you to enroll at any time, regardless of whether or not you have other forms of insurance.
- They Encourage Healthy Lifestyles
In addition to being “Biblical,” the norms of conduct that are demanded by most HCSMs are also beneficial to one’s physical and mental well-being. Almost all HCSMs prohibit or refuse to cover diseases resulting from smoking or the use of illicit drugs. As a general rule, most organizations demand its members refrain from engaging in further dangerous pursuits. Even their prohibitions on sexual activity outside of marriage help lower the incidence of STDs.
In addition, the lifestyle and the prevention of sickness is a major aspect of various HCSMs. Members of Medi-Share who are able to maintain a healthy blood pressure, body mass index, and waist circumference are eligible for a reduction on their share prices.
Members with or at risk for certain lifestyle-related conditions including heart disease or diabetes may also be eligible for individualized health coaching from some HCSMs. Whether you want to give up cigarettes, keep up with your workout routine, or reduce your stress levels, there is a program to help you achieve your objectives. There is typically a surcharge for this convenience, though.
- They are religious.
One of the main draws of HCSMs is the emphasis they place on religion, according to many of their users. These groups’ efforts extend well beyond simply defraying medical bills.
Members can also find others who share their values in this way. Members who are struggling with chronic illnesses often get letters of encouragement and prayers from other members, in addition to financial support.
But because of their religious focus, HCSMs can only accept members who share their faith. That usually signifies they are devout Christians who often attend worship services. Those few HCSMs that welcome members of other religions still insist that their adherents live according to “Christian” or “Biblical” principles.
Health Care Sharing Ministries’ Disadvantages
Healthcare cost-management services (HCMSs) may offer additional value beyond that of health insurance in certain contexts. They accomplish far less in other respects, though. The rules governing insurance do not apply to them, thus they are not obligated to offer the same protections that insurers do.
The promises they provide for the coverage they do supply are optional. Many medical professionals are naturally cautious to collaborate with them due to the absence of such guarantees.
- Pre Existing Conditions Are Typically Not Covered
As was previously said, HCSMs are not obligated to cover prior illnesses, and most do not. One way they are able to keep premiums down is by excluding those who would make the most expensive claimants. Those who are most in need of medical care are being left out of the system due to this unfortunate behavior.
North Carolinian Jack Truex mentioned to PBS that he gave serious thought to pursuing an HCSM in 2016. But he was uncertain whether or not the policy would pay for his wife’s Graves’ illness medication. Even if the premiums for standard health insurance were higher, he chose to maintain his current policy.
Some HCSMs have a wide definition of what constitutes a preexisting condition, so even if you feel perfectly well, it might not be good enough to get insurance. Pastor Michael Rowden of Montana, for instance, filed a lawsuit against Medi-Share in 2006 after the insurance company refused to cover the costs of a heart procedure he had.
Since Rowden’s heart murmur was already present and undisclosed, Medi-Share maintained that he could not be held liable. According to the Dallas Morning News, Rowden won the case in court and the jury paid him $835,000 in damages.
Christian Care Ministry, the parent organization of Medi-Share, declined to pay for ear tube surgery done by Dallas otolaryngologist Evan Bates in 2018, according to a report in Texas Medicine. Since the kid had an ear infection before enrolling in the plan, the insurance company said, any future issues with the ears should be considered prior conditions. After the parents filed an appeal, the HCSM agreed to pay for the procedure. The plan still wouldn’t pay for Bates to remove his tonsils because of his previous illness.
Pre-existing conditions might include even terminal diseases like cancer. For instance, if you have had “signs, symptoms, tests, or treatment” for any kind of cancer during the last five years, you will not be covered for cancer by Christian Healthcare Ministries. And any cancer discovered within a year of joining the plan will not be covered by the Altrua HealthShare Basic or Altrua HealthShare Silver plans because it was likely “existing” at the time of joining.
Even if you’ve never been diagnosed with heart illness, an HCSM can still refuse to provide coverage if you’ve ever had risk factors, like high cholesterol, that could lead to a heart attack or stroke.
- Other coverage is scarce.
HCSMs also often exclude coverage for new medical issues that were not previously present. Many of these plans do not provide coverage for services that the ACA deems necessary, such as:
- Mental health care
- Treatment for Substance Abuse
- Prescription medications are necessary for longer than a few months.
- Check Up\sImmunizations
- Routine health checks
The majority of HCSMs include dollar limits on coverage, even for covered items. That completely undermines health insurance’s primary function, which is to shield policyholders from financially ruinous medical bills in the event of a catastrophic illness or injury.
For instance, you might think you don’t need to worry about coverage limits when it comes to specific illnesses, such as the possible $500,000 cap. However, if you have a critical health issue, you can quickly exhaust that money. Christian Healthcare Ministries’ Brother’s Keeper Gold Plan is one of the few that provide unlimited coverage, therefore anything beyond $500,000 will be entirely on your own.
- They do not accept HSAs.
Combining a high-deductible health insurance plan with a health savings account is a popular way to reduce medical costs (HSA). An HSA is a tax-advantaged savings account that may be used to pay for medical costs not covered by insurance. You can spend this money for a variety of medical and dental costs that aren’t covered by insurance.
If allowed, contributing to a health savings account (HSA) would be a sensible solution to deal with the limitations of an HSCM. Only those with high-deductible health insurance plans are eligible to open a health savings account (HSA). Since HCSMs are not insurance, you cannot combine them with insurance.
You can keep using any preexisting health savings account (HSA) funds for qualified medical care costs after joining the HCSM. Your existing high-deductible health insurance coverage must be maintained in order to make further contributions to your HSA.
- Premiums are currently not tax deductible.
Any medical costs in excess of 7.5% of your AGI can be deducted if you itemize your deductions on your federal income tax return. That incorporates not only the cost of actual medical care but also the cost of health insurance.
However, because HCSMs are not insurance, your monthly contribution is not tax deductible like an insurance premium. If you utilize an HCSM, you can still deduct your actual medical expenses, but not the premiums you pay to the HCSM.
The IRS proposed a new regulation in June 2020 that would classify regular payments made to an HCSM as a medically necessary outlay of money. Since there is no statutory definition of an insurance plan in the tax code, the IRS believes that these payments can be considered as insurance premiums for tax purposes. The regulation has not yet been completed, and even if it is, it won’t go into force until the next tax year.
- You may be required to pay in advance.
Some HCSMs, like insurance, offer a list of approved providers that may be accessed on the HCSM’s website. If you see one of these doctors, the HCSM will be responsible for most of the cost while you’ll just be responsible for your copayment. However, if you see a physician who is not part of this network, or if your HCSM does not have a network, you will likely be responsible for the whole cost of your treatment up front.
When it comes to costly procedures, individuals may struggle to pay the full amount up front. Even if they anticipate being reimbursed by the HCSM, patients may still find it difficult to come up with the whole amount of the bill all at once.
Another issue is that it might be difficult to persuade an HCSM to actually pay a claim once it has been submitted. The Wall Street Journal contacted many Liberty HealthShare patients in 2019 who expressed dissatisfaction with the ministry’s slow or nonexistent claim payments. Further, as was previously said, HCSMs frequently reject claims outright on the basis that they are for treatment of a pre existing ailment.
Some medical facilities and doctors will not treat you at all if you have an HCSM, while others will not take your HCSM as payment. Getting an organ transplant, for instance, is extremely difficult without health insurance (HCSMs do not count). According to Dr. David Ansell, a hospital official quoted by Borgen Magazine, even if you have a willing donor and the means to pay for the procedure, no treatment facility would accept you as a patient if you don’t have insurance.
- Their marketing may be deceptive.
Top HCSMs make it quite clear on their websites that they are not insurance. Of course, not every strategy is that thorough. The Commonwealth Fund states that during the yearly open enrollment period for ACA health plans, many HCSMs extensively advertise themselves as traditional insurance due to their similar appearance. Consumers who signed up for HCSMs in 2017 thinking they were purchasing insurance prompted a rise in complaints from states after the open enrollment period ended.
Regulatory agencies are looking into the marketing practices of health maintenance organizations (HMOs) like Aliera Healthcare’s Trinity HealthShare. The New York Times reports that in December 2020, Nevada insurance authorities issued a warning to customers about these misleadingly advertised products.
Other states’ responses to Aliera have been more forceful. Several states have taken action to prevent Trinity and Aliera from promoting their plans as insurance, according to an article in the CT Mirror. These states include Connecticut, New Hampshire, Colorado, Washington state, Texas, and New York. They have given the corporation cease-and-desist letters, fined it, and filed litigation. Atlanta’s WSB-TV claims that the FBI is also looking into the matter.
- They’re Not Legally Binding
So, let’s say you’ve been diagnosed with a condition that you know for sure is covered by your HCSM. It doesn’t fall under the category of a pre existing ailment and it doesn’t violate any norms on acceptable behavior. You’ve met your yearly deductible and haven’t yet reached your maximum out of pocket expense. Here, your HCSM is obligated to cover all of your medical costs. Yet there’s no assurance that it will.
This is due to the fact that an HCSM agreement is not a legally enforceable contract like a health insurance policy. Instead, it’s all members “voluntarily agreeing” to split the bill. On their own websites, Christian Healthcare Ministries, Medi-Share, Liberty, Samaritan, and Altrua all state expressly that they have no duty to pay for any member’s health care expenditures.
- They raise the cost of healthcare.
It’s not just the paperwork that HCSMs make their members’ lives miserable with. The Commonwealth Fund suggests they can also drive up the price of regular insurance for customers throughout a state.
Those who believe their HCSM will pay for the majority of their medical expenses are the most likely to sign up. This often indicates that the individual is in good health and free of illnesses that an HCSM would reject coverage for. The average health of those who choose for standard insurance will decline as more of these healthy individuals opt for HCSMs.
Health insurance firms have to increase rates for everyone to cover the greater expenses associated with treating sicker individuals. This further increases the already high cost of insurance, discouraging young and healthy individuals from purchasing it. They are increasingly turning to HCSMs, which is driving up the cost of health insurance.
A further method in which HCSMs increase healthcare expenses is through their effect on utilization. According to New York Times user Greg Snider’s account, his wife recently underwent surgery that cost more than $100,000 and they used Medi-Share to cover the costs. Medi-Share “urged him to appeal with the hospital” to reduce the amount instead of paying it. Over time, the hospital waived most of the bill, reducing his personal contribution to $1,500.
Snider benefited from the news, but the hospital paid a high price. Health care providers make up the difference in lost revenue by increasing their costs for everyone else when they have to accept lesser payments from patients who are unable to pay their bills. Both patients and insurers will face increases in their out-of-pocket expenses as a result. Health insurance prices continue to rise as a result of insurance companies’ response, which is to raise rates for everyone.
Bottom Line
Medical insurance and HCSMs are two different things. In fact, you may look for the notice “This plan is not insurance” on the website of any respectable HCSM. Health care spending accounts (HCSAs) are not bound by the same constraints as insurance and do not offer the same advantages.
For this reason, opting for an HCSM rather than insurance is not recommended. While it might reduce your monthly premiums, catastrophic medical bills would still be your responsibility without insurance.
It’s wise to start with the more obvious options while searching for low-cost medical insurance. Determine the price of employer-sponsored insurance and, if it’s too high, research the options available via the Health Insurance Marketplace established by the Affordable Care Act. If you have looked everywhere and still can’t find a plan that fits your budget, an HCSM may be able to help.
