U.S. health insurance premiums and deductibles continue to rise at an unprecedented rate. For those of you fortunate enough to have employer-provided coverage, celebrate! Even a subpar employer-sponsored plan typically offers lower premiums and better coverage than plans on the individual exchange.
For those of you who don’t have health insurance through work, read on for a look at an interesting — and often less costly — alternative to buying coverage on the open market: health care sharing programs.
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The Tax Cuts and Jobs Act of 2017 repealed the Individual Mandate, so you will no longer pay a tax penalty for not carrying health insurance in the U.S. (starting in 2019). Nevertheless, avoiding health insurance coverage altogether is risky. You will be on the hook for all medical bills, possibly ruining your credit history if you do not 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 may opt out, and those who are willing to pay higher premiums stay on plans due to pre-existing medical conditions.
The gig economy and entrepreneurship is prevalent as technology accelerates and people increasingly opt for work-life balance. It is uncommon to spend over 30 years of your life 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
Health care sharing programs offer an alternative to individual health insurance plans on the exchange and are often more cost effective. They are faith-based programs that facilitate voluntary sharing of eligible medical expenses among members. Please keep in mind that health care 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 track record of paying eligible medical expenses once the family has met their equivalent to an annual deductible.
In full disclosure, my family moved to a health care sharing program earlier this year, but this is not an endorsement for them. I heard about these programs through an XY Planning Network member forum and personally conducted extensive research on one program in particular, Medi-Share. You should diligently investigate and make your own assessment prior to selecting any health care sharing plan.
Considerations of Health Care Sharing Plans
There are four critical questions to ask yourself prior to enrollment:
1. Does anyone in the family have pre-existing medical conditions?
In our family, the answer is no and that is beneficial.
2. Do you NEED coverage for preventive care visits, or are you simply looking for catastrophic assistance?
Most health care sharing programs do NOT cover preventive care but will theoretically assist if an unforeseen medical emergency occurs. In that instance, other health care sharing program members’ monthly share amounts are used for your eligible medical bills after your annual household portion is met.
If you are planning a pregnancy, remember 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 members for a longer time period 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 quickly leaving the plan.
3. What is the track record for the health care 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. A strong track record and increasing membership count may provide additional assurance during the selection process.