If you do not qualify for a premium subsidy on healthcare.gov and you do not want to be uninsured, a Medical Cost Sharing Plan may be the perfect choice. In this article you will learn the eleven important facts you need to know about Medical Cost Sharing Plans as an alternative to traditional health insurance.
What is Medical Cost Sharing?
Medical Cost Sharing is not insurance. What it is, is a strategy where individuals (and families) form a community dedicated to helping members pay their medical bills. Each month members contribute a set dollar amount into a fund that is then used to pay the medical bills of members.
Most people know these plans as “Christian Health Sharing Ministries.” Of these the oldest and best known is Christian Healthcare Ministries. This plan has been around since 1981 and is still going strong today.
The second and best known is the Samaritan Ministries Health Care Sharing. This plan was founded in 1994 and has thousands of members nationwide.
After the passage of the Affordable Care Act (Obamacare) these plans gained a lot of publicity. Under the terms of the Affordable Care Act (https://myhealthcare360.org/the-affordable-care-act-obamacare-what-you-need-to-know/) membership in a legitimate health sharing ministry met the requirement for having health insurance. Since costs were significantly less than health insurance and membership eliminated the penalty thousands of Americans enrolled.
Within a couple of years many newer health sharing ministries began to appear. And while members in Christian Health Share and Samaritan Ministries Health Care were very happy, members of some of the newer plans were less enthusiastic.
How Does Medical Cost Sharing Work?
As I mentioned above, members contribute a set monthly dollar amount into a community fund. Then, as members submit their medical bills, the community reimburses them for incurred costs. But Medical Cost Sharing communities do not generally reimburse members for everyday medical expenses such as routine doctor visits for the flu or an urgent care visit.
Most Medical Cost Sharing plans require that medical bills exceed some initial amount before they will reimburse you as a member. Unlike a deductible in health insurance, this initial amount of medical bills is per illness or accident. With a deductible, each medical bill is added to previous bills to meet the deductible.
As an example, a Medical Cost Sharing plan might require that members the first $1000 of any one accident of illness. If you were a member and injured your leg playing sports your medical bills might look like this:
As you can see, the total for this one medical event is $1850. Under the Medical Cost Sharing plan you are responsible for the first $1000 for any one medical event. Therefore, you would submit the remaining $850 to the community. Next, the community would send you a check for $850.
Medical Cost Sharing Under the Affordable Care Act
In its original form the Affordable Care Act mandated that Americans own qualified health insurance or pay a fine. But health insurance was (and is) very expensive. As a result of the cost, Americans who made too much money for a subsidy found that buying a health insurance policy was incredibly expensive. In addition, they would still have a $5000 deductible, no copays and another possible $2500 out of pocket. To many Americans this was unacceptable.
Luckily, there was a provision that allowed Americans to participate in a health sharing ministry and avoid the tax penalty. But, to qualify a health sharing ministry had to meet certain requirements. To avoid the tax penalty the health sharing ministry had to:
The Different Approaches to Medical Cost Sharing
The earliest health sharing plans we incredibly simple. Members made a monthly contribution into the community fund. There were no preferred provider or health maintenance networks. And there were no precertification requirements. As a member you would send your medical bills to the community and the community would then send you a check.
Today there are several plans, both faith-based and secular that utilize this approach. Under this approach you become a “cash-pay” patient when you get medical services. You explain to providers that you are a member of a medical cost sharing community and they will send you a check for your medical bills. Once you receive that check, you will pay them! The challenge for members under this approach is that you must deal directly with your medical providers. If they want immediate payment since you do not have insurance, you may have to utilize your credit cards.
To deal with the challenges posed by you being a cash-pay patient, several medical cost sharing plans began to mimic health insurance. They utilized a preferred provider network and provided an ID Card. Even though your plan was not health insurance, it looked like health insurance. As a patient, you provided your ID card, and the provider filed the claim directly with the plan. But this approach had some problems and that resulted in member dissatisfaction.
A newer approach is what I refer to as Managed Medical Cost Sharing. There is no PPO network, but you are provided a lot of assistance in dealing with providers. The Medical Cost Sharing Community Administrator maintains a staff of healthcare navigators to assist you, the member. These navigators will talk directly to your medical providers, including the hospital. They will negotiate the pricing in advance, agree on arrangements to pay each provider, and even make sure that you are working with a high qualify provider.
How Does Medical Cost Sharing Compare to Health Insurance?
If you are considering choosing a Medical Cost Sharing Plan instead of a health insurance policy, it is very important to understand the differences. With health insurance you transfer all the risk to the insurance company. With Medical Cost Sharing you share the risk with community. So, what does that mean?
When you buy a health insurance policy there is a contractual guarantee between you and the insurance company. If your maximum out of pocket liability is $8000, the insurance company assumes the risk for any costs that exceed that liability. In theory this means that if you were diagnosed with cancer and your total medical bill was $150,000, you would only pay $8000.
I say “in theory” because as we all know it is possible for the health insurance company to deny a claim. In addition, it is possible that some of your treatment will be provided by an out-of-network doctor. Still, if all your providers are in-network and all procedures are approved, your total out-of-pocket cost would be limited to $8000.
To meet the guarantees of your health insurance policy, insurance companies are required to maintain minimum financial reserves. And if they are unable to pay claims, most state insurance departments maintain an insurance program similar to the FCIC for banks. Your medical bills will get paid.
There is one more difference between health insurance and medical cost sharing. As a result of the Affordable Care Act, your health insurance is required to provide coverage for a set of preventative services. If you own a health insurance policy, your preventative services are covered in full. Learn what is covered here: https://www.healthcare.gov/coverage/preventive-care-benefits/.
How Does Medical Cost Sharing Differ?
When you join a Medical Cost Sharing Plan there is no guarantee of payment. These plans are not regulated by the Department of Insurance in your state. Plus, there is no reserve requirement. That means that your plan has no legal requirement to maintain a certain amount of money with which to pay member’s medical bills.
While it is possible for a Medical Cost Sharing plan to lack the funds needed to pay claims, the best of these plans (health sharing plans/ministries) have never failed to pay a member’s medical bills. Medical Cost Sharing plans keep administrative costs to a minimum so that more of the member’s monthly payment can go to pay medical bills. And there is less red tape in paying medical bills.
One feature of medical cost sharing plans results in members having a far better healthcare experience than with health insurance. The best of these plans takes the middleman out of the doctor – patient relationship. There is no one second guessing the recommendations of your doctor. Let me give you an example.
My daughter has been trying to find out why she has been experiencing a lot of pain. Her doctor wants her to get an MRI but her insurance company has declined the request. She had to visit a second doctor and get a second opinion that agrees with the first doctor. The second doctor had to resubmit. With Medical Cost Sharing the first doctor would have ordered the MRI, she would have gotten it and the Medical Cost Sharing community would have sent her check for any amounts beyond her responsibility. Simple!
Is Medical Cost Sharing More Affordable Than Health Insurance?
In a word the answer is yes! Medical Cost Sharing is far more affordable than health insurance. It is more affordable both in the monthly cost and member out-of-pocket liability.
Imagine that you are a healthy 40-year-old, non-smoker who is comparing a health insurance and a medical cost sharing solution.
Major Insurance Co
$289 Monthly Premium
Subject to the Deductible
Major Insurance Co
$368 Monthly Premium
|Subject to the Deductible|
Cost Share 1
$248 Monthly Cost
Any Provider – No Network
$1000 Member Responsibility Per Event
Subject to the Member Responsibility
Cost Share 2
$319 Monthly Cost
Any Provider – No Network
$1000 Member Responsibility Per Event
Included at Zero cost for primary care
With Medical Cost Share 1 you would have the option to increase the member responsibility to as much as $5000 per event. Doing that would reduce the monthly cost to $166 a month.
If you chose a traditional health insurance with a $2500 deductible, $8,550 maximum out-of-pocket and a $10 office visit copay (closest to the Medical Cost Share 2), the monthly premium would be $540.
The traditional health insurance plan includes coverage for prescription drugs while the Cost Share includes a discount formulary. The question that you must answer is this: is it worth $220 a month ($2640 annually) to have a prescription drug benefit? That will depend on your current health situation.
Medical Cost Sharing Versus Group Health Insurance
If you own a company and have employees you are well aware of the importance of healthcare benefits. According to the Metlife Employee Benefit Trends Study 2020 86% of employees consider health insurance to be a must-have benefit. You can download that study here: https://www.metlife.com/employee-benefit-trends/ebts2020-holistic-well-being-drives-workforce-success/.
The challenge for most employers is that group health insurance is very expensive. If you are looking for a more affordable way to provide healthcare benefits, Medical Cost Sharing can be a great alternative. But there are some distinct differences between Medical Cost Sharing and Group Health Insurance that you must be aware of.
The first difference is that while group health insurance premiums are deductible, medical cost sharing is not. Any amounts that you pay for medical cost sharing programs must be added to the employee’s income for you to deduct the cost.
The second major difference with most medical cost sharing plans is in how employees interact with their healthcare professional. Most plans expect the member to be cash-pay patient and work with their providers.
Avoid Faith-Based Plans for Group Benefits
According to the Department of Labor website “Title VII of the Civil Rights Act of 1964 (Title VII) prohibits federal agencies from discriminating against employees or applicants for employment because of their religious beliefs in hiring, firing and other terms and conditions of employment.” You can read the entire text here: https://www.dol.gov/agencies/oasam/civil-rights-center/internal/policies/religious-discrimination-accommodation
Since the Faith-Based Cost Share Plans require that the member affirm their beliefs, you may open yourself up to litigation. You need a non-religious medical cost sharing health plan that does not rely on an affirmation of faith.
5 Steps to Choosing Your Medical Cost Sharing Plan
Is Medical Cost Sharing sounding like something worth looking into for you? If so, you need to understand how to choose the best plan for you needs. This checklist might be helpful to you.
- Is the plan faith-based? If so, can you honestly say that you agree with the belief system of the plan? If not do not enroll. You do not want to find yourself having your medical bills denied due to misrepresentation.
- Does the plan utilize a healthcare network? My advice is to avoid plans that use a network. In choosing a Medical Cost Sharing Plan you do not need a third party getting involved in your medical care. That should be between you and your provider.
- Does the plan require pre-approval for services? The best plans will assist you in finding the best care but leave the decision-making between you and your providers.
- If you are choosing a secular cost sharing plan, can you abide by their lifestyle rules? Many of the secular plans utilize lifestyle in place of an affirmation of faith as the basis of the community. Read their rules in full.
- If possible, find a plan that provides a healthcare concierge team to help you engage with your providers. While you will still be a cash-pay patient having a healthcare team to talk with your providers can make dealing a medical event less stressful.
What Are Some Medical Cost Sharing Companies?
Medi-Share Health Share
Medi-Share was founded in 1993 under Christian Care Ministry. As you can guess this is a faith-based health sharing plan. Medi-Share does utilize the PHCS Preferred Provider Organization. Members are not considered “cash-pay” since the PHCS network negotiates reimbursement levels with providers. If the member goes out-of-network Medi-Share will not negotiate the medical bills and will pay the in-network benefit.
Medi-Share does provide their members an ID Card for use with medical providers.
Liberty Healthshare is another faith-based medical cost sharing community. Unlike Medi-Share, there is no healthcare network. That means that you can use any doctor or hospital.
Liberty Healthshare was founded in 1995. Like most plans, you will have several options to choose from. The most comprehensive choice includes a $1,000,000 maximum benefit per shareable event.
Liberty Healthshare does provide members an ID Card that can be shown to providers. Though you are still considered a cash-pay patient, arrangements can be made to have your medical bills sent directly to the community.
Samaritan Ministries Heath Care Sharing was founded in 1994. This is another faith-based medical cost sharing health plan. With Samaritan Ministries you can use any medical provider or hospital.
Samaritan Ministries offers several plans. Originally, Samaritan Ministries offered two plans: Classic and Basic. Recently they added several more options which they have named “Given”.
As a member you will receive an ID Card which can be presented to your healthcare provider.
One Share Health
OneShare Health is another faith-based medical cost sharing plan. Like Medi-Share, OneShare utilizes a Preferred Provider Network. The network used by OneShare Health is the First Health® Provider network.
Under their FAQ section they address using an out-of-network provider this way: “Not to worry. You can nominate an out-of-network provider to become part of the First Health® Network.” The website does not address what happens if your provider chooses to not join the network.
Zion Health is one of the newer Medical Cost Sharing health plans. Founded in 2019 by entrepreneur and business owner, Nathan Udy. Unlike the previous cost sharing plans, Zion Health is a non-religious medical cost sharing plan. Instead, members commit to healthy living, personal responsibility, and inclusivity of all beliefs.
With Zion Health, you can use any provider, anywhere. There are no networks. The Zion Health team works with members to engage directly with providers and negotiate any costs.
Sedera was one of the first of the non-religious medical cost sharing plans. And they set the standard for a well-run cost sharing community. Sedera members commit to a statement of beliefs and ethics. Read the statement here: https://sedera.com/principles-ethics/.
Sedera originally started as a way for employers to leverage the Medical Cost Sharing concept for their employees. They have only recently started to accept individual enrollments. If you are interested in learning about rates and enrolling you can click my affiliate link HERE
With Sedera you can use any provider or hospital, anywhere. And while you are cash-pay patient, Sedera has a team that will guide you in talking to providers.
New Path Health
New Path is a completely new approach to non-religious medical cost sharing plan. Like Zion and Sedera, committing to a healthy lifestyle the foundation for membership. Unlike all the other medical cost sharing plans, Zion is partnered with Redirect Health and provides unlimited primary care with no copays. And there is no network so you can use any doctor or hospital anywhere.
I like to refer to New Path with Redirect Health as managed medical cost sharing. Redirect Health provides a healthcare concierge team who work with the member and his/her providers. By getting the healthcare concierge team involved on the front end of a medical event, the best costs can be negotiated before service.
Having a healthcare concierge team also creates a new and better healthcare experience for you, the member. You can get rates and enroll by using my affiliate by clicking HERE.
Always Work With a Professional and Independent Health Insurance Agent
I end every article with the recommendation, but it is particularly important when looking at a Medical Cost Sharing health plan. Since these plans are not insurance, it is possible for a non-licensed individual to sell them. But that individual will not understand the differences between health insurance and medical cost sharing. More importantly, the unlicensed individual has a vested interest in selling the Medical Cost Share plan.
The professional health insurance should be licensed with the major health insurance companies as well as the cost share plan and be able to enroll in all of them.