Some Americans are legally skipping out on Obamacare in favor of a different kind of coverage – coverage they share with like-minded individuals. Recently, we wrote about the growing popularity of healthcare sharing ministries and the fact that members of eligible HCSMs may qualify for exemptions from the Affordable Care Act’s individual shared responsibility provision.1
What is with this upward trend? Is membership in a healthcare sharing ministry, which is also referred to as a health cost sharing ministry or faith-based healthcare organization, a viable substitute for buying Obamacare?
The concept is nothing new. Health cost sharing ministries haven’t been established because of the ACA; however, one could conclude that demand has increased as a result of the healthcare reform law and the rising healthcare costs people have faced in recent years. These organizations have been around for decades. Founded in 1981, Christian Healthcare Ministries claims to be the original healthcare sharing ministry for Christians and has served more than 100,000 people.2
There are a lot of questions that come to mind. What’s the draw? If HCSM members exempt under the ACA can skip major medical insurance and not owe a tax penalty, are they truly saving money? If so, can just anyone take advantage of this coverage?
The answers: It depends on whom you ask. Possibly. And, not necessarily.
Why do people choose faith-based healthcare coverage?
There are a variety of reasons people chose a healthcare sharing ministry. Cost savings is one. In a June 2016 Forbes opinion piece, author and entrepreneur Dave Chase asserted that a family of four could save $20,000 per year, even with LibertyDirect’s “richest offering.”3 Huffington Post reported that ministry officials estimate their members pay up to 30 percent less than people with traditional health insurance plans.4
Others are attracted to becoming part of a community that shares the same values and looks out for one another. In addition to cost-sharing, prayers and spiritual support are often considered features of these organizations.
How health cost sharing ministries work. What they cost. And, Can you have faith your claims will get paid?
It sounds straightforward enough: You pay your dues, become a member of a HCSM, and claim an exemption from the individual shared responsibility on your tax return. But what happens if you get sick – whether you are diagnosed with a common ear infection or a more serious illness such as cancer?
How exactly will your HCSM help with the medical bills?
Let’s take a look at the overall structure. Ministries operate differently. Generally, members pay dues, fees or contributions similar to a health insurance premium – though, remember: This is not health insurance. Some organizations place these in a fund that is used to help pay for members’ healthcare. Others are structured so that members directly transfer funds from a special account to another member’s account for eligible medical expenses.5 Some require members to pay providers up front and file a claim, while others work directly with the provider.
With Medi-Share, members pay an Annual Household Portion, which is the dollar amount they must pay toward eligible medical bills in a 12-month period before their bills can be published for sharing. The AHP is based on household size, and as of October 2016, this ranged from $500 to $10,000.6 On top of this, there is a monthly share amount, which ranges from $186 to $502, depending on household size and health incentive discounts.7
- $150 per unit, per month for its Gold program
- $85 per unit, per month for its Silver program
- $45 per unit, per month for its Bronze program
Each of theses three programs has a different personal responsibility amount, discounts, and assistance level, and certain guidelines apply.9
Are faith-based healthcare sharing ministries the same as health insurance?
No. And, though, some individuals and families might consider them an attractive form of coverage, whether due to philosophy and/or cost, there are some caveats.
Potential drawbacks mostly stem from the lack of regulation. Complaints cannot be made to state insurance commissioners, HCSMs are not required to have financial reserves, and coverage can be limited.10 Because these plans are not health insurance, they are not subject to the Affordable Care Act, which means they may not cover preexisting conditions or preventive care. Furthermore, healthcare that does not adhere to membership guidelines may not be covered.
However, ministries must fulfill significant requirements to remain ACA-recognized. Among those requirements is an annual, independent audit conducted certified public accounting firm. Additionally, to qualify for an ACA exemption, a healthcare sharing ministry must:
- Be 503(c)(3) a tax-exempt organization
- Have members who share a common set of ethical or religious beliefs
- Share medical expenses among members in accordance with those beliefs and without regard to the state in which a member resides or is employed
- Allow members to retain membership, even after they develop a medical condition
- Have existed at all times since Dec. 31, 1999
- Have shared members’ medical expenses have been shared without interruption and continuously from Dec. 31, 1999
Five major ministries that are recognized as legal under the Affordable Care Act include Christian Healthcare Ministries, Liberty HealthShare, Samaritan Ministries, Medi-Share, and Altrua HealthShare.11 There are an estimated 50 healthcare sharing ministries in the United States.12
Who can join a healthcare sharing ministry?
Membership requirements will vary by ministry. In addition to a health questionnaire, members may be required to complete a Statement of Faith or similar document. They also agree to bear one another’s burdens and may be required to commit to drinking lightly or not at all, abstaining from sex outside of a traditional Christian marriage, attending church, and refraining from tobacco and illegal drug use. Some organizations may also prohibit the use of contraception.
Is choosing a HCSM a good idea? Will it be enough coverage?
That is up to you and your family to decide. As with traditional health plans, HCSMs have different costs and benefits levels. If you are considering joining one, it is important to first gain a thorough understanding about how particular ministries work. This is especially important since HCSMs are not regulated like health insurance, which means they are not subject to the same laws and are likely to have different rules and guidelines.
If you are a ministry member or will become one, you might want to consider supplemental benefits such as critical illness coverage, dental insurance, or a hospital indemnity plan. Such products can help reduce your out-of-pocket healthcare costs.
Plans start at a few dollars a month
To learn more about supplemental coverage, whether or not you are part of an HCSM, call the number at the top of your screen to speak with a health insurance producer.