What Is A Medical Cost Sharing Program & Is It Right For Me?

Thanks to the pandemic and resulting unemployment, health insurance is getting more attention lately. Most people get their health insurance through their employer, so the loss of a job often means loss of health insurance as well. If you find yourself in that situation, or you are self-employed or your employer doesn’t offer health insurance, then you might feel that your only option is your state’s healthcare exchange.

That is an option, but not the only option. There is another way to protect yourself against unexpected medical expenses, by participating in a medical cost sharing program. Also called health sharing ministries, these plans provide a lot of the benefits of traditional health insurance without actually being insurance.

How Medical Cost Sharing Programs Work

A medical cost sharing program is pretty much what it sounds like—an organized group of people who share their medical costs. It is based on the idea of everyone pitching in to share each others’ burdens, as the early church did in the book of Acts. A little more structured than the early church, these programs are usually set up as 501(c)(3) nonprofit organizations.

Each member pays their monthly share, just as you would an insurance premium. The money is then pooled together to cover the costs incurred by members. Many programs handle the funds centrally, but some programs have their members send payments directly to other members who have qualifying expenses. Like a deductible, there is usually an amount that must be paid out-of-pocket before the ministry begins to cover costs. 

For most programs, members see healthcare providers as uninsured cash-paying patients. (MediShare has a PPO network of providers for their members to see.) They then submit their expenses to the cost sharing program for reimbursement. 

How Medical Cost Sharing Is Different Than Insurance

It is important to know that medical cost sharing programs ARE NOT insurance. As such, they don’t provide all of the same benefits as insurance and are not subject to the same regulations. One difference is that there are no guarantees with cost sharing ministries. Unlike insurance, funds are not guaranteed. There is also usually a limit to the amount of expenses that can be shared whereas with insurance there is no limit. Also, medical insurance premiums are tax-deductible for self-employed people and medical sharing cost payments are not.

The main difference between the two is that cost sharing programs don’t always cover everything that traditional insurance does. The Affordable Care Act required that insurance companies cover pre-existing conditions. That isn’t the case with medical sharing ministries. Each medical cost sharing plan handles pre-existing conditions differently, from having a waiting period before coverage applies to limiting coverage to only covering very specific cases. 

Many cost sharing programs are based on the Christian faith and require their members to ascribe to certain beliefs and abstain from certain behaviors. Medical costs incurred because of a violation of these standards of conduct, such as a drunk-driving accident or illegitimate pregnancy, are not covered. Also, there are certain procedures that are not covered for moral reasons, such as abortion. 

Is A Medical Cost Sharing Program Right For You?

Now that you know about medical cost sharing programs, would one be a better option for you than traditional health insurance? There are several factors you should look at as you consider that question. 

Cost

Take some time to compare costs between marketplace plans and medical sharing ministries. In addition to the premium paid, look at deductibles, coinsurance, and out-of-pocket limits. Some have found that as a self-pay patient (with a cost sharing program) they are eligible for deep discounts from what medical providers charge insurance companies. This will affect any coinsurance and deductibles you are subject to. 

Coverage

What kind of coverage do you need? Young, healthy people often like medical sharing plans because they only really need them in catastrophic situations. However, if you have an ongoing medical condition or high prescription costs, traditional insurance may be a better choice. With both insurance and medical sharing programs, it is important to review the coverage and make sure it meets your needs, both current needs and potential needs.

Pre-Existing Conditions

If you have a pre-existing condition, make sure you know exactly how it would be handled. Each cost sharing program handles pre-existing conditions in their own way and they are very transparent about it on their websites and in their promotional materials. Remember, your pre-existing condition must be covered with traditional insurance. 

Morality Clause

Are you ready and willing to commit to a certain lifestyle? Are you eager to know that your monthly payments won’t be supporting things you believe to be immoral? Some sharing plans require a statement of faith and agreement to abstain from regular tobacco use and excessive use of alcohol. Others simply ask that you acknowledge that you were made by God. When looking at medical sharing programs, make sure the morality clause actually matches up with your current lifestyle and can truly stand behind their statement of faith. 

Why I Chose A Medical Cost Sharing Program For My Family

As a self-employed small business owner, I do not have an employer to provide health insurance for me. In the past, my family obtained insurance coverage on the Minnesota exchange but at the end of last year we signed up for a medical cost sharing program beginning in 2021. The main reasons that we did this were because it is likely that our health costs will be significantly less with the plan that we selected. For example, our fixed monthly cost with the plan we chose is $425 per month for our family of six, compared to the more than $800 per month we would have paid for the cheapest plan through our state exchange. We also really like the idea of personally getting to send our share amounts to others in need each month and taking the time to pray for and encourage them. You can hear more about my experiences on this episode of the Dollar Derail podcast.

If your employer offers health insurance, especially if they pay for it, then that is likely the best way for you to obtain coverage. If you don’t have health insurance through work, though, then participating in a medical cost sharing program may be something you want to consider. This article outlines how they work and some things to pay attention to as you make your decision. However, if you want more personalized help in figuring out how medical care can fit into your overall financial plan, we can help. Schedule a call today to learn more.

About Guide Financial Planning

Guide Financial Planning is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner™ and Certified Kingdom Advisor®. He has a passion to help people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.