Like so many Americans, you may find yourself sighing (if not weeping) over the cost of your health insurance premium and the size of your deductible.

It’s no joke that premiums and deductibles continue to rise at an unprecedented rate. 

According to the Kaiser Family Foundation’s 2021 Employer Health Benefits Survey, the average premium for family healthcare coverage has increased 47% in the last decade.

In 2021, the average premium for employer-sponsored family coverage was $22,221.

I know. That sounds crazy. And honestly, you’re probably not paying that full amount if you’re getting health insurance through your employer. 

On average, employers cover about 72% of the cost of employees’ monthly premiums. 

For those of you fortunate enough to have employer-provided coverage, congratulations! Even a mediocre employer-sponsored plan typically offers lower premiums and better coverage than plans you find on the individual exchange. 

For those who are self-employed (or find themselves temporarily unemployed), the reality of covering healthcare costs in America feels pretty grim.

Let’s face it. Government healthcare programs are really not great. And the individual plans are expensive.

So there are a lot of people exploring different options and looking for alternatives to traditional health insurance. If this is you, I invite you to weigh the costs and benefits of a healthcare-sharing plan.

In this post, we’ll be looking at how a healthcare sharing plan works and some considerations you may want to make before deciding to go with this option.

First, let’s go over some of the major legal changes in recent years that affect how Americans are thinking about healthcare.

 

Repeal of the Obamacare Individual Mandate

The Tax Cuts and Jobs Act of 2017 repealed the Obamacare Individual Mandate indefinitely, so you no longer pay a tax penalty for not carrying health insurance in the U.S. 

Nonetheless, avoiding health insurance coverage altogether may not be the wisest decision. You will be on the hook for all medical bills, possibly ruining your credit history if you don’t have the cash to pay them. 

And as you have probably seen on the itemized bills… medical costs are insanely high. 

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.

Gone are the days of spending thirty years or more working for the same company in a desk job. The gig economy and entrepreneurship are prevalent as technology accelerates and people increasingly opt for work-life balance. 

Faced with competing pressures of skyrocketing health insurance costs and your desire to have flexibility in your work life, how do you move forward?

That’s where a healthcare-sharing plan might be a worthwhile option.

An Alternative to Traditional Insurance

Healthcare sharing programs (or medical sharing programs) offer an alternative to traditional health insurance and are often more cost-effective. They facilitate the voluntary sharing of eligible medical expenses among members. 

How does a healthcare share plan work?

The short answer is that it works quite similarly to health insurance.

Let me elaborate.

There are multiple types of plans that you can choose from; they cover different types of medical costs, such as preventative care and emergency care.

You pay a monthly share amount, similar to an insurance premium. You are also required to pay up to a certain amount of your own medical expenses, just like you would an insurance deductible. 

However, share amounts tend to be much lower than traditional insurance premiums.

Another thing to note is that most healthcare-sharing programs are faith-based, and some require an agreement to a simple statement of faith. If you’re part of a Christian denomination, there are several available options. 

Nonetheless, I do want to make you aware of two crucial caveats …

1. Healthcare-sharing programs are NOT insurance. These programs are not legally required to pay for a member’s medical expenses. However, larger ones typically have a strong historical track record (99% or more) of paying eligible medical expenses once the family has met their equivalent to an annual deductible.
   

2. I am NOT endorsing any particular medical sharing program. My family moved to a healthcare-sharing program (albeit briefly) in 2018 when we lived abroad in Spain for three months. Although we selected Medi-Share for our family, this is not an endorsement for Medi-Share or any other healthcare sharing organization. Each family should conduct independent research on healthcare sharing programs and make the best decision for their particular family.  

 

A History of My Family’s Health Insurance

To help you better understand exactly how medical sharing programs work, I’ll give you a brief snapshot of my family’s health insurance decisions.

In 2017, my husband was employed by a large corporation that offered solid medical plans. Since I was self-employed, it made sense for our entire family to use health insurance coverage offered by my husband’s employer in 2017. The premiums for our family of five ran $5,400 annually for both medical and dental care. We had relatively low deductibles and out-of-pocket costs.  

We had to find alternate health insurance coverage when my husband quit his job to pursue our dream of living abroad in Spain. COBRA premiums would have exceeded $2,000 monthly for our family of five.

On the individual exchange, medical insurance premiums for silver or bronze level policies with much higher deductibles still averaged $1,500 monthly. The government’s premium assistance only happened at certain income levels, and we did not have a clear idea of our family’s 2018 income in late 2017. 

We would have tripled our medical insurance cost by pursuing one of the individual exchange plans!

Medi-Share was a saving grace for our family in 2018. 

Although the terminology is slightly different, our monthly premium (known as “monthly share amount” by Medi-Share) was $788. The annual household deductible (“annual household portion”) was $3,000.

The doctors we regularly used such as kids’ pediatricians and general practitioners were within Medi-Share’s preferred provider network. Medi-Share negotiated a discount directly with the medical provider and sent me an Explanation of Sharing after the service was rendered. Then the medical provider billed me directly. 

This made living overseas so much easier than if we had chosen traditional health insurance for that period.

It was honestly one of the best decisions we’d ever made.

That being said, it may or may not be the right decision for you. Everyone has different needs and circumstances. 

I want to help you think through whether healthcare cost-sharing is the most effective and affordable option for your situation.

So, let’s turn to some important considerations you’ll want to keep in mind while deciding between a healthcare sharing plan and traditional health insurance. 

Health Insurance Vs. Medical Sharing Plan

Healthcare sharing plans are great alternatives to traditional health insurance in certain situations. But they are not ideal for everyone. 

Please answer the below questions prior to joining any healthcare-sharing program:

1. DOES ANYONE IN THE FAMILY HAVE PRE-EXISTING MEDICAL CONDITIONS? 
   
   Healthcare sharing plans are optimal for families with NO pre-existing medical conditions.If a member of your family has a serious pre-existing health condition, certain limitations in healthcare sharing plans may prevent your loved one from getting the medical care he or she deserves.

2. DO WE NEED COVERAGE FOR PREVENTATIVE CARE VISITS, OR ARE WE SIMPLY LOOKING FOR CATASTROPHIC ASSISTANCE?  
   
   This is a really important question to ask as a family because certain sharing plans like Medi-Share will NOT cover preventative care. However, the program will theoretically assist with medical bills due to an unforeseen medical emergency.
   
   In that case, you may receive notes of encouragement and prayers from other healthcare-sharing plan members whose monthly share amounts will go towards paying eligible medical bills. 
   
   If you are planning a pregnancy, keep in mind that your out-of-pocket costs will be greater due to the sheer amount of prenatal visits recommended by physicians.
   
   Medi-Share has stringent standards, requiring families to be Medi-Share members for longer time periods 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 then leaving the plan immediately. How you will cover medical costs for pregnancy and delivery is a really important consideration to make when planning for a family. Make sure to research and compare your healthcare coverage options.
   

3. WHAT IS THE TRACK RECORD OF THE HEALTHCARE-SHARING PROGRAM? 
   
   Some programs have been around for a long time while others are a bit newer. Healthcare sharing programs that have been around longer have been able to prove themselves over time and tend to have a more consistent track record.
   
   Medi-Share began in 1993, and members have shared and discounted more than $2 billion in medical bills since its inception. It is one of the largest medical sharing programs and has a strong history of paying eligible medical expenses beyond the Annual Household Portion. We took comfort in Medi-Share’s track record, similarity to traditional insurance, and increasing membership count.
   
   When looking at healthcare-sharing programs, consider how long a particular program has been around and what its current and former members say about them.
   

4. DOES THE PROGRAM ALIGN WITH OUR VALUES? 
   
   Do you love the idea of sharing one another’s medical burdens? If the answer is YES, a healthcare-sharing program may be ideal for your family.  If you’re a Christian, a healthcare-sharing plan may be one way to reflect faith-based ethics and values in how your money is spent. Many healthcare-sharing programs do not cover expenses such as abortion, birth control, and injuries related to drugs and alcohol due to misalignment with Christian values. Hopefully, these exclusions make you feel good about the choices you are making on a regular basis.

 

The Downsides of Healthcare Sharing Programs

So far, I’ve painted a fairly optimistic picture of healthcare-sharing plans. However, there are two significant downsides to medical cost-sharing programs.  

1) IGNORANCE IS NOT BLISS.

Similar to traditional insurance plans with high deductibles, you likely have no idea what your out-of-pocket cost will be for prescription medication or procedure. Your level of financial responsibility is unclear until the service is rendered, an Explanation of Benefits is provided, and the bill arrives.  

When our family started Medi-Share, we could not anticipate the out-of-pocket cost of our kids’ annual well visits with the pediatrician. Each well-child visit was just under $130 in 2018. Prescription drug costs could be hard to predict, too. I paid $140 for two prescribed medications while using Medi-Share. Those medical costs were higher than expected, and we couldn’t have predicted them in advance.

2)   EMPLOYER-SPONSORED PLANS ARE MORE AFFORDABLE

Although faith-based sharing programs typically offer lower premiums than plans on the individual exchange, they are usually more expensive than insurance subsidized by an employer.

My husband found new employment at a large company after our Spain adventure, so we switched from Medi-Share to a traditional health insurance plan.    

Nonetheless, healthcare-sharing plans may be a good option — in lieu of COBRA coverage — if you and/or your spouse contemplate early retirement.  In this context, early retirement is prior to age 65 when you become eligible for Medicare.

 

Do Your Homework

Please conduct additional research if faith-based healthcare programs interest you. This Nerd’s Eye View article will help you understand the nuances between the most popular healthcare-sharing programs, namely:

• Christian Healthcare Ministries (CHM)

• Liberty HealthShare

• Medi-Share

• Samaritan Ministries

Each organization is nuanced as to the types of expenses they potentially share, monthly share amounts, and so forth. Make sure you consider all options carefully before making a decision.

Next Steps

In closing, it’s important to weigh all the pros and cons of the different healthcare options. 

Healthcare sharing programs are not intended for everyone. Traditional insurance is a viable option for many families, particularly for those with pre-existing medical conditions. But if you are frustrated with traditional insurance and had no familiarity with these programs prior to reading the article, I encourage you to explore them further.  

As a fee-only financial advisor at WorthyNest®, my only source of compensation comes directly from clients through a stated, transparent fee.

There is absolutely no financial incentive for me to recommend healthcare-sharing programs or Medi-Share.

Medical costs, including traditional health insurance, continue to be a hot topic in the conversations I’m having with existing and prospective clients. Perhaps one of the healthcare-sharing programs will ease that burden for your family.  

At WorthyNest®, we guide parents through important financial decisions using a values-based approach. Contact us to explore a one-on-one relationship.