Health Care Sharing Ministries (HCSM) are a growing alternative to traditional health insurance. Though the concept has been around since the 1980s, the popularity of these organizations has increased since the implementation of the Affordable Care Act.
The primary reasons for the increase in popularity are 1) for many people in good health, costs are lower that ACA compliant health insurance plans, and 2) though these non-traditional alternatives to health insurance are NOT insurance and don't qualify as "qualifying healthcare coverage", they are exempt from the Individual Shared Responsibility provision of the Affordable Care Act (aka the "indvidual mandate" or "penalty"). Every person is required to have "qualifying healthcare coverage" (called "minimum essential coverage") as defined by the Affordable Care Act OR pay a penalty UNLESS they qualify for an exemption under the Act.
HCSMs are one of the exemptions BUT they must have been in existence and continually paying out shared medical costs since December 31, 1999 or before.
Here is the excerpt from the part of the Internal Revenue Code that applies:
U.S. Patient Protection and Affordable Care Act [26 U.S.C. §5000A(d)(2)(B)(ii)]:
(2) Religious exemptions
(B) Health care sharing ministry.
(i) In general: Such term [note: “term” refers to “penalty”] shall not include any individual for any month if such individual is a member of a health care sharing ministry for the month.
(ii) Health care sharing ministry: The term “health care sharing ministry” means an organization:
(I) which is described in section 501(c)(3) and is exempt from taxation under section 501(a),
(II) members of which share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs and without regard to the State in which a member resides or is employed,
(III) members of which retain membership even after they develop a medical condition,
(IV) which (or a predecessor of which) has been in existence at all times since December 31, 1999, and medical expenses of its members have been shared continuously and without interruption since at least December 31, 1999, and
(V) which conducts an annual audit which is performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and which is made available to the public upon request.
There are lots of HCSMs but, as of today (May 27, 2016), my research has uncovered only five that meet the criteria for official exemption from the "Shared Responsibility" penalty. They are:
- Christian Healthcare Ministries (Started in 1981) - Couldn't find copy of actual exemption letter online, but I'm sure it's available
- Medi-Share (Started in 1993 and part of the Christian Care Ministry) - Exemption letter dated January 9, 2014
- Samaritan Ministries (Started in 1994) - Exemption letter dated February 26, 2014
- Liberty HealthShare (Sharing costs since 1995 as part of Gospel Light Mennonite Church Medical Aid Plan, Inc.) - Exemption letter dated March 31, 2014
- Altrua HealthShare (Started in 1999) - Exemption letter dated December 19, 2014
From the Alliance of Health Care Sharing Ministries (started by Medi-Share & Samaritan) website:
A health care sharing ministry (HCSM) provides a health care cost sharing arrangement among persons of similar and sincerely held beliefs. HCSMs are operated by not-for-profit religious organizations acting as a clearinghouse for those who have medical expenses and those who desire to share the burden of those medical expenses.
- HCSMs receive no funding or grants from government sources.
- HCSMs are not insurance companies. HCSM do not assume any risk or guarantee the payment of any medical bill. Twenty-nine states have explicitly recognized this and specifically exempt HCSMs from their insurance codes.
- HCSMs serve more than 580,000 people*, with participating households in all fifty states.
- HCSMs’ participants share more than $570 million per year* for one another’s health care costs.
- HCSMs strive to be accessible to participants regardless of their income, because traditionally shares are a fraction of the cost of insurance rates.
*As of April 1, 2016
A key point is the consistent declaration that these are NOT insurance companies and there is no guarantee of payment of any medical bill. However, many of the processes and procedures look a lot like insurance (although terminology is different to try to alleviate confusion). In fact, HCSMs look so much like insurance, there is a question as to whether or not they should be subject to state insurance laws.
In 2012, after a 10-year legal battle, a judge in my domicile state of Kentucky shut down Medi-Share until it got regulatory approval from the state's Department of Insurance. In 2013, the state legislature passed a "safe harbor" law specifically exempting HCSMs from insurance laws AS LONG AS new Kentucky members sign a statement saying they understand health care sharing is not insurance and there is no guarantee of payment of medical bills.
The HCSMs operate in all 50 states, and 29 states now have specific "safe harbor" laws exempting them from insurance codes. A map of the states is provided by the Alliance here: State Info & Map.
Now, the basic premises of these five HCSMs are the same.
- Members share in the coverage of health care costs
- All medical bills are considered by the medical profession to be "self-pay" (although the various HCSMs handle payment differently)
- Medical bills, or portions of those bills, that are NOT eligible for sharing are the SOLE responsibility of the member
- Members in each HCSM share common beliefs and must agree and adhere to certain conditions or expressions of beliefs sometimes called Statement of Faith, Statement of Shared Beliefs, Statement of Standards, etc.
- Members are required to lead a healthy life and follow specific membership requirements
- Members can't lose membership due to development of a medical issue
- Members can be terminated due to false statements made in applications or due to conduct in violation of membership requirements
Some HCSMs are more restrictive in who can be a member than others. Christian Healthcare Ministries, Medi-Share, and Samaratin are Christian membership organizations, while Altrua and Liberty are open to more faiths with Liberty having the broadest scope of who can be members.
Certainly, the Statements of Faith, Shared Beliefs, Standards, and the healthy lifestyle requirements (no tobacco, no illicit drugs or abuse of prescription drugs, no abuse of alcohol, etc.) will eliminate many from membership in HCSMs, but you might be surprised to learn who may be eligible in some plans.
Also, some of the HCSMs have the ability to sign up groups.
I wish I could do a side-by-side comparison of each of the five HCSMs, but that gets really, really complicated as they all differ regarding:
- Types of plans available
- Monthly contributions (which we might call "premiums" if it were insurance)
- Member responsibility payments (which we might call "deductibles" if it were insurance)
- Percentages of medical bill coverage above member responsibility payments (which we might call "co-insurance" if it were insurance); Ranges from 0% to 50%
- Handling of office visits and emergency room visits
- Handling of preventative care/wellness care (These costs are usually not shareable, but there are some plans that cover them)
- Handling of pre-existing conditions
- Handling of pre-membership health questionnaires, health screenings, medical records, etc. (Some HCSMs have automatic denials based on certain health conditions, exceeding acceptable height/weight charts, etc. while some will accept everyone into membership BUT they ALL may restrict or limit shared costs for certain conditions)
- Handling of maternity benefits
- Ages of children that can be on the plan
- Annual and lifetime limits
- Additional options for sharing of catastrophic medical needs
- Handling of prescription needs
- Requirements for group worship attendance
- Procedures for getting bills paid
- How medical bills are negotiated
- Use of medical provider networks versus choosing any provider
- Expenses that are eligible for sharing versus those that are not
- Member referral programs
I started a spreadsheet to help compare all the HCSMs in some type of visual, columnar form. Let's just say it's a mess. The plans, the monthly contribution payments, and the member responsibility amounts are all over the place. I could take our own personal situation and do a comparison pretty easily, but trying to include every plan and every option was a nightmare.
Generally, the HCSMs are pretty consistent in what costs can be shared, but they are also pretty consistent in what is not eligible for sharing. Some of the coverages now required by the Affordable Care Act as "minimum essential coverage" are not eligible for cost sharing under HCSMs.
I can't emphasize this enough. You MUST read and understand all the details of these HCSM plans and pay particular attention to the handling of pre-existing conditions, and the lists of what is and what is not considered shareable expenses.
I've seen very few complaints about HCSMs in my research, but the ones I have seen often include the words "I assumed .....". The good news is that the plan documents tend to be under 30 pages and are fairly easy to comprehend (unlike my health insurance policy).
Okay, I'm not suggesting that anyone drops their health insurance plan and goes with an HCMS. This alternative is certainly not for everyone. Many people won't be eligible for various reasons, many people can't or won't abide by the requirements, and many people simply will have personal, spiritual, and philosophical objections to the membership guidelines. Heck, many people couldn't bring themselves to become part of an HCSM because it's not insurance and there are no guarantees of payment - it's a big hurdle for most.
However, an HCSM may be a great option for a lot of people. In my opinion, they are best for those that:
- Share the same beliefs as the faith-based HCSM they may be interested in AND have faith that the plans will be around and will continue to share costs as they have been doing for many years
- Fall in the gap where they are not eligible for a subsidy under the Affordable Care Act, but also where they can no longer afford traditional health insurance
- Already live a healthy lifestyle and would like a lower cost safety net for potential health care costs
- Are willing to take more control of their cost of health care by planning for and self-funding their smaller medical expenses
- Are looking for a lower cost alternative to traditional health insurance with a full understanding of what is and is not included as eligible shared costs
- Don't have significant pre-existing conditions
- No longer can get a catastrophic, low-cost health insurance plan
- Want to be in a pool of healthier, like-minded individuals, don't want to pay for required insurance coverages they don't need or want, and don't want to subsidize the costs of care for those that have made unhealthy choices
- Don't have "qualifying healthcare coverage" and want to avoid paying a penalty under the Affordable Care Act
Before I conclude, I mentioned before that there are several HCSMs. I only included the five that I know have official exemptions from the Affordable Care Act "individual mandate penalty", but there are others that are not officially exempt. I suspect we'll see more and more of these as HCSMs continue to gain popularity, and it will be interesting to see how they deal with the Affordable Care Act penalty if they can't qualify for an exemption due to not starting in 1999 or before.
Personally, our grandfathered Anthem Blue Cross Blue Shield insurance is still a really good plan. However, as we've mentioned before, if we lose that coverage, our monthly premiums will double (at least) to replace it with something similar, and we'll likely look very hard at one of these HCSM plans. I wish there was a full-time RVer health care sharing group.
I hope this overview has been helpful. More than likely it will generate more questions than it answers, but so much is specific to each plan within each HCSM and to each person's circumstances.
For the record, I am interested in your comments about HCSMs as an alternative to health insurance especially as it relates to RVing, but I'm not interested in political, evangelical, biblical, or philosophical debates and I will be very selective in the comments I post (some of which may be edited in which case I will note that). In my research on this topic, I saw lots of articles, blog posts, news items, etc. where the comments just got way out of hand. That won't happen here.