Updated June 3, 2019: When the Patient Protection and Affordable Care Act became law in 2010, it brought with it a new era of healthcare for many Americans. Individuals who had previously been uninsurable due to poor health or pre-existing conditions were now able to get comprehensive health insurance coverage via their state health insurance portal or its federal counterpart, Healthcare.gov. Further, the law instituted a new structure of subsidies intended to help make healthcare more affordable.
Alas, Americans could finally buy healthcare regardless of their health, employment situation, or income. Even better, the passage of the ACA eliminated lifetime caps on coverage, meaning you could never get kicked off your plan for getting sick or “run out” of coverage.
Planning on signing up for federal health insurance? Here's our state-by-state guide.
The new ACA plans were rolled out in four different tiers, from lower-end bronze policies all the way up to platinum policies with the best benefits. Where bronze policies are more affordable, they include higher deductibles and annual out-of-pocket costs, whereas platinum policies come with the lowest deductibles and much higher premiums. Gold and silver plans fall somewhere in between in terms of premium costs and deductibles, providing Americans with more options than ever.
Ideally, these new plans were supposed to save Americans money while providing quality health insurance they could count on. President Obama even famously noted that the average American family would likely save $2,500 on their annual premiums.
Of course, a mandate was also instituted so that those who didn’t buy coverage were charged a fine. In 2017, the fine for not having health insurance worked out to 2.5 percent of income, or $695 per adult and $347.50 per child under 18 – whichever is higher.
Unfortunately, the savings didn’t materialize for everyone. While the ACA has helped numerous families with lower incomes and pre-existing conditions, it has created some adverse effects for individuals who earn more than 400 percent of the Federal Poverty Limit (FPL) – where the subsidies drop off – and those who live in certain states. This is mostly due to the redistributive nature of the law, but also due to the fact that each state handles and prices ACA plans differently.
Healthcare Sharing Plans: How they work
While many families are happy with the new set-up of the ACA, another solution to healthcare has become increasingly popular over the years – healthcare sharing ministries. These plans have existed alongside traditional health insurance plans for decades, yet they have grown tremendously since the passage of the ACA. Here's a primer on them.
While they aren’t considered “health insurance,” healthcare sharing ministries provide meaningful financial protection for families who want to share their healthcare expenses with other like-minded families with the goal of keeping everyone’s out-of-pocket costs low. The main healthcare sharing ministries available at the moment include Liberty Healthshare, Christian Medi-Share, Samaritan Ministries, and Altrua Healthshare.
Here’s how they work: Individuals and families who choose healthcare sharing ministries pay a monthly “sharing amount” similar to a health insurance premium. Depending on the program they choose, they can enjoy many of the same perks of traditional health insurance – like discounts on healthcare, limited out-of-pocket limits and predictable monthly payments. The biggest benefit, however, is the way the monthly sharing amounts are priced.
Depending on the plan chosen and family size, monthly payments for healthcare sharing plans can be significantly cheaper than traditional health insurance plans purchased through the ACA – maybe even half the cost or less. Deductibles are typically a lot lower than ACA plans as well, although it depends on the plan you choose.
Another big benefit is the fact that healthcare sharing ministries help their members avoid paying a fine for not having ACA-approved health insurance. This benefit has made it possible for many families who can’t afford ACA plans to get some type of coverage without having to pay a penalty for going uninsured.
But there are drawbacks. Because healthcare sharing plans are made up of like-minded people sharing their costs, and because these plans aren’t held to ACA standards, they don’t have to accept people with pre-existing medical conditions or chronic illness. If you smoke, drink too much, have a complex medical history or a problem with obesity, for example, you may have trouble qualifying for a healthcare sharing plan.
Further, since these plans are Christian-based, they don’t consider all forms of healthcare necessary, meaning many services won’t be covered. While it depends on the plan and sharing ministry you choose, this typically means you won’t get coverage for certain types of birth control or any services the group decides are unethical. (Birth control is typically free under other types of health insurance.)
Healthcare sharing ministries also expect their customers to be people of faith who are practicing their religion on a regular basis, although they may not necessarily require you to prove your religious beliefs. Generally speaking, these plans just ask you to agree to a statement of faith when you sign up.
Make sure the ministry is legitimate before purchasing any sort of plan — you don't want to get scammed.
Lastly, healthcare sharing ministries can place annual or lifetime limits on coverage unlike ACA plans. For example, a family plan with Liberty Healthcare may only cost $449 per month, but you’re limited to $1 million dollars in coverage per incident or illness with their most generous tier of coverage. If your healthcare costs exceed the caps of your policy, you will have to figure out how to pay on your own.
ACA Plans vs. Healthcare Sharing Ministries: What you should know
If you’re considering a healthcare sharing ministry, it’s important to weigh the pros and cons before you sign up. You especially don't want to be underinsured (like many Americans).
The chart below highlights some of the big differences between ACA plans and healthcare sharing ministries, as well as who these plans are good for:
- You can buy coverage regardless of your health
- No lifetime limits or caps
- Subsidies available for those who earn less than 400 percent of FPL
- You may be able to pair your plan with a Health Savings Account for tax savings. Here's how to set up an HSA.
Healthcare Sharing Ministries
- Less Expensive
- Lower annual costs and deductibles
- Families can share their costs with other like-minded families
- Avoid the penalty for not having health insurance
- Plans can be expensive
- Plans may run on narrow networks
- Available plans depend on your state of residence
Healthcare Sharing Ministries
- Lifetime or annual caps on coverage
- You can’t use a HSA
- You need good health to qualify
ACA Plans vs. Healthcare Sharing Ministries: How to decide
So how do you decide? At the end of the day, the best way to find the right plan for yourself or your family is to look at your unique situation and determine which plan might offer better protection without costing too much or sacrificing your quality of care. Here are a handful of scenarios to consider:
You may be better off with a healthcare sharing ministry if…
- You’re young and relatively healthy. Because healthcare sharing ministries typically don’t accept people with complex medical conditions or chronic conditions, you need to be healthy to apply.
- ACA plans are prohibitively expensive in your area. If ACA plans offered in your state and county are overly expensive, you may be able to save a bundle - up to half or more - by joining a healthcare sharing ministry instead.
- You’re a Christian who wants to share costs with like-minded individuals. Because healthcare sharing ministries aren’t traditional insurance and actually “share” bills instead, these plans are best for people who are open to this kind of arrangement.
- You don’t take a lot of prescription drugs. While healthcare sharing ministries offer a minimum level of coverage if you get sick, most don’t offer comprehensive prescription drug plans. If you want to avoid paying too much out-of-pocket for your prescriptions, you may be better off with a traditional health insurance plan.
- You want to see any doctor without limits. While traditional ACA plans can offer very narrow networks, most healthcare sharing ministries will let you see any doctor or specialist you want provided they accept this coverage.
- You earn too much money to qualify for subsidies with traditional ACA plans. If you earn more than 400 percent of FPL and don’t qualify for subsidies that make healthcare more affordable, you may find healthcare sharing ministries are less expensive.
You may be better off with a traditional health insurance plan if…
- You have a preexisting, chronic, or recurring medical condition. If you have a chronic medical condition or underlying pre-existing condition, you’ll likely need to apply for an ACA plan since healthcare sharing ministries may not accept you.
- You take prescription drugs. If you want a comprehensive plan that covers prescription drugs, an ACA plan will likely leave you better off.
- You qualify for subsidies with the ACA. If you earn less than 400 percent of the FPL, you could qualify for subsidies and even cost-sharing benefits that can make health insurance especially affordable.
- You want to use a HSA. One of the biggest downsides of using a healthcare sharing ministry is the fact you can’t pair these programs with a HSA for tax savings. If you’re dead set on using an HSA, you’ll need to sign up for a high deductible health insurance plan. HSAs can also help you retire.
- You don’t mind narrow network plans. If you want meaningful health insurance coverage but don’t mind narrow networks or only being able to see certain doctors, a HSA plan may be your best bet.
While the ACA was supposed to streamline healthcare, shopping for health coverage is more complex than ever. Before you choose a plan, make sure you understand your specific needs and the risks involved with all plans considered.
The cheapest option isn’t always the best, but it can still pay to think outside the box.
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