Should you join a health care sharing ministry?

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Colin LalleyContent Director, Home & Auto InsuranceColin Lalley is the content director for home and auto insurance at Policygenius, where he leads our property & casualty editorial teams. His insights have been featured in Inc. Magazine, Betterment, Chime, Credit Seasame, Zola, and the Council for Disability Awareness.

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Health insurance is in the news a lot these days, what with the fate of Obamacare hanging in the balance and all.Some people want the government more involved in health insurance. It’ll offer more protections...but also more sometimes-needless regulations.Some people want the government less involved in health insurance. We’ll have more flexibility...but we may lose some protections and get taken advantage of by big insurers.But either way, we all need health insurance, right? There’s no other way to cover huge medical bills.Or is there?Enter healthcare sharing ministries.

These groups, like Christian Healthcare Ministries and Liberty Healthshare, boast hundreds of thousands of members. Personal finance guru Dave Ramsey says they’re a valid alternative to health insurance, as long as you know "you’re off the grid as far as the normal way of doing things."

So what are healthcare sharing ministries? Who can join them, how do they work, and how are they different from health insurance? We take a look.

Who can join a healthcare sharing ministry?

If the word "ministry" didn’t clue you in, healthcare sharing ministries are religiously-affiliated. Most healthcare sharing ministries, or HSMs, cite Galatians 6:2 as their Biblical inspiration for their existence: "Bear one another’s burdens, and thus fulfill the law of Christ." Because of this, while technically anyone can join, HSMs do have guidelines as far as what they expect from members.The use of tobacco and illegal drugs (and, in some cases, certain prescription drugs) is prohibited, and members must follow "biblical teaching on the use of alcohol". There’s also the expectation that members attend group worship regularly.On the other hand, HSMs don’t discriminate based on age, weight, or health history, and members can come from anywhere. This is different than health insurance, where you buy on a state- and county-basis. HSMs give you the freedom to find the group that works for you, rather than being stuck with whatever’s in your geographical vicinity.

What is a healthcare sharing ministry?

Every healthcare sharing ministry is clear to point out that they are not health insurance. Instead, they’re faith-based organizations that operate on a voluntary cost sharing idea (that’s an important distinction that we’ll come back to in a bit). Even though they aren’t insurance, members of an HSM are exempt from the ACA’s federal mandate penalty.

In order to be considered an HSM, an organization is legally required to meet five guidelines:

  • It must be a 501(c)(3) organization

  • It must "share a common set of ethical or religious beliefs and share medical expenses among members...without regard to the State in which a member resides or is employed"

  • It must allow members to "retain membership even after they develop a medical condition"

  • It has to have been in existence since December 31, 1999

  • It must allow an independent CPA to perform an annual audit

So how do HSMs actually work? Because it isn’t health insurance, HSMs use different terminology than insurance, but they work in somewhat the same way.

  • You pay a certain amount each month, similar to a premium, but in this parlance is called a sharing amount.

  • You have an unshared amount, or "personal responsibility," which you have to meet each year before you can use the HSM to help pay your bills – just like a deductible.

  • There are maximum eligibility amounts that determine how much money you can request for individual expenses. HSMs have an "additional sharing" option that let you contribute money (usually directly) to other members once they’ve reached this limit to help them with uncovered costs.

Depending on the HSM, you can either pay your bills and get reimbursed or have the organization deal directly with the hospital on your behalf. You may (again, depending on the HSM) send your sharing money to the organization to be paid out as needed, similar to your relationship with an insurer, or you’ll be directed to send money to individuals who need it.The main draw of HSMs is that they can be a much more affordable option than health insurance. Let’s look at two of the main HSMs, Christian Healthcare Ministries (CHM) and Liberty HealthShare.CHM categorizes you and your dependents as "units." You count as one unit, your spouse counts as a second unit and your children – no matter how many – count as a third unit. CHM’s Gold program is their most expensive by month: $150 per unit, with a $500 personal responsibility. That means that for an entire family, it’s equivalent to paying a $450 monthly premium with a $500 deductible.For a similar family plan through Liberty HealthShare, you’d be paying $449 a month (or less – in addition to "units," Liberty divides sharing amounts by age) and $1,500 that you’re responsible for annually.Considering Obamacare premiums rose by an average of 22% this past year, these relatively low prices are enticing. That plays out in membership numbers: HSMs have grown from around 200,000 members to over 500,000 members since 2010.

How is a healthcare sharing ministry different than health insurance?

Because HSMs stress this, I figure I might as well, too: healthcare sharing ministries are not health insurance. But how do they differ?The biggest single difference is that there’s no contract involved with an HSM. As mentioned before, it’s a voluntary organization. With health insurance, you have recourse if something goes wrong, like going to your state’s insurance department. With HSMs, no such action is available. You’re essentially working on the honor system – that your money will be directed where it’s needed, and you’ll receive money when you need it.That’s not to say that HSMs are like the Wild West – there are guidelines in place, the organizations have been around for decades, and there are hundreds of thousands of members to vouch for them – but it’s important to know that some of the protections you receive with insurance aren’t available with HSMs. If you don’t trust others to morally commit to the premise of an HSM, it might not be for you.The lack of protection extends to coverage, too. Every health insurance plan must, by law, cover ten essential benefits. Depending on the HSM you join, you may find those benefits lacking. Prescription drug coverage, maternity care, and coverage for pre-existing conditions can vary by HSM. Some people find that a benefit – one argument against Obamacare is that, say, young single men shouldn’t have to pay "extra" for maternity coverage that they’re not going to use, and with HSMs you may not have to – but, again, it’s important to know what the tradeoff is between health insurance and HSMs.Of course, then there are some health insurance restrictions that don’t apply to HSMs. Members of HSMs can fill out a health coverage exemption form to avoid the individual mandate tax, even though they don’t technically have insurance coverage. Plus, HSMs don’t have enrollment periods, so you can sign up whenever you want rather than just once a year.If you’re frustrated with the current state of health insurance, healthcare sharing ministries may be something to look into. As Dave Ramsey says, though, this isn’t like using your health insurance. Before you decide to ditch your health insurance and join a healthcare sharing ministry, make sure you understand the differences and what you’ll gain – and lose – by making the switch.

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