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What is the Difference Between Health Insurance and Health Sharing?

Most Americans are familiar with health insurance. We pay a premium to receive access to a health network. While some receive health insurance as a benefit from their employers, others must seek coverage on their own. what is the difference between health insurance and health sharing

The quality and type of health insurance often correlates with monthly premium. Higher quality insurance costs more than basic programs. However, other factors such as the policyholder’s individual health status affects the price of health insurance as well.

While many Americans receive health insurance from their employer, part-time workers, contract workers and retirees do not. When considering an early retirement, check out this article for more information on how to provide for your healthcare needs. For many Americans, the Affordable Care Act provides health insurance options through a government sponsored marketplace

The Affordable Care Act does not allow health insurance programs offered from the ACA marketplace to offer different rates based on overall healthiness. Other programs not associated with the Affordable Care Act may adjust their rates based on factors such as pre-existing conditions, but they generally provide access to more health providers and a higher quality of care.

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Certain lifestyle decisions also alter monthly premiums for policyholders. Activeness, tobacco use and other lifestyle factors might increase or decrease an insurance rate. It might not be fair, but insurance companies need to make sure they can stay in business to provide adequate coverage for all of their policyholders. 

Retirees considering any health insurance change in a policy or provider should review this article for tips and tricks on how to stay financially and physically healthy through retirement

Healthy people often experience rises in their health insurance rates, especially since the passing of the Affordable Care Act. With more Americans previously denied insurance due to a pre-existing condition now covered, rates increased for everyone to cover this greater access to health insurance. This leaves many Americans searching for alternatives to the ever increasing costs of health insurance.

Healthcare sharing ministries offer an alternative that many American families feel secure in using.

What is Healthcare Sharing?

Healthcare sharing ministries have existed for decades, but their popularity increased substantially with the passing of the Affordable Care Act. Healthcare sharing, while not technically health insurance, operates similarly in function. Members pay monthly fees or rates, often per family, and the money pools into a fund to cover healthcare costs.

Healthcare sharing ministries operate as non-profit organizations. They earn that designation because they are faith-based organizations. Ministries align themselves with a religious or faith-based focus, with membership often depending on association within a religious institution.

The idea behind healthcare sharing is almost the same as health insurance, but with a strong focus on religious involvement. And no, the healthcare programs do not solely cover holistic or faith healing. Access to traditional health providers exists for those enrolled in a healthcare sharing ministry.

Like some health insurance policies, healthcare sharing members receive access to a Prefered Provider Organization (PPO). PPOs offer lower rates based on a previous negotiation. Also like some types of health insurance, if a member seeks medical care outside of the PPO, the rates tend to increase.

Pros of Healthcare Sharing

Healthcare sharing might be a viable option for many families who cannot afford health insurance from the Affordable Care Act marketplace. The monthly rates for many healthcare sharing ministries varies from $500 to $1000. However, most ministries offer this rate to cover an entire household.

Rates fluctuate depending on the type of coverage each family wants. More options means a higher monthly payment. This gives some flexibility so that families can find the rate and coverage that works best for them.

Additionally, membership in a healthcare sharing ministry cannot be terminated should a member develop a medical condition. Nor can membership be altered due to employment status. 

Members or outside organizations can choose to audit a healthcare sharing ministry to ensure financial longevity. Due to the nature of healthcare sharing ministries, many individuals might feel uncertain about enrolling. An audit can ensure the ministry’s long-term stability and ability to cover medical expenses.

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Cons of Healthcare Sharing

Unfortunately, perfection exists in no system or program. Due to religious affiliation, primarily that of Christianity as a prerequisite for access to a healthcare sharing program, not everyone is eligible for membership. As faith-based organizations, these practices are not considered discriminatory.

Many healthcare sharing ministries require consistent religious service attendance or vows relating to faith. For instance, they may enforce strict no tobacco or alcohol policies. Failure to adhere to these restrictions creates grounds for membership termination. 

Some states do not recognize membership in a healthcare sharing ministry as access to health insurance as made necessary by the Affordable Care Act. This exposes members to risk should the ministry go bankrupt, fail to cover a claim or revoke access. While most healthcare sharing ministries do not provide grounds for complaints in their coverage, the lack of legal protection results in insecurity.

Unlike other health insurance programs, pre-existing conditions might not discount a potential member from healthcare sharing access, but they often increase monthly rates. Families considering enrolling in a healthcare sharing ministry must thoroughly review all contract details. Retaining a contract attorney might ensure the program does not contain any exploitable loopholes.

Healthcare sharing ministries provide caps on coverage. For instance, some coverage only reaches a $250,000 annual maximum for members. In the cases of extreme accidents or illness, healthcare costs could potentially shatter the maximum amount of coverage, leaving members picking up the rest of the bill.

Where Health Insurance Differs From Healthcare Sharing

One of the largest differences between health insurance and healthcare sharing is that no one can be denied health insurance based on religious affiliation. In fact, no one can be denied coverage from any of the healthcare plans on the Affordable Care Act insurance marketplace for any reason other than financial. Those who earn a certain amount greater than the poverty line are not eligible for any type of subsidy under ACA marketplace plan.

Any certified health insurance plan protects policyholders from the fines associated with not having health insurance, as enacted by the Affordable Care Act. All states recognize health insurance and provide legal protection for all policyholders should their insurance provider deny coverage. 

Whereas annual limits on care existed for both health insurance plans and healthcare sharing, the Affordable Care Act removed those coverage limits for health insurance plans. No matter the cost associated with healthcare, everyone covered by a health insurance plan can feel secure knowing that their insurance provider will cover the full cost of treatment and care beyond copayments and deductibles. So long as the healthcare is provided within the agreed upon network. 

Once you are enrolled in a health insurance program, the law requires providers to maintain a set premium as determined by the health insurance contract. Should a policyholder develop a medical condition, their insurance rates will not rise throughout the duration of that contract. Healthcare sharing ministries are not subject to that same requirement and can increase monthly rates should a medical condition arise. 

Not all healthcare sharing ministries will raise rates and some will include contractual provisions indicating that they will in fact maintain the rate, but they are not obligated to provide those provisions under the same law. 

Know the Benefits and Risks

Before you decide between a health insurance plan and a healthcare sharing ministry, understand the important differences in your legal rights protected by both programs. Your state may or may not consider a healthcare sharing ministry legitimate insurance, so always do sufficient research to understand how your rights can be affected.

Whereas health insurance programs have some government sponsorship backing them should a financial hurdle impact the company, healthcare sharing ministries lack this support as non-profit organizations. Consider contacting a private agency to perform an audit on the financial well-being of any ministry you wish to enroll in. 

Consider state funded Medicaid programs as another alternative should traditional health insurance premiums surpass your financial capabilities. These programs help people in need and can offer coverage so long as eligibility exists.  

Do a fair amount of research to make sure healthcare sharing makes financial sense for you and your family. Examine the ACA marketplace to compare rates. While healthcare sharing might provide greater coverage than some insurance plans and for a lower rate, they lack the security that health insurance provides.

In many cases, it just makes more sense from a financial perspective to enroll in a traditional health insurance program over a healthcare sharing ministry. Always consult a 

financial advisor for help whenever making a tough financial decision that could impact your well-being, both physically and financially.

Are you already enrolled in Medicare and curious if you could save money with a different plan? Check out our simple 3-step Medicare guide that could save you thousands in surprise medical bills or penalties.

If you need financial advice or are uncertain about your current financial situation, sign up for a 15-minute phone call to get a free financial assessment today. Here at Nextgen Wealth, we pride ourselves on providing clients with a healthy and beneficial structure that will serve them well into retirement. 

Know that as financial advisors we offer straightforward consultation to help serve your best interests. Contact us today and start planning for your continued financial security.

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About the Author

Aurtho Clint Haynes, CFPThis article was written by Clint Haynes, CFP®. Clint is a Certified Financial Planner® and Founder of NextGen Wealth. You can learn more about Clint by reading his full bio here.