With the cost of health care continuing to climb – taking consumers and insurance premiums along for the ride – a lot of consumers are wondering how they will fit health care into their household budgets.
As of 2016, more than half-a-million Americans had turned to health-share plans to meet their family health care needs. But what exactly are these plans? What does a consumer need to know before signing on the dotted line?
Here are a few important things you should know about health-share plans:
Health-share plans are not health insurance
Health-share plans are cooperatives – often faith-based – with members agreeing to cover a certain portion of each other’s medical costs. That sounds a lot like insurance, but there are important legal and practical differences. Many states – including North Carolina – have passed laws that exempt health-share plans from laws and regulations governing health insurance. Many of these laws are designed to protect consumers and govern the way premiums are collected and benefits are paid.
One important way that health-share plans are different from insurance is that health-share plans can come up with their own processes for distributing money to members who file “claims.” Some plans even have members giving money directly to each other to cover medical bills.Since many health-share plans don’t cover wellness visits or preventive care, members pay for those entirely out-of-pocket. Other plans don’t cover dental or vision.
And remember: Health-share plans can’t be used with Health Savings Accounts (HSAs) or other reimbursement plans.
If annual deductibles are scaring you away from actual health insurance, a health-share plan may not offer much relief. Most health-share plans have an “annual unshared amount,” which is the same as a deductible.
Since health-share plans are not insurance, consumers have very few legal protections
Health care is going through a period of rapid change, coupled with legislative uncertainty.
For consumers, this can all be unnerving. But without being subject to regulatory oversight, health-share plans are not subject to the laws governing policyholder treatment, not subject to regulatory oversight to monitor their financial health, and not subject to the vast set of laws that protect consumers when their insurance company does not live up to their policy provisions or regulatory requirements or have insufficient funds to pay on their obligations.
Member savings through negotiated provider discounts may be uncertain
An important benefit for consumers provided by health insurance plans is the negotiated discounts that place a ceiling on the cost of medical care. Since health-share plans have far fewer members and less bargaining power with doctors and hospitals than insurance plans, the cooperatives have less ability to lower costs through negotiated discounts.
Many health-share plans don’t cover pre-existing conditions
Federal and state laws require insurance companies to accept customers with pre-existing medical conditions and prevents insurers from charging those customers higher premiums. Since health-share plans aren’t insurance, they aren’t subject to these requirements. One of the more popular health-share plans doesn’t cover pre-existing conditions until the member has paid into the cooperative for three years.
The costs for even common pre-existing conditions can be staggering. The Health Care Cost Institute estimates the annual health care costs for a person with diabetes is $15,000. Diabetics with health-share plans are likely to pay 100% of those costs out-of-pocket for at least the first year in the plan. And that doesn’t include what they might have to pay for any other health problems.
Health-share plans aren’t required to cover anything
Health-share cooperatives make their own rules on what they will cover and what they won’t.
Members’ contributions to the health-share are considered gifts, and the cooperative gets to decide whether to reimburse you for your expenses – or not. And there are no set guidelines about what is or isn’t covered. A health-share plan may consider the circumstances that led to an illness or injury before deciding whether to cover medical bills.
And while some insurance plans encourage – and even reward – healthy lifestyles, a health-share plan can actually require members to take up regular exercise and a nutritious diet.
Health-share plans may seem very attractive because of their monthly costs. But make sure you read the fine print before abandoning the comprehensive benefits and peace of mind offered by your insurance plan.