According to the Kaiser Family Foundation, average annual health insurance premiums hit $7,911 for single coverage and $22,463 for family coverage as of 2022, before Affordable Care Act subsidies are taken into account.
That translates to $1,872 per month, every month, right out of the household budget.
The trendline isn’t looking good, either. On average, health insurance premiums for a family of four have increased by 20% since 2017, and 43% over the ten years prior to the KFF survey.
So it’s no wonder why hundreds of thousands of families who don’t qualify for an Affordable Care Act subsidy are turning to health sharing plans.
This blog post explores how health sharing plans can save a family of four money compared to unsubsidized marketplace health insurance plans.
Rising Deductibles
Similarly, deductibles have also risen sharply since the passage of the Affordable Care Act.
In 2014, the average deductible for a single person was around $1,217. By 2020, this figure had increased to nearly $1,655, according to the Kaiser Family Foundation.
By 2023, these deductibles had risen to $7,481 for Bronze plans, $4,890 for Silver plans, $1,650 for Gold plans, and $45 for Platinum plans, again according to data from the Kaiser Family Foundation.
Higher deductibles mean that individuals and families have to pay more out-of-pocket before their insurance coverage kicks in, adding another layer of financial burden.
Health Sharing Savings Example: Family of Four
Let’s consider a family of four without an ACA (Affordable Care Act) subsidy.
If this notional family were to use a traditional health insurance plan from the marketplace, they might pay around $1,872 per month, based on the Kaiser Family Foundation’s average.
In contrast, many health sharing plans claim to offer savings of up to 50%. This means just by switching to a health sharing plan, the family could save $936 per month or more.
At 50% off, that savings amounts to annual savings of $11,232 per year.
In fact, several health sharing plans offer similar cost-sharing benefits for less than $350 for individuals, and less than $750 for families.
Which would generate even more savings, depending on your age, location, and current health insurance plan.
Note: Unlike traditional health insurance premiums, health sharing contributions are not tax-deductible.
However, they typically save so much money every month compared to unsubsidized health insurance premiums that most families still come out way ahead by switching to a health insurance plan, even without an Obamacare subsidy.
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How Much Does Healthsharing Save?
We ran the numbers for individual health insurance coverage for a single 30-year-old, a single 50-year-old, and a family of four headed by a 50-year old.
And then we got live quotes from several leading health sharing organizations for high-quality health sharing plans with the lowest out-of-pocket cost exposure available for each plan – again for a 35-year-old, a 50 year-old, and a family of four headed by a 50-year-old.
Here’s what we found:
| Individual, age 30 | Individual, age 50 | Family of Four w 50 y.o. primary member | Cost Savings for family of four w. 50 y.o. primary member | |
|---|---|---|---|---|
| Traditional Health Insurance Costs, Unsubsidized, 2022 | $4,944.00 | $7,860.00 | $25,104.00 | N/A |
| Altrua ('Diamond' Tier) | $4,272.00 | $5,736.00 | $8,472.00 | $16,632.00 |
| HSA Secure ( $1,000 IUA option) | $3,600.00 | $3,900.00 | $10,980.00 | $14,124.00 |
| DPC DIRECT | $3,240.00 | $3,560.00 | $10,320.00 | $14,784.00 |
| netWell ('Elite+' Tier) ($2,500 AMC option) | $4,078.20 | $6,436.44 | $11,624.76 | $13,479.24 |
| Zion Health ($1,000 IUA Option) | $2,556.00 | $3,216.00 | $9,480.00 | $15,624.00 |
See the savings for yourself! Click here to get a fast, free, no-obligation quote from several leading health sharing firms in seconds. If you like your savings, you can complete your initial enrollment application in minutes.
Health Savings Accounts (HSAs) and Healthsharing
Some health sharing plans are compatible with Health Savings Accounts (HSAs), which offer tremendous tax advantages.
This is especially true for those in good health and who are in higher tax brackets.
An HSA allows you to set aside pre-tax income for qualified medical expenses. This could result in further savings when you consider the income tax angle, making healthsharing even more attractive financially.
Here are the maximum amounts you can contribute to your Health Savings Account for tax years 2023 and 2024:
| 2023 | 2024 | |
|---|---|---|
| Self-only Coverage | $3,850 | $4,150 |
| Family Coverage | $7,750 | $8,300 |
| Catch-up contribution (age 55 or older) | $1,000 | $1,000 |
Anyone covered under an HDHP or the HSA SECURE health sharing plan who’s also not covered under another plan like the VA or TRICARE can contribute these amounts to a health savings account.
Annual savings from income taxes alone can be as much as $2,905 for a family in the effective 35% income tax bracket.
Add in another $200 to $350 in potential tax savings per person age 55 and older on the plan, thanks to catch-up contributions.
How Health Sharing Differs from Health Insurance
Health sharing plans typically work by helping families control exposure to the high out-of-pocket costs of traditional health insurance premiums and copays.
They typically do this while providing patients with much more flexibility to see their own doctors compared to HMO and PPO Marketplace plans, which restrict patients to approved providers.
Healthsharing plans are not insurance. They are a money-saving alternative to traditional health insurance plans that can operate with a much lower cost structure.
Healthsharing plans differ from traditional health insurance in several key ways:
Health insurance companies are usually for-profit corporations run for the benefit and profit of their shareholders. Health sharing organizations are non-profit, 501(c)(3) organizations run for the benefit of their members.
Health sharing plans are typically based on shared values and religious or ethical beliefs and require members to abide by certain lifestyle standards, like no smoking or excessive drinking.
Some health sharing organizations require active attendance or membership in specific churches or religious bodies. Many others are Christian-focused but have no such specific requirements. And many others are completely secular.
Rather than paying a monthly premium to an insurance company, members contribute a set amount into a communal pool. When a member faces medical expenses, the pool is used to help cover the costs.
Health Sharing and Dealing with Pre-existing Conditions
Healthsharing plans often have different rules regarding pre-existing conditions compared to traditional insurance plans.
By law, traditional health insurance plans are required to provide ten “minimum essential coverages.”
Health sharing plans have no such requirement.
Traditional health insurance plans must take on all new members who sign up during open enrollment, or who enroll during a special enrollment period that occurs for 60 days following a qualifying life event.
While some healthsharing plans might not cover costs related to pre-existing conditions immediately, they may offer only partial coverage after a certain period.
It’s crucial to read the terms carefully and consult the healthsharing organization to understand how they handle pre-existing conditions.
If you or someone in your household has a pre-existing condition requiring ongoing medical treatment, you may be better off paying more money and enrolling in a traditional health insurance policy.
Other Health Sharing Considerations
Prescription Medications
Many healthsharing groups typically don’t cover prescription medications directly.
However, they often secure substantial discounts on frequently-prescribed generic medications for their participants.
If you’re dependent on a costly medication, it’s crucial to check to see if your drug is included in the plan’s discounted offerings and what the associated expenses might be.
Maternity, Prenatal, and Neonatal care
Additionally, if you’re currently expecting a baby, or are single and plan to become pregnant, certain healthsharing plans might restrict or offer limited coverage for maternity services.
This is an important aspect to weigh in your decision.
Always make sure to thoroughly review the guidelines of the healthsharing plan to grasp which expenses are eligible for sharing, in what situations, and which ones are not covered.
For example, unlike traditional health insurance, healthsharing organizations may limit sharing of maternity costs for members who are not married or whose pregnancies began well after the conception date of the baby.
Conclusion
For families struggling with the high costs of traditional health insurance, health sharing plans offer a financially attractive alternative.
With potential savings of up to 50% compared to marketplace plans, plus compatibility with HSAs for added tax benefits, health sharing could be a game-changer for millions of American families who make too much to qualify for help paying health insurance premiums under the ACA.
However, it’s crucial to understand how these plans deal with pre-existing conditions. Given the high and rising costs of traditional health insurance, it’s worth exploring health sharing as a viable option for cost-saving and community-based healthcare support.
By making the switch, a family of four could save thousands of dollars annually while still getting the healthcare they need. It’s an alternative worth considering as healthcare costs continue to climb.
Here are some additional blogs on the topic: Medical Cost-Sharing: A Viable and Attractive Alternative to Traditional Health Insurance | Best Healthshare Plans Comparison Guide 2024 | I Lost My Job, What Are My Health Insurance Options! | Health Plans for Digital Nomads: What You Need to Know to Live Life on the Go | How Health Sharing Protects People from Big Catastrophic Medical Bills
Here are some additional pages related to this article: Healthshare Plans | The HSA Secure Plan
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Frequently Asked Questions on HSAs and Health sharing
What is a health sharing plan?
A health sharing plan is a community-based approach to healthcare where members contribute a set monthly amount into a shared pool. When a member incurs medical expenses, funds from this pool are used to help cover the costs.
How is health sharing different from traditional health insurance?
Unlike traditional health insurance, healthsharing plans do not involve an insurance company. Members contribute directly to a communal pool, and these funds are used to help pay for medical expenses among the community of members.
Are health sharing plans cheaper than traditional health insurance?
Many health sharing plans claim to offer savings of up to 50% compared to traditional health insurance premiums. However, individual savings can vary based on the specific plan and the healthcare needs of the family or individual.
Can I use a Health Savings Account (HSA) with a health sharing plan?
Some healthsharing plans are compatible with HSAs, which allow you to set aside pre-tax income for qualified medical expenses, potentially offering additional savings.
How do health sharing plans deal with pre-existing conditions?
Healthsharing plans often have limitations or waiting periods for pre-existing conditions. Each plan will have its guidelines, so it’s essential to consult the specific health sharing organization for details.
Are health sharing plans compliant with the Affordable Care Act (ACA)?
Health Sharing plans are not considered insurance under the ACA, so they don’t have to meet the same requirements. However, membership in some health sharing plans can qualify as an exemption to the ACA’s individual mandate.
Do health sharing plans have networks of doctors and hospitals like insurance plans?
Generally, health sharing plans do not have networks, which means you have the flexibility to choose your healthcare providers. But it’s crucial to verify this with your specific plan.
How reliable are health sharing plans?
Health Sharing plans rely on the community of members to cover medical expenses. While many have successfully operated for years, they don’t offer the same guarantees as traditional insurance. Always research before joining.
Can I join a health sharing plan at any time of the year?
Most health sharing plans allow you to join at any time, unlike traditional insurance, which usually has an open enrollment period.
Do health sharing plans cover preventative care?
Coverage for preventative care varies by plan. Some may offer partial coverage, while others may not cover it at all. Check the specific terms of your health sharing plan for details.
Are health sharing plans faith-based?
Many health sharing plans originated from religious communities and may require members to adhere to specific religious or ethical guidelines. However, some plans are open to anyone who agrees to the community standards.
What happens if medical costs exceed the amount in the communal pool?
The specifics can vary by plan, but generally, members may be asked to make additional contributions, or payouts might be limited until the pool is replenished.
Can I switch from a traditional insurance plan to a health sharing plan easily?
Switching usually involves canceling your traditional insurance policy and applying for membership in a health sharing plan. Make sure you understand the coverage differences and limitations before making the switch.
Do health sharing plans cover prescription medications?
Prescription coverage varies widely among health sharing plans. Some may offer partial coverage or discounts, while others may not provide any prescription benefits.
Are there age limits for joining a health sharing plan?
Age limitations can vary by plan. Some plans may have age restrictions or may require higher contributions for older members. Always check the specific guidelines of the health sharing plan you’re considering.
