The escalating healthcare costs in the United States have become a significant financial burden for millions of Americans. However, medical cost sharing plans can help!
As of late 2023, the average annual health insurance premiums without a subsidy amount to $8,435 for individual coverage and $23,968 to cover a family.
These average premiums each increased 7% in 2023 alone. Meanwhile, the average family premium has more than doubled in the past few years.
This trend has particularly impacted young and healthy individuals, who often find themselves questioning the need for traditional health insurance due to their minimal healthcare requirements.
The question they ask themselves is, why should active and health-minded people who refrain from smoking, get regular exercise, control their weight, and don’t abuse drugs or alcohol be forced to subsidize smokers, alcoholics, drug abusers, chronic overeaters, and others who continually make irresponsible lifestyle choices that drive costs up for everyone?
That’s a good question.
And the answer is, you don’t have to.
If you are in good health and don’t have serious pre-existing conditions that may require care in the next few years, you have a choice:
Drop your overpriced traditional health insurance policy, and join a health sharing plan.
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The Health Share Alternative
These programs, gaining traction in recent years, offer a different method of managing healthcare expenses.
This article delves into the concept of the health sharing alternative, examining its benefits and evaluating its suitability for young, healthy individuals aiming to economize on healthcare costs.
Understanding Medical Cost-Sharing
Medical cost-sharing represents a collaborative approach to healthcare financing.
Health share organizations are not insurance companies. Instead, they are not-for-profit mutual aid societies that facilitate like–minded, health-conscious individuals to pool their resources and help share the unexpected medical expenses of their fellow members.
This system is grounded in mutual responsibility and community solidarity.
Instead of insurance premiums, health sharing participants contribute a monthly “share” and these funds are allocated to cover eligible medical expenses within the group, along with plan operating expenses.
Key Features of Medical Cost-Sharing Plans:
- Monthly Shares. Members contribute a fixed monthly amount, determined by factors like age, family size, and plan selection. These shares are generally more affordable than standard health insurance premiums.
- Eligible Expenses. These programs typically encompass a broad spectrum of healthcare services, including hospitalizations and surgeries. However, most health sharing plans provide limited sharing benefits for prescription medications or consultations.
- Exemptions. There are certain limitations, such as waiting periods for pre-existing conditions and exclusions based on lifestyle choices like smoking or substance abuse, which can impact sharing eligibility.
How Medical Cost Sharing Benefits Young, Healthy Individuals
- Cost Efficiency. The primary advantage for this demographic is the potential for significant cost savings, as monthly shares are often considerably lower than traditional insurance premiums.
- Flexibility. These programs frequently offer the freedom to select healthcare providers and negotiate costs, which can further reduce expenses.
- Community and Shared Values. Medical cost-sharing groups are founded on common ethical or religious principles, fostering a sense of community among members.
- Transparency. These programs typically offer clearer pricing structures, aiding members in understanding the true costs of medical services.
- Focus on Health and Wellness. Some groups encourage healthy living through wellness initiatives and preventive care, which aligns well with the needs of young, healthy individuals.
Health Sharing vs. Traditional Insurance
It’s important to note that health sharing is very different from traditional insurance.
While they share a similar purpose – to help people afford the high cost of healthcare and to preserve access to quality healthcare services – they are structured very differently.
For example, while traditional health insurance policies are required to cover pre-existing conditions immediately. Health sharing plans may impose a waiting period before they will share those costs.
This is one reason why health sharing plans save so much money compared to the unsubsidized monthly cost of health insurance. The savings for younger, healthier individuals can amount to thousands of dollars per year.
However, the waiting periods for pre-existing conditions means that health sharing may not be a good match for people with a history of medical conditions that may required ongoing care. If you have pre-existing conditions, you may be better served by a traditional health insurance policy – even if you have to pay more money each month in premiums.
Joining a Medical Cost Sharing Plan
Before joining any health sharing plan, you should go over the plan’s guidelines, and take careful note of any sharing limits, exclusions, and waiting periods.
The decision to opt for medical cost-sharing should be based on your own individual health needs, values, and your ability to share in the risk and the cost of your care.
If you are able to take on a few thousand dollars of risk in the event you unexpectedly need medical care, you can opt for a higher member responsibility amount (MRA) – sometimes called the initial unshareable amount (IUA).
This is the amount you must pay out of your own resources before the plan will start sharing medical expenses. The higher the member responsibility amount you select, the lower your monthly membership costs will be.
It’s great to elect the highest MRA you are comfortable with. Just don’t select one so high that you will find yourself skipping needed medical care because you can’t afford to see your doctor. That could lead to higher health care costs down the road.
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Just Want a Catastrophic Plan?
If you are in good health looking for a budget friendly health share plan that focuses on catastrophic needs, consider the JHS Community DIVINE plan.
This plan is specifically designed for those in generally good health, and who can afford to share up to $15,000 per year in the event they have a medical need. The idea is to keep monthly expenses as low as possible so you can invest your cash flow in more productive ways, while still protecting yourself against bankruptcy.
Get Help
Questions? Need more information? Make an appointment with one of our experienced Personal Benefits Managers. They can walk you through your options, help you assess the pros and cons, and help you zero in on the best possible plan for you.
There’s no charge for a consultation and quote.
Further Reading: Complete Guide to Direct Primary Care (DPC) – HSA for America | Which is Better, Health Sharing or Health Savings Accounts (HSAs)?
Wiley is President of HSA for America. He believes that consumers should have choice and price transparency, so they can make the best healthcare decisions for their needs. Read more about Wiley on his Bio page.