Why Is Health Sharing So Cheap vs Health Insurance?

Health Sharing vs Insurance

There are several reasons it is so much less expensive: These include:

Understanding these factors can help explain why health sharing is often cheaper compared to health insurance.

Learn more: How Much Money Can Health Sharing Save?

Compare Pricing on the Best Insurance Plans Available

Cost Structure and Membership Contributions

Health sharing plans are not insurance products. Instead, they are not-for-profit entities that operate on a mutual aid model, where members contribute monthly “shares” into a communal fund.

These shares are then used to pay for members’ eligible medical expenses, unlike health insurance premiums, which can be influenced by profit margins and shareholder expectations, health sharing contributions are designed solely to cover the community’s health care costs.

This fundamental difference in cost structure can result in lower monthly contributions for members compared to traditional health insurance premiums.

Medically Underwritten and Lifestyle-Based Membership

Health sharing plans often have specific membership requirements that can include adherence to certain lifestyle choices, such as not smoking or engaging in high-risk activities.

Health sharing plans are also medically underwritten. This means they can exclude individuals with pre-existing conditions or impose waiting periods before covering such conditions.

This approach creates a membership pool that is generally healthier and less likely to incur high medical costs, further reducing the overall expenses that need to be shared among members.

The focus on a health-conscious membership base contributes to better risk management and can lead to lower costs for all members.

Limited Coverage and Exclusions

Health sharing plans often exclude services that their membership collectively agrees are unnecessary or against their beliefs, such as coverage for contraception, mental health services, and certain preventive care measures.

By excluding some of these costly medical services, health sharing plans can lower their costs to existing members.

Additionally, most health sharing plans do not include a drug insurance component but may offer discounts on generic medications, further reducing costs.

Health Sharing vs Insurance: Regulatory Environment

One of the most significant factors contributing to the lower cost of health sharing plans is the regulatory environment in which they operate.

Health sharing plans are not considered insurance and are therefore not subject to the same regulations and mandates that govern traditional health insurance companies.

This lack of regulation means that health sharing plans do not have to comply with requirements such as covering a set of essential health benefits or spending a certain percentage of revenues on medical care.

The reduced regulatory burden allows health sharing plans to operate with lower administrative costs, which are passed on to members in the form of lower monthly contributions.

Compare Pricing on the Best HealthShare Plans Available

Combining Health Sharing with an HSA

A recent development is the ability to combine health sharing with Health Savings Accounts (HSAs), providing members with additional cost savings and tax advantages.

HSAs allow individuals to save money on a pre-tax basis to pay for qualified medical expenses. When combined with a health sharing plan, members can use their HSA funds to cover out-of-pocket costs such as deductibles or non-shareable expenses, providing a comprehensive approach to managing healthcare costs.

Health sharing plans offer a cost-effective alternative to traditional health insurance due to their unique cost structure, membership requirements, limited coverage scope, and favorable regulatory environment.

See if health sharing is right for you and your family, with a free consultation from one of our Personal Benefits Managers.

For Further Reading: Myths and Misconceptions about Health Sharing Plans | The Pros and Cons of Religious vs. Secular Health Sharing Plans | How Health Sharing Can Expand Healthcare Freedom