Everything You Need to Know About Health Sharing Plans for Small Businesses [2023 Update]
A comprehensive guide to health sharing plans for businesses with less than 50 employees
By Mike Montes – Updated Sept 6, 2023
Reviewed by Christine Corsini Fact checked by Whitney Kline
Starting a small business and looking to get health benefits for your employees, but traditional group insurance is too expensive? For small businesses with only a handful of employees, health care cost sharing can be a simple, refreshing way to offer health benefits while keeping your costs under control.
Health care sharing, also known simply as healthshare, is a legitimate and legal alternative to conventional insurance. Health sharing plans have been around for decades, and have been exploding in popularity due to the steep rise of national health insurance premiums. Today, over 2 million people are enrolled in health sharing plans.
At the end, we’ll also reveal some of the other low-cost health insurance alternatives that are available to small businesses. Health sharing plans are also available to individuals. Details and instant quotes are on our individual and family healthsharing page.
In this small business health benefits guide, readers can get answers to some of the most frequently asked questions regarding cost sharing programs, including:
How does healthcare cost sharing work?
How much does health sharing cost for employees?
When is health sharing a better choice for a small business than a conventional group plan?
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KEY TAKEAWAYS: HEALTH CARE COST SHARING FOR SMALL BUSINESS
For those who are short on time, here are the key healthshare takeaways that this guide explores:
Health care sharing for employees is not health insurance.
Health sharing is a cost-saving alternative to conventional coverage, but it is not insurance. There are a number of restrictions and limitations that are unique to health sharing, and it’s essential to be aware of them.
Health share contributions are not tax deductible.
Unlike HRA funds and group insurance contributions, health sharing contributions are not tax deductible.
Health share plans are significantly cheaper than conventional insurance.
Group health sharing plans for small businesses are between 20% and 50% more affordable than regular insurance plans.
Health sharing encourages and rewards a health-conscious lifestyle.
In order to become a member of a health sharing organization, employees are asked to commit to healthy choices. By staying healthy, employees will maximize the amount of money they’re saving each month.
Q: What is group health care cost sharing?
Health sharing is an alternative to conventional insurance that allows like-minded individuals to share the cost of medical expenses according to a set of community guidelines. Traditionally, all health sharing plans were faith based, but this is no longer always the case with new health sharing communities like Sedera.
The biggest advantage of health share plans is that they are significantly cheaper than insurance. On average, health sharing plans for business are around 40% cheaper than traditional group insurance.
Health sharing comes with more restrictions than insurance, and a little more risk. With healthsharing, there is no federally-backed guarantee that an employee’s medical expenses will be covered.
Q: What are the limitations of health care sharing?
Medical cost sharing programs often have waiting periods for pre-existing conditions. This can range from 12 months to 36 months depending on the organizations. Some plans put dollar limitations on pre-existing conditions. In addition, not all these plans will cover preventative care, maternity coverage, drug and alcohol rehabilitation services, or certain other treatments.
Health sharing organizations share the contributions from all members, in order to pay medical bills for those who have needs. They do not have an insurance company backing them up, and there is no federally-backed guarantee that qualified expenses will actually be paid out.
Q: What is the advantage of health sharing over health insurance?
For employees and employers alike, the biggest advantage of health care sharing is the price. Health sharing plans cost less per-month than almost any other type of health benefit.
However, there are also some disadvantages to health sharing. Longer wait times for some pre-existing conditions is one, and the lack of a federally-backed guarantee is another.
Q: What are health care sharing ministries (HCSMs)?
Health sharing plans have traditionally been offered by health care sharing ministries, or HSCMs. Over the last few years, these groups have evolved into a diverse set of communities, each with the goal of sharing medical costs according to a set of guiding principles.
HCSMs require a statement of faith, usually in non-denominational Christian language.
Non-faith-based health sharing communities may require a statement of principles, which is a similar agreement without explicit reference to religion or belief.
Q: What kind of medical costs are shared under health sharing programs?
The first objective of health care sharing plans is to protect their members from large and/or catastrophic medical expenses. In other words, the unexpected medical needs that your employees can’t pay for on their own.
But there is a lot of flexibility in benefit design, so we can structure your plan to pay for a wide range of expenses, including:
- Preventive care
- Doctor visits
- Medical supplies
- Prescription drugs
- Maternity benefits
- Physical, occupational, & massage therapy
- Alternative treatments (with approval)
The full list of what is considered shareable will depend on the healthshare organization you sign up with, and your specific plan. For some alternative or elective procedures, the member will need to get a written pre-approval from the organization.
Q: Is medical cost sharing legal?
Yes, health sharing plans are 100% legal in the United States, and are available in all 50 states. While businesses with over 50 full-time employees are required to provide health insurance, small companies have a lot of flexibility, including the option of offering a health sharing plan.
Q: Do health sharing plans for business work with health savings accounts (HSAs)?
There are some HSA-eligible healthshare plans available, including the HSA Secure.
Adding an employee HSA to your health sharing offer is a great way to increase the value of your company’s benefits package. These tax-advantaged accounts make it possible to save money specifically for medical expenses, all without paying income tax, payroll tax, FICA, or unemployment.
Click here to find out more about the advantages of HSAs for small business.
Q: What is the minimum employer contribution for a group healthshare plan?
There are no minimum contribution amounts for healthsharing, and no minimum number of employees.The employer can decide exactly how much to pay towards the employee’s share. The employee is responsible for covering the remainder, usually paid directly from payroll.
Q: What is the maximum shareable amount for an employee health share plan?
All health sharing organizations handle benefit maximums a little bit differently. Some sharing plans offer no lifetime or annual limit on how much can be shared, while others may have $500,000 or $1,000,000 limits.
Q: Do health care sharing plans have premiums?
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THE BENEFITS OF OFFERING A GROUP MEDICAL COST SHARING PLAN
Health sharing plans have been around since the early eighties, but they’re becoming more popular than ever. For companies with 50 or fewer employees, health sharing offers a number of significant advantages over conventional insurance:
Group health sharing is cheaper than group insurance.
There’s little question that the primary advantage of healthshare plans is their low-cost monthly price. Individuals who are enrolled in a company healthshare plan can look forward to paying between 30% – 50% less than traditional group insurance.
Health sharing offers more freedom of choice.
Some medical cost sharing communities have no network limitations. As long as the expense is allowed under the plan rules, it is eligible for cost sharing, no matter which doctor or hospital was used.
Healthshare plans have no minimum contribution.
With health sharing, employers can choose exactly how much to contribute towards an employee plan. The remainder of this monthly share cost is paid by the employee via payroll.
Health sharing is a great fit with a health savings account (HSA).
Some group healthcare sharing plans are HSA-qualified. This means that you can pair them with a health savings account, an innovative and empowering way for employees to save tax-advantaged money for medical expenses. As a bonus, all employer contributions towards group HSAs are completely tax-deductible.
Schedule a time for a call with one of our Personal Benefits Managers, and review healthshare costs and options for your business.
HOW HEALTH CARE COST SHARING WORKS FOR EMPLOYERS
The employer selects a health sharing community and plan options
There are a number of organizations currently offering group health care cost sharing. Some of the most popular plans include those by MPowering Benefits, OneShare Health, and Sedera. Each works a little bit differently in terms of how medical bills are processed and paid, but both offer all the convenient and low-cost benefits of health sharing.
The next step is selecting the plan options. There are far fewer group healthshare options on the market, so fortunately this process is quite simple.
The employer decides how much to contribute towards the monthly share
The monthly cost of health sharing plans is referred to as a ‘share’. The employer can decide how much to contribute to this share each month. The employee is responsible for paying the remainder out of their paycheck.
Employer health sharing contributions are not tax deductible. However, because there is no minimum requirement, simply offering a group health sharing plan can be an easy way to introduce health benefits to your company.
The health sharing community negotiates on the patient’s behalf
Your group health sharing organization has the ability to negotiate your medical bills for its members. They will work with both you and the provider to determine the appropriate payment amount. If the cost is deemed shareable, then the member will receive a payment from the shared funds pool.
Any cost sharing payments will be less the members IUA, which is similar to a deductible in that it needs to be met before sharing payments can be applied.
HEALTH INSURANCE IS TOO EXPENSIVE FOR MOST SMALL BUSINESS
Group health insurance costs have been skyrocketing.
According to the Kaiser Family Foundation, the cost of providing employees with traditional health insurance has roughly tripled, rising at over twice the inflation rate.
As of 2022, the average premium to cover a single worker was $6659.25 per month, or $7,911 per year, while the average cost of providing coverage to an employee with a spouse and two children was $1,872 per month, or $22,463 per year.
These rising costs haven’t just been hurting employers; They also impact workers, too: On average, covered employees contribute 17% of the total premiums for single coverage and 28% of the premiums for family insurance coverage.
For workers with families, that amounts to $509 per month, or $6,106 per year. Workers have also been squeezed on the other side, with increased deductibles. Many have seen their deductible go up by $2,000 or more over the past 5 years.
As traditional health insurance costs continue to rise, healthsharing has become a more viable and popular alternative.
HOW MUCH CAN SWITCHING TO HEALTHSHARING SAVE YOUR BUSINESS?
By dropping bloated and overpriced traditional group insurance and switching to healthsharing, employers are saving between 30% and 50% compared to the per-worker cost of a group insurance plan.
These aren’t theoretical savings: We ran actual healthsharing quotes on some of the most popular healthsharing plans in the United States to compare them to the cost of a traditional group health insurance plan.
Whole healthsharing plans and pricing differ from company to company, in each case, we found that healthsharing saves employers thousands of dollars per year – even if employers pick up the entire tab and don’t require workers to pay part of the premiums.
For the purposes of our survey, we ran both single and family healthsharing quotes for a 30 year-old and a 50 year-old. We also assumed the consumer would choose the most expensive healthsharing option available, which are those with the lowest member contributions.
COST COMPARISON – EMPLOYEE HEALTH INSURANCE VS. MAJOR HEALTHSHARING PLANS
| Traditional Health Insurance Costs Per Employee | |
|---|---|
| Individual, age 35 | $ 7,341 |
| Individual, age 50 | $ 8.252 |
| Family of Four w 50 y.o. primary member | $23,197 |
| Cost Savings per year for family of four w. 50 y.o. primary member | N/A |
| HSA Secure ( $1,000 IUA option) | |
|---|---|
| Individual, age 35 | $3,600 |
| Individual, age 50 | $3,900 |
| Family of Four w 50 y.o. primary member | $10,980 |
| Cost Savings per year for family of four w. 50 y.o. primary member | $12,217 |
| netWell ('Elite+' Tier) ($2,500 AMC option) | |
|---|---|
| Individual, age 35 | $4,078.20 |
| Individual, age 50 | $6,436.44 |
| Family of Four w 50 y.o. primary member | $11,624.76 |
| Cost Savings per year for family of four w. 50 y.o. primary member | $11,572.24 |
| Altrua ('Diamond' Tier) | |
|---|---|
| Individual, age 35 | $4,272 |
| Individual, age 50 | $5,736 |
| Family of Four w 50 y.o. primary member | $8,472 |
| Cost Savings per year for family of four w. 50 y.o. primary member | $14,725 |
| DPC DIRECT | |
|---|---|
| Individual, age 35 | $3,240 |
| Individual, age 50 | $3,560 |
| Family of Four w 50 y.o. primary member | $10,3200 |
| Cost Savings per year for family of four w. 50 y.o. primary member | $12,877 |
| Zion Health ($1,000 IUA Option) | |
|---|---|
| Individual, age 35 | $2,556 |
| Individual, age 50 | $3,216 |
| Family of Four w 50 y.o. primary member | $9,480 |
| Cost Savings per year for family of four w. 50 y.o. primary member | $13,717 |
INDIRECT BENEFITS OF HEALTHSHARING
Also, unlike HMOs and PPOs, which dominate the employee health insurance market, most healthsharing plans do not limit workers to a narrow network of authorized providers. Healthshare plans allow your employees the freedom to choose any doctor.
We believe in healthcare freedom. We also believe that allowing your employees to choose the best doctors available, rather than limit them to a narrow care network, will show up in improved patient outcomes.
This leads to lower absenteeism and presenteeism costs, contributing further to your bottom line.
Note: Dropping health insurance coverage and switching to healthsharing provides the most savings for employers with fewer than 50 full-time equivalents. This is because these smaller employers are exempt from paying an Affordable Care Act penalty for not providing health insurance.
However, some larger companies are now finding the savings worthwhile, even after paying the penalty.
OTHER ALTERNATIVE OPTIONS FOR SMALL BUSINESS HEALTH BENEFITS
Because of the limitations and restrictions present in health sharing plans, they might not be the best option for your growing company. If you’re looking for health benefits that are either a.) more comprehensive, or b.) more tax-advantaged, then employers may want to consider offering an HRA or a small group insurance plan.
Employee HRAs
Small business HRAs are one of the most flexible health benefits options on the market.
HRAs allow companies to reimburse their employees for the cost of health insurance, tax free. Not only is it easy for the employer, but it empowers the employee to choose the health plan that is right for them.
In addition to using an HRA to reimburse your employees for their health insurance premiums, you can also use the HRA to reimburse (tax-free) expenses for copays, deductibles, eyeglasses, or other medical expenses.
Small business group health insurance
Small group health insurance works well for groups that may have a lot of pre-existing conditions, or for companies with larger budgets.
Our guide, ““Everything You Need to Know About Small Group Health Insurance” can illuminate the many potential benefits of group plans.
SUMMARY: THE BEST HEALTH CARE SHARING PLANS FOR SMALL GROUPS
Over the last few years, more Americans have made the switch to health care cost sharing than ever before. While this began as a clever (& legal) way to avoid the ACA individual coverage mandate, these plans have become a viable cost-saving option for anyone struggling to pay their monthly medical bills.
If your employees have recurrent or ongoing healthcare needs, then you might need a plan with a more comprehensive group health insurance plan, or you may want to reimburse your employees for their cost of individual health insurance through a Health Reimbursement Arrangement.
Your Personal Benefits Manager is an expert at pairing business owners with the healthcare options that are right for them. Schedule an appointment or give us a call at 800-913-0172.
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