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 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 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 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 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: 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 sharing plans for business work with health savings accounts (HSAs)?
There are some HSA-qualified healthshare plans available, specifically those available through MPowering Benefits.
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.
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.
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, and b.) more tax-advantaged, then employers should consider an HRA or an affordable group insurance plan.
Unlike health sharing payments, all contributions made to an HRA are tax deductible. In addition, HRAs can also be used to pay for other out-of-pocket medical costs, including copays or supplemental
Small business group health insurance
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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