In your late 30s or 40s, you may be reaching a tipping point with ever-increasing health insurance premiums. You’re fed up and want a cheaper alternative that allows you to keep saving towards major life goals. Perhaps you’ve heard about healthcare sharing ministries from a friend.
Attractive as they might sound, these organizations require you to do your due diligence before joining. The risk is that you could end up spending less each year, but exposing yourself to so much more risk than you had realized.
Ask these 5 questions to uncover exactly what you’re signing up for:
- What exactly is covered? Unlike health insurance, which is heavily regulated, healthcare sharing ministries are free to set their own rules for what gets covered. And without the incentive of profit, you should expect a strong layer of faith and community values to be added on top.
That’s why it’s important to ask the ministry to provide a clear, written explanation of what sorts of health expenses are covered, and which are not. What’s covered is often referred to by the term “shareable expenses”, a nod to the fact that the costs are shared by other members of the ministry. - Are pre-existing conditions excluded? Because healthcare sharing ministries aren’t intended to be health insurance, they are allowed to exclude members with pre-existing conditions without running afoul of the law. Before you sign up, you’ll want to know how the ministry defines a pre-existing condition, and how many years back they apply that test.
Most ministries do allow anyone to join, but have special financial status or membership requirements before you can contribute your health expenses to the pool. They may also have special exclusion periods that involve partial or graduated payments as you ease into full coverage. - How do payment caps work? Even after you’ve made it through answering the first two questions, you have to be aware that your out-of-pocket liability doesn’t stop there. Many healthcare sharing ministries have a global cap on payments across all members, which means there’s a real possibility they can run short of money to pay claims if big expenses hit.
On top of their global cap, there might also be yearly caps on how much you can be reimbursed for your own health expenses. These limits are in place to prevent a small number of members from taking up a larger than expected portion of the sharing pool. - What are the member obligations? While a typical health insurance arrangement is a purely financial one, in which you exchange an upfront payment for a future reimbursement, healthcare sharing ministries are different. They operate more like a community or club, and intentionally make it hard to sign up if you don’t have some skin in the game.
That “skin in the game” varies significantly across ministries, but can include requirements that you follow certain lifestyle rules, are active in your faith, or even participate in their community events. Depending on your perspective, these might be non-issues, or something you want to know about upfront. - What happens when the sharing pool runs short? Finally, one of the most important questions to ask is what happens when the ministry runs short of money to pay its claims. Does that mean you might not get paid, or will others in the community step in to cover the difference?
The risk of running out of money could be due to one unusually large claim that wipes out the reserve, or a series of smaller-than-expected claims that add up over time. Either way, you need to have a clear plan on how these scenarios will be handled, and whether you’re comfortable taking on that risk.
Decide if the tradeoffs are worth it
Healthcare sharing ministries aren’t for everyone. Some people will prefer the simplicity and predictability of traditional health insurance. Others will be drawn to the ministry’s lower costs and community aspect. The key is to go in with your eyes wide open.
After you’ve asked these 5 questions and received answers, it’s important to reflect on whether the tradeoffs actually make you better off. It’s easy to get excited about the aspects of something that stand out as different, but at the end of the day, you have to make sure it’s really what you’re looking for.