Can't Afford Obamacare? Consider a Health Care Sharing Ministry Instead
As many as 2.6 million families lost their chosen health insurance plan in 2013, since their plans did not meet standards required by the Affordable Care Act, also known as Obamacare, according to an analysis by the Urban Institute. And according to recent news surrounding the law, the number of cancellations will likely continue to surge this year.
For example, Politico reports that as many as 22,000 Colorado residents recently received notice that their plans will cease to exist at the end of 2014. As many as 250,000 Virginia residents are expected to receive a cancellation notice for their policies by the end of November, as well as 30,000 residents of New Mexico, 14,000 residents of Kentucky and thousands of others from surrounding states, according to USA Today.
Anyone with a canceled plan will now be required to purchase an ACA-approved plan once open enrollment starts on Nov. 15 or pay a fine. And in 2015, that fine could be as much as $325 per person or 2 percent of your annual household income.
What is a Health Care Sharing Ministry?
While you could sign up using the federal Health Insurance Marketplace, an alternative option exists for people who cannot afford new plans -- or object to buying one for religious reasons. These alternative plans, offered by health care sharing ministries, are not represented as traditional insurance, but as ministries that allow people to share their health expenses for the common good.
"A health care sharing ministry (HCSM) provides a health care cost sharing arrangement among persons of similar and sincerely held beliefs," the Alliance of Health Care Sharing Ministries states on its website. "HCSMs are not-for-profit religious organizations acting as a clearinghouse for those who have medical expenses and those who desire to share the burden of those medical expenses."
According to the HCSM, health care sharing ministries currently cover 300,000 people in all 50 states.
How Health Care Sharing Ministries Work
The biggest health care sharing ministries operating in the U.S. include Samaritan Ministries, Medi-Share, Christian Healthcare Ministries and Liberty Healthshare. Although they all operate in a slightly different manner, each ministry shares the same basic qualities. First, they are nonprofit entities with limited budgets for administration and advertising. Second, they serve as a middleman for Christians who want to pool their funds to share in each other's medical bills.
Instead of deductibles, participants are subject to annual unshared amounts. For example, some plans pledge to cover medical expenses after a family spends $1,500 out of pocket for their own medical care, while others don't begin offering benefits until you spend $5,000. However, unlike health insurance plans offered through the ACA, health care sharing plans are not required to cover some medical procedures -- including certain procedures the group finds morally objectionable.
Of course, there are other differences between traditional health insurance and sharing plans. For example, health care sharing ministries reserve the right to deny applicants due to pre-existing conditions, which is in stark contrast to new guarantees offered by the ACA. Sharing plans also often come with lifetime caps on coverage that range from $250,000 to as much as $1 million depending on the plan you choose, and participants are required to pay for their own well visits and preventive care.
The Cost Benefits of Health Care Sharing Ministries
Although health care sharing ministries offer a lower level of coverage overall, they often cost far less than traditional insurance. For example, according to eHealthInsurance, the average family premium this month is about $700, depending on the state of purchase. Meanwhile, a family of four could purchase the lowest level of coverage from Christian Healthcare Ministries for less than $200 per month.
No matter where you stand on the issue, it's important to understand all your options. Health care sharing ministries, while far from ideal, offer coverage that is usually less expensive than traditional health insurance while also providing your family with coverage from catastrophic events.
And if you aren't a fan of the new health care law, they might be just the answer you are looking for.
Holly Johnson is the founder of personal finance website, Club Thrifty, which provides tips for frugal living, budgeting, and more. Holly also writes about frugality and travel at Get Rich Slowly, Frugal Travel Guy, and her other website, Travel Blue Book.
