Is a Medical Sharing Plan a Smart Alternative to Medical Coverage?
At this time of year, we are enjoying cooler weather, fall color in the trees, football games and pumpkin spice everything. If you are the individual at your ministry who oversees employee benefits, you may be sipping that pumpkin spice latte while poring over your group medical plan options for 2020.
Because GuideStone® has been offering medical plans for pastors and churches for more than 50 years, ministry leaders often seek our advice when they’re shopping for a plan. During the past few years, those questions seem to be particularly focused on the use of medical sharing plans as a replacement for traditional coverage.
So we thought it would be helpful to provide some context on medical sharing plans, explain how they fit into today’s insurance landscape and help you know if they’re really a smart choice.
What is a medical sharing plan?
Medical sharing plans are organizations that connect individuals and families to share the cost of all members’ medical bills. These plans have found a market in the Christian world by providing a product that mimics pre-Affordable Care Act (ACA) insurance in a ministry setting. But the most important thing to know about these sharing plans is they are not true medical coverage, and benefits are not guaranteed.
The plans were initially sold to healthy individuals and families who did not have access to a group plan through their employer and to those who needed an alternative to the high cost of coverage available through the open market. However, in recent years, the number of people on these plans has grown, thanks to the ACA.
How did the ACA fuel growth in medical sharing plans?
When the ACA went into effect in 2014, it changed the rules for insurance providers. For example, lifetime limits were eliminated, and some services, such as annual checkups, were required to be at no cost to the policyholder. Because of the increased costs of these ACA-mandated changes and many others instituted under the law, medical plan providers were forced to increase prices to accommodate the new level of benefits.
As the cost of coverage increased, churches and ministries increasingly turned to medical sharing — a practice that has yet to be legally tested as acceptable group coverage by the IRS.
How can you know if medical sharing is a good fit?
If you are considering a sharing plan for yourself, your family or your church, it’s important that you take time to understand both the benefits and the risks of these plans. Here are 10 things you need to know about medical sharing plans.
- Medical sharing plans offer no guarantee of payment.
- Monthly shares in sharing plans can be less than monthly premiums for a comprehensive medical plan. This is because sharing plans offer far fewer benefits.
- Applicants can join anytime and do not have to wait for an open enrollment period.
- In most plans, members must pay their medical bills up front and then request payment from the plan. Reimbursements can take three to six months.
- Most sharing plans do not allow coverage for pre-existing conditions, such as diabetes, or preventive services, such as annual checkups.
- There is no discounted network of providers — such as that available in a standard PPO.
Members are expected to negotiate their own discounts.
- Membership requirements are restrictive, and there is no guarantee you will be accepted into the plan.
- Prescription drug coverage is not available in most plans.
- The cost of monthly shares is not tax-deductible.
- There are substantial financial and legal risks for employers who choose to offer medical sharing plans in lieu of group coverage.
What should you do when it’s time to make an insurance decision?
The bottom line is that medical sharing plans should never be mistaken for real medical coverage. The plans may be an adequate short-term option for individuals who are healthy and have no other affordable option. But many churches and ministries who are pioneering the medical sharing plan as group coverage have been surprised by the large financial commitment and costs for their employees.
When it’s time to shop for health care coverage for your ministry, take time to review all the options and do your research. Thanks to the wide variety of plans in today’s marketplace, you can find many ways to offer true coverage that costs less. For example:
- Offer a comprehensive PPO plan with a higher maximum out-of-pocket.
- Pair a consumer-driven Health Savings Account (HSA)-qualified High Deductible Health Plan with a Health Reimbursement Account.
- Consider a plan that offers streamlined benefits in exchange for a lower monthly cost, such as the GuideStone Secure Health™ plan.
To help you as you make the right health care decisions for yourself and your ministry, GuideStone recently published the How to Choose the Right Health Care Strategy for Your Church or Ministry white paper, which details the benefits and risks of six popular health care options. Get your free copy today!
GuideStone is a leading provider of employee benefits for SBC churches, ministries, organizations and institutions. Visit GuideStone.org to learn more about how they can help you with retirement, insurance, investments and more.
Greg Love joined GuideStone in 2012 and serves as Director for Retirement Solutions, specializing in church retirement plan design and employee education. He holds degrees from both the University of West Alabama and Southwestern Baptist Theological Seminary and is currently pursuing a Master of Business Administration from Dallas Baptist University. Greg holds the Chartered Retirement Planning Counselor℠ professional designation, as well as Series 6 and 63 securities licenses.
Greg is passionate about helping local churches thrive, make disciples and impact the globe for Christ. He and his wife, Jaime, have been married since 2001 and enjoy raising their two children — John Parker and Georgia Grace.