Medical Sharing Plans: What are they and why you need to stay away from them.

Medical Sharing Programs have been around for decades, initially launched in the 1960’s by faith-based organizations as an alternative to traditional, high priced insurance policies. The premise is simple: Pay a pre-determined monthly contribution, and when anyone in the entire program has an accident or illness, in theory, other members join together to pay those medical bills.  The problem is, however, since it’s not technically insurance, there’s no guarantee of coverage.

Let’s take an example: You’re walking in a busy area and on your cellphone, oblivious to your surroundings and cross the street without looking. A car runs a stop sign, mowing you down, and you find yourself in the hospital with major surgeries needed and a recovery period that’ll take a year, if not longer. In such a scenario, the bills could easily climb above a million dollars.  Since you’re in a medical share program and are not guaranteed coverage, your out of pocket can easily go into the hundreds of thousands of dollars. Furthermore, other members in the program can decide not to allocate money to your hospitalization and recovery, because they feel that the event occurred because you were ‘careless’ in speaking on the phone while walking, further burdening you with an already huge bill.

Another example: You’re 50 years old and are diagnosed with lung cancer, requiring surgery, radiation and chemotherapy. Again, other members will contribute, but since it isn’t insurance, there’s no guarantee of full coverage. Now, let’s add another dimension: the traditional treatment plan isn’t working as planned, and you learn of a Drug Treatment Trial that you could qualify for. The trial’s been approved by the American Medical Association, but it’ll cost hundreds of thousands of dollars. But since it’s technically ‘experimental’, and you’ve already burned through hundreds of thousands of dollars of others’ contributions, the program could put a halt on any disbursements for a drug trial that could be your best hope.

Why do we need insurance?

For everyday stuff, like small accidents (such as a fractured arm), minor illnesses and health and wellness screenings, many people can address these needs through set-aside savings or a HSA (Health Savings Account). Both its contributions and withdrawls are tax-free, and can accumulate to a relatively significant amount of money. We need insurance for the major stuff, the serious accidents and the critical illnesses. We need it for the peace of mind in knowing that we’ll be covered if the worst happens. We won’t have to make choices like rent vs. medication or food vs. surgery, and we won’t get buried in enormous medical bills where the only way out may be declaring bankruptcy, and the future problems that creates (In 2018, 66.5% of all personal bankruptcies in the United States were due to unpaid exorbitant medical bills).

Final Thoughts

While membership in a Medical Sharing program is better than not having any protection, it’s fraught with non-coverage, non-reimbursement risk. If you have chronic condition(s) and are subsidy-eligible, an ACA (or Marketplace Insurance plan) could work perfectly for you. If you (and your family) are healthy, want good coverage for day-to-day health, wellness, accident and sickness, and also the peace of mind in knowing that if a major accident or illness does fall upon you, you’ll be completely covered, think seriously about transitioning away from your Medical Sharing plan, or remove it from consideration if you’re still shopping.  There isn't that significant a cost difference between Medical Sharing plans and Private Plans for those who can qualify medically (and you're not tied to specific enrollment periods).

As a specialist in this field, I give expert guidance to individuals, families and small business owners on which insurance options maximize their coverage while minimizing premiums and out of pocket costs, for their specific situation. If you have any coverage questions, or would like a free analysis and a no obligation quote, feel free to either send a message, reach out toll-free 800-213-6083 or email me at eric.geier@ushadvisors.com.