[Editor's Note: Like many of my guest posts, this one comes from a reader (Nicholas C. Kanaan, MD) sending me a question I didn't know the answer to. I figure since he was going to have to research the answer anyway, he might as well write up his research and submit it as a guest post. As you might imagine, he asked the question back in November when this issue is on all of our minds. By the time he submitted it, we were past the ACA deadline already, and I was a couple of months out on guest posts anyway. However, the content is mostly evergreen like most posts on this site and we're all going to be wrestling with the same or similar issues next Winter anyway. Dr. Kanaan and I are in the same large emergency medicine group and so share some overhead expenses but have no significant financial relationship beyond that.]
It's that time of the year again–Christmas lights, egg nog, cozy fires, snow covering mountain tops, and of course signing up again for health insurance. If you get your insurance through the Affordable Care Act (ACA) insurance marketplace, you probably have already received mail or emails reminding you to sign up again, and informing you of the new plan’s cost (in many cases with a premium increase), and signed up.
For those with high healthcare needs (and therefore costs,) who are unable to get healthcare from an employer, these marketplaces have been a godsend. For those with low or average healthcare needs (and costs,) the ACA is often looked at as a burden and perceived as a rising cost (the latter undoubtedly being true). I think a lot of people are seeing their insurance premium go up and get sticker shock from the increased premium costs. This has lead to a widespread disapproval of ObamaCare because it has been associated with increased costs to them. But what we are forgetting in these calculations and sticker shock is that a significant amount here is countered by tax savings, and most people are not taking that into account.
Let’s put this into perspective. The majority of people get their healthcare through their employer (43%), with another 36% from the government (19% Medicaid, 17% Medicare). The uninsured rate is improving annually, with the RAND Corp estimating 16.9 million newly insured through the ACA, but still comes out to 11.4% uninsured (http://obamacarefacts.com/uninsured-rates/). So that leaves 6% of folks getting their healthcare through the ACA insurance marketplace and just over 3% obtaining non-marketplace individual plans or other insurance sources. Chances are, if you have employer or government sponsored insurance, you will continue with those benefits, so the rest of this discussion is specifically for the latter 9% of Americans (obtaining healthcare insurance through the ACA or other sources). It makes me a bit surprised how much loud and angry rhetoric there is on Facebook and in the news about how terrible the ACA is when it is covering just 6% of America. [To be fair, the ACA has had a dramatic impact on those with employer provided health insurance as well, not only on the employers but also on the employees who often have the additional costs passed on to them.-ed]
Nicholas Kanaan, MD
With increases in healthcare premiums and high deductibles posing payers a significant out-of-pocket burden for medical care, people are beginning to seek other options. One such option is a non-traditional cost-sharing plan. These are often religion-based insurance alternatives where you pay monthly “shares” [read: premium], which are sent directly or indirectly to other members who have made a healthcare cost reimbursement claim from the group. I’m not going to get into the nuances of these plans, as they were well laid out in the WCI article referenced above, but I will say that Christian Healthcare Ministries (CHM) appears to have the best “cost-to-benefits” ratio of the cost-sharing plans I researched.
I also would be remiss not to mention that plans such as CHM do NOT cover prescription medications, birth control or abortions, preventative care (flu shot, vaccinations, many screening exams), or primary care doctor visits — as such, they place the burden of these very important health maintenance costs on you and thus they are implicitly disincentivizing these medical services. Their aim is to instead cover the bigger medical events and expenses. Also, it seems somewhat antithetical for an insurance plan approved by our government to satisfy the individual mandate for insurance to be one that requires you to be a Christian that attends church regularly – which at face value really makes me hesitate to join an exclusive organization. With this requirement, they also reserve the right to refuse payment for medical expenses determined to be caused by not adhering to “biblical principles” (ie. potentially STD treatment, alcohol / drug / smoking / or prescription drug related illnesses, etc), and may even charge an increased fee for being obese or having chronic illnesses. They also do not have to cover anything at all, since contributions are a “gift,” you are a self-paying patient, and the organization can reimburse you, or not. And although this doesn’t seem to happen to my knowledge, given their track record and the many participant reviews — there are no direct guarantees. This kind of cherry-picking and excluding of the insurance pool is really not how insurance is supposed to work to benefit society at large, but perhaps is why they are able to keep their costs down, and thus your monthly “shares” [read: premiums]. All of that said, they are a low cost alternative if you feel you fit their requirements. For simplicity I will compare my ACA plan to the CHM plan, and encourage you to follow suit and perform a similar comparison using your preferences and needs.
Last year, my ACA plan was a middle-of-the-road Silver Plan that qualified for an HSA—an important feature for me, given the tax benefits and investment opportunity of having an HSA as a triple-tax-advantage. Last year I paid $249 per month in premiums, while this year the same plan will cost $319 per month (albeit with higher max out-of-pocket costs). That 27.8% premium increase would result in my paying a total of $831 more for healthcare insurance in 2017. But, if you happen to be in the 33% tax bracket, like I am, then when you file a 1095-A form with your taxes to indicate the amount you spent on healthcare premiums, you are able to deduct that cost from your income, and thus receive a 33% deduction—or savings. Apply that here and in post-tax dollars it is only a $567 increase from last year, instead of $831. As a general rule, you should be thinking about true tax-adjusted annual plan costs so you can better compare options.
For full disclosure, I am a healthy 33-year-old male emergency physician in the 33% tax bracket, a non-smoker without prior conditions, living in Salt Lake City, UT. I’m generally a good bet for an insurance company, and thus my plans tend to be cheaper than others. My predicted medical expenses include a prescription sleeping medication I take sparingly when flipping night and day shifts, occasional antibiotics when I travel overseas, an annual screening blood test, and occasionally an imaging study when I take a tumble exploring the Utah wilderness. I’m also an emergency physician, so any lacerations, sprains, non-scheduled medications or lab studies that I need I can often take care of by myself or through colleagues. My unpredicted medical expenses are, well, totally unpredictable (a broken leg and an ACL rupture, both requiring surgical repair), but over the past 10 years I have had nearly zero expenses for 7 of them, 2 years with incidents that required my full deductible, and 1 year with a partial deductible need. This doesn’t count small things like primary and preventative care, annual checkups/physicals, travel medicine, and occasional prescriptions. It is notable that I am not religious but grew up in a Catholic family. I fear that there may also be a remote possibility that if I try to get reimbursed for expenses, CMH may disqualify me from their plan and benefits based on my poor church attendance record, found to be living with an unmarried partner, consuming alcohol, or other behavior behavior outside of “biblical principles”. Also of note is that I will be comparing individual but not family plans—having a family will change the numbers, so feel free to adjust these calculations to your specific situation.
Comparing Health Sharing Plan With a Bronze ACA Plan
The Christian Healthcare Ministries (CHM) coverage I wanted would cost: $1,940/yr ($150/mo for the gold plan + $140/yr Brother's keeper – which removes the reimbursement cap), with a $500 deductible per incident, and no coverage if the bill is <$500 (ie primary care, preventative care, lab studies etc). Double that cost if your family is a single-parent and children, or you are a married couple, and triple that if you are a married couple with children. CHM (and some other cost-sharing plans) is an eligible option under the ACA, and thus if you fill out IRS Form 8965 ‘Health Coverage Exemptions’ then you will not be penalized for the individual mandate of insurance (2.5% of household income up to the maximum of the national average of an ACA Bronze plan which was $2,676 in 2016). If you or I had to pay the penalty, CHM wouldn’t even be on the table for discussion.
However this is $1940 in POST-TAX MONEY you are spending AND you are not able to contribute pre-tax money into a HSA because this isn't a high-deductible health plan. Adjusting the $1,940/year to pretax dollars is $2,895. So you have to compare this number to whatever plan you are considering. You also have to realize that contributing $3,400 to an HSA gives you a tax savings of $1,675 (again assuming the 33% tax bracket).
Another significant difference is if you have a significant medical bill. The “deductible” on CHM is only $500 for a medical incident, so the total of the “deductible” and the “shares” (premiums) would be $2,440.
By comparison, a Bronze HSA plan (I am only considering HSA plans) will cost $2,867 / year in pretax insurance premiums alone, which is actually very similar to the CHM plan in pretax dollars. Insurance premiums are deducted from my taxable income, thus I am saving $946 — so true post tax cost is $1921. I will also be able to contribute $3,400 (in 2017) to my HSA account, giving me a $1,122 tax saving. So annual premium $2,867 – premium deduction $946 – HSA deduction $1,122 = $799 in post tax expenses for the plan. That’s $66.56 per month, which really doesn't sound that bad anymore, especially when compared to what I spend on my cell phone plan. Unfortunately the bronze plan comes with a $5,750 deductible. Now let's say you have some medical expenses which will require you to pay out-of-pocket (OOP) until your deductible is met. So you need to also consider that this plan may be as low as $799 post-tax expenses if you have no healthcare costs, or $6,549 if you meet your deductible in costs, or even $7,349 if you reach your maximum out-of-pocket. A Silver HSA plan with a $2,500 deductible would cost $4,321 (pre-tax) or $1,773 (post-tax including HSA deduction). For me, that made the silver plan unattractive (especially when you compare it to CHM).
How Much Health Care Will You Consume?
If I have ANY high medical expenses (any surgery or hospitalization will likely cause you to meet your full deductible and OOP expense) then I will save a LOT of money ($1,500 to $3,592) with the CHM plan, because I would only be paying $500 per medical incident. If I have NO medical expenses, I can expect to save $1,457 in premiums vs the CHM plan by selecting the cheapest Bronze HCA plan from the exchange. The middle ground is where it gets murky trying to decide. My personal history is one of 7 years of no expenses, 2 years of full OOP, and 1 year of ½ OOP expenses. Play that scenario out to an annual average, and the Bronze ACA and CHM plans are nearly identical (with CHM $170 more costly in a year based on post-tax dollars). This seems to be the inflection point in these two plans. That is to say that when you reach maximum OOP healthcare expenditures more than 30% of the time, then CHM plan seems to be cheaper than a Bronze ACA plan. The converse being if you have no healthcare expenditures >70% of the time, a Bronze ACA plan is cheaper.
It is also worth noting that is hard to determine the benefit of having a triple-tax-advantaged HSA account, and how much more that is worth to you. To me, I see a lot of benefit of having an account that will compound and grow quicker than any other investment account I have, so I tend to weigh that highly. Also, there are a lot of small costs not covered by CHM plan that could add up (primary care, preventative care, medications, and anything under $500). That said, savvy healthcare consumers and physicians can often find ways to save money in healthcare. For example, you can order your own lab studies and interpret them using a service like Econolabs and getting their annual panel for $115 (CBC, CMP, UA, TSH, Lipid, PSA). For radiology exams, use Health Care Blue Book and get a Chest X-Ray for $51, Wrist X-Ray for $56, non-contrast knee MRI $545. And use your knowledge of drugs to obtain cheap prescription medications using generics and similar class alternatives through the $4 and $10 list of meds from Walmart.
In the end, I decided on getting the Bronze HSA Plan from the ACA exchange, as I think I can keep my medical costs down (fingers crossed), and I would like to contribute as much as possible into my HSA account while I am young so that it can grow rapidly to be used later when I am more likely to need it, thereby reaping the triple-tax-advantage.
This is just one example (of my personal situation) and my thought process with analysis of 3 plans – the preferences, context, specifics, and costs most certainly would differ for you. This is a comparison of apples to oranges, as you have different benefits, costs, and coverages with each plan, so it gets both complicated and difficult to predict what best fits you. But hopefully following my process can help you come to a better decision about what plan to choose for this significant annual line item bill. But don’t forget, the whole reason we get insurance is to protect us from serious or catastrophic financial loss – make sure you don’t get in a situation where you are underinsuring yourself. For those of you that already signed up for an ACA plan and feel you want to change, its never to late as there are no deadlines for joining CHM, but going the other direction is more difficult since there are well-defined open enrollment periods.
[Editor's Note: Dr. Kanaan makes some excellent points that he discovered from his research. Let me summarize what I see as the key points:
- Health-sharing plan shares are not-deductible and no health-sharing plan is HSA eligible. Thus, for high earners and good savers, there is a serious disadvantage to using a health-sharing plan and you must tax-adjust any comparison.
- Health-sharing plans do not qualify for the ACA tax subsidies, which are significant for even above average Americans.
- “Deductibles” are much lower for health-sharing plans than even the more expensive HSA eligible plans. However, they are “per incident,” not “per year.”
- Low health care consumers should focus on after-tax premium cost and HSA benefits.
- High health care consumers should focus on maximum out of pocket costs including premiums and all tax-deductions.
- The value of an HSA is difficult to determine, but it becomes more valuable the more you earn, the longer you can leave the money in the account, and the better job that you do investing it.
- Physicians should be expert users of economical health care due to their knowledge and access to professional courtesy.
- A high-earner who does not qualify for a subsidy can purchase a plan on the open market through an insurance broker rather than through the ACA plan, but the end result is basically the same.]
What do you think? What are you using for health insurance? Why? Did you run the numbers and come to a different conclusion than Dr. Kanaan? Comment below!
I think a lot of the noise we hear coming from people regarding their distaste for Obamacare is originating from sources painting an inaccurate picture of the ACA for political reasons. Let’s be honest here, the majority of republicans hate the ACA because it taxes the wealthy to provide health insurance for the poor. They have been spreading negativity about the plan for the last 6 years and do a great job with their propaganda. Any minor problem identified with the ACA is blown out of proportion by special interest news channels. Meanwhile, we hear virtually nothing about all the people that its helping. And we don’t hear sensible, well researched information as you presented above. Most American’s don’t think that much and would never take the time to read an article like this. They scan the headlines on their Facebook feeds and that’s it. I just hope the current administration wises up and sees that dumping the ACA for political reasons is bad move. They need to focus on fixing the problems with the system we have. Improve, not repeal.
Wow. That turned political fast.
Funny how people zero in on one line of a long post, isn’t it?
True….it is funny that the first post was on the ACA line. But, I also know why. First hand, in the past 5 years my plan for a healthy, young family of 4 has increased from $350/month to $980 per month. Deductible has gone from 2000 per person/max 4K to 6K per person max of 12K. Now, I can afford this change and I do get some additional coverage for yearly exams and basic lab testing. But, if I was less financially inclined, I would be severely hurting. Even with any tax savings, 11K a year is not affordable for most families of 4.
Whether people like it or not, things will be changing in the next year with this congress/president. I’m not sure if it will get better or worse. Time will tell.
These numbers are just not realistic this year. In Wisconsin my wife and I, both healthy 61 yr old non-smokers on no meds will have to pay $3051.50/mo for the only Bronze HSA plan we are offered. That is $36,618 per year with a $7000. deductible for each of us. My income is high therefore so is the penalty if I choose to self insure. There are no other major medical choices, just health sharing and discounted care, so if I get hit with a truck I could potentially risk everything I have saved for retirement. We have had no expenses since our last well child visit 20+ years ago. Just so the rest of you know how bad it can get.
I urge you to look up Medi Share. My husband is 63 and I am 59. We pay 360.00 per month with 10,000 deductible. We both are non smokers and healthy and have been on the program for a few years. Those numbers are insane!!
Wow! That’s terrible. That might be the highest premium I’ve ever seen for a couple. Did you meet with an insurance broker to make sure there aren’t any other plans out there you could use, or did you just go to the ACA exchange
We have and I might be able to find one through United health which by rumor just entered the market a week ago but may not be able to be HSA qualified as it is only a short term 6 month plan. Nothing else has a major medical exposure for risk reduction, which leaves out health sharing and discounted health plans.
Our family of 4 Bronze HSA plan (in GA) was $1050/mo in 2017 and it jumped to $1500/mo in 2018 and switched from PPO to HMO to boot. There are no choices left on the exchange and the state of GA had to strong arm one company (BCBS) to even stay. I have it now (for January), but at $18000/year with a $6500/person deductible, I’m not sure it’s worth it. Bring back the old system, this is ridiculous.
If interested I represent the finest Health Ministry Plan out there imo. The best Gold Plan equal includes outpatient first dollar benefits with catastrophic coverage. A $1,000 up front member responsibility and 80/20 co-expense to $10,000 with an out of pocket of $3,000 maximum per person. Monthly share cost of around $1,820 or about half of your existing cost. http://www.alierahealth.com/index.cfm?id=295672
This is direct primary care, not health sharing.
Not to mention that $1,820 isn’t half the cost, it’s MORE given he is now paying $1,500 a month.
He is replying to Scott and his $3051 monthly premium, not Gary and his $1800 monthly premium. In that situation his $1820 monthly option is worth consideration as it is indeed roughly 59% the cost with a 57% less deductible to boot.
Umm…..it wasn’t just one line. It was the whole post that was political!
Political? Funny! I have a client whose premium went up this year for his family of 3 and his deductible went up by 6 times along with just about every other benefit increasing. When ACA came out and my plan was canceled my premiums went up 62% in the first year which is what caused me to switch to a medical sharing plan. The complaints seem pretty real to me.
I switched to medi share which is a plan that doesn’t have a reimbursement cap. My share amount (premiums) for a family of 5 are $390 a month with a $5000 family share amount per year. When I switched 4 years ago my ACA plan was $1262 a month.
This article paints a pretty accurate picture of the comparison of the two with one big caveat – this is for a single person. I have found that families are the ones that save the most money with a medical sharing plan.
Correction, his benefits decreased drastically!
Well I am not wealthy. I am now paying $1,059/Mo with a $6,300 Ded for single. I do not work for a large company to get group insurance but I make over the $50,000 ACA requirements to get subsidized. I take care of myself, exercise, eat right and in good health. Why should I have to pay for someone else’s insurance when they probable are not taking care of themselves by smoking, drinking alcohol or not eating right? Most of them have a smart phone and a data plan that they sure can afford so again why should I pay for there insurance? Obamacare is the worst.
This may help out financially if interested.
Charlie,
This link can certainly help you if you live a healthy life style.
Coverage that has a low monthly contribution and a member responsibility amount of $2,750. per person per year.
https://myaccount.altruahealthshare.org/AltruaRegistration?ContactId=0033600001ZCAh3AAH&[email protected]
My family just had to drop health insurance through the marketplace. We made $1000 over the income limit for a subsidy and were quoted a price of nearly $3000 per month for a silver plan . Obamacare isn’t working. We pay for others to have health insurance but are priced out now. We made 1k more and we need to find 36k extra somewhere for not so good health insurance
Wow! Crazy. That’s over twice what my health insurance with dental for six costs.
I think your next guest post should be on shopping around for a cell phone plan. 🙂 My Republic plan runs $13 to $15 a month.
I’m impressed by the low cost of your exchange plan. When I’ve looked, I’m shopping for a family of four; both deductibles and premiums have been much higher, which makes sense, of course.
I wasn’t aware of the HCM plan with no reimbursement cap. Thank you for turning me on to that! With the limited reading I’d done on the sharing plans, I had read about the cap, which ruled them out immediately for me. Insurance (or whatever you call this product) is no good if a serious illness or trauma could wipe out your life savings. Thanks again for the thorough write-up.
Best,
-PoF
Some of us like cellular data on our plans, and I think most of the people here can afford to pay for it 😉
I have data, actually, but I only pay for what I use. Technically, I am charged for it up front, but what I don’t use is refunded in the next bill.
Since I spend most of my time at home or in the hospital, I’m usually using (free) wifi data. Even the curling club has wifi, as do most restaurants, etc… When I’m driving, I wouldn’t want to use data, because I don’t want to crash my beater car. 😉
Cheers!
-PoF
Pof, I was going to comment the same. I average $10-20 on Airvoice using an an iPhone 4 with a cracked screen (my phone is for audiobooks not internet or talk so I’m a minimal user). DW has unlimited t&t with 1gb for $30 on an iPhone 6. Since going to Airvoice, we have saved >$3600 compared to old AT&T, which almost pays for our upcoming 12 day trip to Singapore and Bali. How do you travel as a resident? Not doing stupid stuff that everyone else does.
If the ACA was billed as a restructuring of health care to tax the wealthy and increase the premiums on the middle class in order to provide coverage for the poor, and then put the rest on an expanded Medicaid which will also be paid with higher federal and state taxes, then yes we could have had an honest debate where reasonable people could disagree on the merits.
But the ACA was sold as a plan that would lower the premiums and cost for everyone. IMO this was dishonest, and is the primary reason it is so unpopular. The American people are generous when asked to sacrifice, but don’t lie and abuse their generosity.
I never thought of it like that, and thought it did what it was supposed to. Make healthcare more affordable for the country, aka the government. They did this by using classic economic models and shifted the burden of care to the users to make them aware of the actual costs, to decrease consumption, and it worked. Now everyone is acutely aware that healthcare is indeed expensive, which it is regardless of who’s paying.
It does have a lot of problems, and they should get to fixing them as much as they can to make it better. I assume they will get started on that and make it their own.
It takes two things for market forces to decrease the cost of health care- # 1 Shared costs- i.e. everyone has to have skin in the game. Not so much the ACA, but the trend toward higher deductible plans has done that for those of us not on government programs.
# 2 Price transparency- the ACA did NOTHING for this. What good does it do to try to find the cheapest option when nobody knows what the price is?
At any rate, those who wish to discuss the ACA, be aware that most discussions of it generate far more heat than light. It’s unfortunate it has become such a highly politicized topic, but it is what it is.
Both points are exactly true. There needs to be some serious transparency, but that would start to reveal some serious gouging, like in the case of PBMs and some of the shady stuff coming out about them and adding huge costs to the system.
I agree, its difficult to try to have a rational discussion since its nearly impossible for it to not be overly politically colored which leads to discussing things that have zero to do with the real issues.
I’m fearful the industry cannot fix the transparency issue itself. It may require outside (i.e. government) intervention. There’s just no incentive for anyone in the industry to reveal prices or make them more transparent. I think it is going to have to be mandated. Nothing that gets rid of shade like a little sunlight.
Health care should borrow some cost transparency from veterinarians. They always have an excellent projection of costs – including major surgeries – because they expect people to pay the actual bills (often times in advance) instead of offering up Monopoly bills to the insurance companies.
I expected non-profits or government websites to have published actual OOP pricing for medical procedures long ago and it’s still barely available in any form. The only believable published prices are Medicare / Medicaid reimbursements. It’s hard to avoid thinking it remains this way because none of the industry players want it.
Thats because the incentives line up. WCI is right that it makes no sense for people to be transparent because there will be an exposure of a lot of groups that arent actually doing anything that are taking a hefty premium from the process of inserting themselves between the patient and the provider.
Take pharmacy benefit management companies for example. Supposed to drive down costs by being a big purchaser of meds, but is of course just skimming and creating even more costs. This exists across the spectrum. If everyone was transparent we could all see who isnt needed and their industry dies. You dont expect that to come of their own free will do you?
Exactly. If I had to tell people what their emergency care was going to cost and they had to pay it before I did anything many would choose to consume less and I would be paid much less. There is zero incentive for me to post a sign on the wall in the waiting room with my fees listed on it.
Big issue with the ACA is that it did not even come close to addressing the real problem which is cost. All the ACA really did is switch around who will pay for it. And the only discussion politicians are having today is still about who the ayer will be. I don’t see a word regarding cost and transparency. To its benefit the ACA does allow people to become insurable despite pr-existing conditions. Probably one of the only things that people from both parties agree with.
Until we have a real discussion about cost non of the debate really matters.
WCI, to your point, some states are intervening as you suggested:
https://nhhealthcost.nh.gov/
Liberty Health Share does not require members to be Christian.
https://www.libertyhealthshare.org/faq
I’m not affiliated with them but have several patients who use Liberty at my Direct Primary Care practice.
Just clicked on your link. According to the health plan’s website, “As a community of people we try our best to live out Jesus Christ’s mandates.” Members are not “required” to be Christian but they must sign a “Statement of Shared Beliefs” that states:
-We believe every individual has a fundamental religious right to worship the God of the Bible in his or her own way.
-We believe it is our biblical and ethical obligation to assist our fellow man when they are in need according to our available resources and opportunity.
-We believe it is our spiritual duty to God and our ethical duty to others to maintain a healthy lifestyle and avoid foods, behaviors or habits that produce sickness or disease.
-We believe it is our fundamental right of conscience to direct our own healthcare, in consultation with physicians, family or other valued advisors, free from government dictates, restraints and oversight.
This statement does seem to encompass all denominations of Christianity, but it does not reflect the beliefs of Jews, Muslims, Buddhists, Hindus, not to mention agnostics or atheists.
In addition to all the other downsides its too much. I dont care if they essentially cover anything, its a “gift” and nothing HAS to be covered. No way, too risky. They could confiscate everything and then say well you gave it to us. Great ponzi scheme set up that would be technically legal…interesting. I wouldnt lie to get covered either.
I Am very confused about the deductibility of health care premiums. Last year I got ACA insurance outside of my group’s sponsored plan because the premiums were so much smaller, even though I couldn’t pay with pre-tax dollars like I could have with the group’s plan (or so I believed). Based on consultations with different accountants with the group, they claimed you could not deduct health care premiums unless they were part of the group’s plan. But it sounds like you and Dr. Kanaan suggest otherwise. Could you give me more info and some sources on this issue? I myself and all my partners would be interested since we all researched this last year and couldn’t find anything definitive saying otherwise. For reference, I made $450k last year and expect to do the same this year. I ended up going with the group plan this year for the tax savings since my understanding at the time was that I couldn’t deduct any other health care premiums. I’m obviously locked in for this year, but want to be prepared for next year.
If you are self-employed (1099, K-1, but not W-2), you deduct health insurance premiums on line 29 of the 1040. https://www.irs.gov/pub/irs-pdf/f1040.pdf
If you have no self-employment income, you’re out of luck.
My wife’s father created a limited family partnership that we get a K-1 statement for in her name for her share in the partnership…would that count?
I agree with the choice of an ACA plan over one of the Christian Health Sharing plans. I hadn’t thought as much about the financial problems of health sharing plans — nondeductible, no HSA, no catastrophic coverage — as the moral problems in taking part in a program counter to my own. I hadn’t read WCI’s column on this issue before but agree with the concerns of discrimination and selective coverage for certain treatments.
I recommend this op-ed on the quandary of health sharing plans:
https://www.nytimes.com/2016/12/10/opinion/sunday/should-i-lie-about-my-beliefs-to-get-health-insurance.html?_r=0
Great article you referenced… the savings with a Health Sharing Plan for a larger family can certainly add up. And with that, the temptation to save money may be even stronger — even if it means tacitly agreeing with things you do not. It just seems to me that health insurance really isn’t the place to take up a religious torch and draw lines on coverage and exclusion based on faith and beliefs.
Next year I won’t have this choice. Currently the only insurer within my county’s ACA exchange just dropped out for 2018. So in summation in my county, ACA dies at the end of the year. Now Congress has to decide if there is any replacement.
This wasn’t hit on in the post. Similarly with a sharing program you can essentially see whatever provider you wish as you’re paying out of pocket. Conversely with an ACA program you’re stuck with whoever takes them in your area. I’ve found these to sometimes not be the best, for PCPs at least.
As long as the provider will take you as a self-pay patient. You’re going to have to convince them each individually that you and your network are actually good for it (or pay cash on the barrelhead.)
The only positive thing I’m hearing about health sharing plans is the potential cost savings. That’s quickly offset by the discretionary ability of not reimbursing for any medical expenses along with the lack of tax benefits. It doesn’t matter whether insurance costs only $1 / month if benefits aren’t paid out. I’m also wondering about exactly what defines an “incident” and whether you’d have to pay OOP for everything up-front since it’s reimbursed rather than being first processed by an insurance company.
I had hip surgery last year to repair a torn labrum followed by dozens of visits for rehab & PT over twelve months. After paying the $10K deductible, everything else was billed directly to the insurance company who paid the bills. It sounds like the health sharing version would have been $50K OOP up-front that would be reimbursed plus OOP expenses for every follow-up visit after the surgery. The biggest problem with charging per incident is anything that requires multiple treatments.
Does a single incident fee include all follow-up consultation, imaging, treatments and prescription meds?
Another huge benefit of insurance not mentioned in the article is the negotiated cost schedule. Since last year was the first time we met the full deductible, I’ve paid OOP for pretty much everything over the past 15 years and pay attention to the actual cost of services (unlike the vast majority of people with insurance). The discounts negotiated by the insurance companies off list price for medical care are significant.
Even though I’ve paid most of the bills directly until last year, the plan has reduced my OOP cost by 70-80% through negotiated rates along with providing free wellness care for both children. That’s been worth tens of thousands of dollars and dwarfs any possible monthly premium savings from a plan that doesn’t provide an equivalent benefit. Some of the differences between list price and negotiated rate are completely ludicrous (e.g. $600 billed for a blood panel screen vs. $8 negotiated rate or $2,220 billed for an MRI vs. $400 negotiated rate).
I think some CHM type sharing programs qualify for negotiated prices- but this might require that each doctor/ hospital agree to participate.
I sure know that when I dropped my dental coverage- because the 6 free check-ups we got for buying it cost a lot less even at higher private pay price than the insurance- and asked the office manager if I could get insurance company rates for cash payment ahead of time she said “if you want those rates get dental insurance”. Wonder who she works for, the dentist or the insurance company?
We’ve used CHM before, and I’d two more points in favor:
1) Republicans may very well open up HSAs to members of health care sharing ministries. Their health care bills and HSA bills in the past have sought to do so, and I read that current efforts to change/repeal ACA will include this. Fingers crossed, as I love HSAs.
2) You don’t have to deal with a network. With CHM, you’re covered no matter where you are. Europe, Asia, U.S., etc. Doesn’t matter. No network. I love that freedom.
great points! Agree completely!
How do you go about getting the rate negotiated between provider and insurer? Does CHM had a negotiated rate?
You get it automatically when it is “run through your insurance.” But you don’t get it with CHM. You get the chargemaster rate minus whatever you personally negotiate.
You can usually negotiate a 40% or so discount, which I think lines up with what the insurance companies get. Not everyone likes to do it, but we’ve seen discounts like that and more every time we’ve done CHM.
That’s not true. Medi- Share is part of the largest network in the country. Your doctor will run the bills through the network and the final bill comes back considerably less than the original price. I mean up to 75%! We switched two years ago when the ACA cancelled our insurance. We were desperate and took the chance. Now I am sure we wont go back into the regular insurance marketplace. I now pay 420.00 for my husband, 62, myself 58 and our son, 21. Before the ACA we use to pay 480.00 for a family of 4 with a deductible of 10,000. However, with every year the deducible was not met it would lower 1500 till finally reaching a 5000.00. I loved that insurance! Golden Rule. 100% coverage when you met your deductible also well care benefits. No prescription coverage but we were healthy. I cant tell you how angry I was when I received my cancellation notice.
Any doctors here have an agreement with Medi-Share? Do you have a list of who is “in-network?”
PHCS providers. It’s HUGE. You can go to mychristiancare.org/providers
We simply have them run the bills through the network. On our member website I see the bills processed and deducted. I pay what is my portion and that goes against the deductible. PLUS we get free Dr Video Apts. Everyone of us has taken advantage of that service.
Cool! Nice to see a pre-established network.
As a Medi-Share member, I wanted to second Madeline’s comment. The network of available doctors is vast; you will likely have no problem finding a nearby doctor in the specialty you’re looking for.
While Christian healthcare ministries are not insurance, they do function very similarly — but at a fairly significant discount in most cases as there is substantially less regulation.
See here for a detailed price comparison here between Medi-Share and conventional insurance:
http://www.medisharereviews.com/price-comparison.html
And Googling the other main healthcare sharing ministries such as Liberty and Samaritan, you can find good comparisons for them as well.
Liberty (and probably others) have a group of people dedicated to negotiating for you for an additional fee. They were able to reduce bills that we had and will soon be put to the test again, unfortunately.
Two of my kids are on a Health Sharing Plan. They live outside our area and would not be covered by our plan. The plan they are on (Liberty) has a $500 per year deductible, not per incident. One of them had expenses that were about $1500 and we only paid $500 just like advertised.
The rest of my family (5 of us) are on a traditional, employer offered plan. I pay about $800/mo, the employer pays about $650. (Silver plan in CA). It is HSA qualified and has a $4000 deductible. Believe me, next year we very well may switch.
Yes, a Health Sharing Plan could in theory not cover a thing, but guess what, that hasn’t happened. Interestingly, part of the reason it is in the law, is probably because of Nancy Pelosi, the whole thing with passing it before reading it. :O)
What a fun topic, mixing religion and politics! WCI, you are living dangerously today. :O)
It’s been a rough week. Wait until Friday when I start talking about my pecs. 🙂
Dr. Kanaan provided an excellent discussion of the comparison of the Gold Christian Healthcare Ministries plan and a Bronze ACA plan. Thank you for a good summary. I was forced to make a change in my health insurance in December when the company that covered my family announced they would no longer cover anyone living in my area unless they were in a large group plan. I was no longer in a group. One possibly unfair part of Dr. Kanaan’s report was comparing the highest level (most expensive) sharing plan against the lowest level (least expensive) ACA plan. The numbers as they worked out for my family are as follows.
Current Bronze (least expensive) traditional insurance plan for my family of 4 with a $5,000 deductible= $1,408/month or $16,896 per year.
To keep this option, we would be changing companies and getting a hefty rate increase, but since we were dropping one child at the same time (he got covered by his employer), the rate increase and the drop of a member we figured would be a wash for the new rate for next year. So we used our current rate to compare.
Current CHM Bronze (least expensive) plan for my family of 3 with a $5,000 deductible= $135/month + $25/month to add the brother’s keeper and $40/year administrative fee or $1,960/year.
Changing from our high deductible conventional insurance plan to a high deductible Medical sharing plan would save my family an estimated $14,936 per year in premium fees. Our out of pocket costs if a major incident occurred would be about the same for each plan. Some differences in how the plans work are well pointed out by Dr. Kanaan’s excellent research.
It was very hard for us to justify paying the extra $15,000 per year in premiums to get similar coverage even with some tax advantages. In three years of this we will have saved $45,000 in premiums and that will pay for a lot of medication and doctor visits. We decided the medical sharing system would be the best for us to cover for any catastrophic incident.
If you are considering a medical sharing plan, go through the process of figuring out the actual cost for your family. The size of the family makes a big difference in the cost of the plans. For example, CHM does not charge any additional “Premium” as your family grows beyond the third family member (you, spouse, 1st child).
Dr Fawcett, I agree with you… the savings for cost sharing plans really tend to widen when you are covering a larger family. The people who encouraged me to switch to a CHM plan all have families with multiple children, and thus their savings are significant (admittedly they are also more religious than I am and perhaps align more with the ideology of CHM). Of note, they have not had any problems with reimbursements to date, and are quite happy with their plan after being members for a few years now.
Also, if you click on the table, you can see the analysis compares CHM to both Bronze and Silver HSA plans through the ACA. The reason I didn’t discuss the comparison to the Silver plan in the text of the article is that the Silver plan was so much more expensive in every way compared to CHM that it didn’t make for an interesting comparison. The same (obviously) would go for a Gold plan, to a greater degree. Instead, finding a plan that was similar in pricing allowed for more of a conversation about the more nuanced pros and cons of each plan and how one would benefit more from one vs the other based on their needs. So yes, making a comparison to anything other than a Bronze plan would indeed make the ACA plans not nearly as financially attractive as CHM.
Great post and discussion. I am very much in favor of an alternative option to the ACA marketplace. It is certainly not for everyone, but for those who do not have access to employer sponsored insurance, and who are healthy and low utilizers of the healthcare system, a healthcare sharing program can be financially advantageous.
I’ll share my own N of 1 example. Before I had access to employer-sponsored health insurance, I investigated plans on the ACA and found the lowest price high-deductible plan to be around $750/month. For reference, I live in Alaska, which has the highest per capita health care costs of any state in the nation (http://kff.org/other/state-indicator/health-spending-per-capita/?currentTimeframe=0).
I found this cost appalling, so I researched health care sharing programs, and found a MediShare plan for $70/month. I was not able to contribute to an HSA, and there was no “guarantee” of coverage if I was to be involved in a serious accident, but I avoided the ACA tax penalty and saved over $650 per month in premiums. This was a great deal for me. Of course, your mileage may vary.
wow. this is the first time in a while I have left my email and come to the site to read the actual post and every single comment. The discussion is almost as good as the piece.
After reading the article, my big question was about preventative care and well child checks etc. (I’ve got 4 months left of residency and this is soon to become a REAL issue. We’ve got 4 kids and will be 1099 income from TEAM health responsible for all of our own health care costs).
After messaging a few friends in Texas I know on Liberty HealthShare I got this response I thought might be helpful to some.
“As far as liberty healthshare- so far our experience has been great. We haven’t used it much yet, but we have already saved well over $1500 in the last two months alone, so I am still sold on them. The article you sent said that they do not cover preventative care- they do. They will cover yearly check ups for each family member (and more for kids under 2). More specifically it is zero out of pocket for well child check ups/ yearly visits for adults, even if you haven’t reached that $1500. It is not part of the unshared amount, just like on an insurance plan with a deductible. I am not entirely sure about vaccinations, but I am under the understanding that it does cover them. It does not cover birth control. It will cover other prescription drugs though. We do not have any doctors in our area that take liberty healthshare directly, so we just tell them we are self paying. We pay the bills and submit them online to liberty healthsare, and they will send us a check after we reach our $1500 unshared amount (like a deductable, per family). Because we’ve only been using them for two months, we haven’t reached that unshared amount. But my friend that recommended them to us, has and they have cut her checks each time she’s requested.
Really, it’s a great program if your family is overall healthy. They won’t cover pre-existing conditions (anything that has been treated in the last 24 months) including pregnancy.”
I’m going to have to run our own numbers but I have this weird gut feeling that often accompanies a “too good to be true” offer. What’s the catch? Also seems pretty messed up to not cover everyone according to the “what would Jesus do” christian mentality. But, I guess that’s built into their business model.
As a side note (might make 43% of people mad), I would love to see us get rid of ALL employer plans and create an actual market. Both of Adam Smith’s Invisible Hands have been amputated in our nonexistent market that is health care. Maybe we would see a shift if there were more of a demand and purchasers that didn’t have corporate priorities and tax structures etc. Thoughts?
Liberty phases in pre-existing conditions. 1st year no coverage, 2nd year like 25%, 3rd year like 75% and then you are covered. Families that start early and young are also often ahead of the game. Since the fees aren’t horrible and if you currently have good healthcare, but are expecting that may not continue you could always so if that math works out to “double-up”.
Part of the problem with WWJD and covering everyone is part of the system that makes it work are people agreeing to abstain from or moderate certain behaviors and agreeing that they at least acknowledge the God that asks them to do so, thus a fairly high level of accountability.
Not covering pre-existing conditions means the plan isn’t ACA compliant. You’d still be paying any penalties associated with not having any coverage (although the penalty has apparently been rescinded by one of Trump’s recent executive orders). Who knows what happens in the next 18-24 months with ACA plans.
I think well child care is a state requirement, not an insurance company giveaway. We’re in Colorado and it’s been difficult to get any reliable information on exactly what’s automatically covered for children. Even my insurance agent hasn’t been too useful in that regard, but the bills processed by the insurance company for the kid’s checkups, vacs, diagnostics have always been fully paid.
From the comments, it doesn’t sound like most people realize you can buy insurance outside the ACA exchange directly from a provider. You just lose the ability to get refund credits (if applicable) along with some other minor features that I can’t remember. My legacy family plan became ACA compliant after coverage caps were removed. It’s $475 monthly w/$10,000 deductible for a family of four compared with about $1,200 monthly for plans on the exchange.
Another option for health insurance is business and trade association groups which offer discounted plans by pooling together the member. The concept is similar to sharing, but it’s an actual group health insurance policy subject to insurance regulations.
Incorrect, you do not have to pay penalties.
You are correct in saying it is not an ACA policy.
Sorry I’m late to the post. I would be more than happy to pay $249.42 or $318.70 monthly for a silver HSA qualified plan. Like you I have little need for insurance other than covering being hit by a truck, etc. In Wisconsin I have to pay $1308.76/month with a $7,000 deductible for a plan that isn’t even HSA eligible. I don’t qualify for any ACA subsidy. I am 60 recently retired and in excellent health with only Atorvastatin. I need to protect my savings for retirement, but other than that I don’t want insurance. I’m sick of caring for any now paying for those who don’t take care of themselves and abuse the system, which is one of the reasons I retired. Joining a religious based co-op with no guarantee they are going to cover expenses just isn’t a good option either. I just see this as another forced tax. I can’t seem to find costs from state to state but your cost seems like a bargain to me.
Following retirement, at age 60, I need health insurance to protect my retirement savings in case my wife or I get hit by a truck. We are both very healthy and otherwise have no need for healthcare. Ministry based coverage is also a risk as there is no guarantee of payment due to its co-op nature you are relying on their benevolence, which is something I don’t wish to gamble on. I would love a silver plan which only costs $249.42 or $318.70 monthly. In Wisconsin my wife and I have to pay $1308.76 for a bronze plan which isn’t even HSA and has a $7,000. deductible. I’m sick of paying for everyone else’s health care especially when so many abuse the system. I just can’t find any other choices in my area.
Hello
I am moving from California to Denver after my fellowship. I am starting new job in October.My current insurance will expire at the end of June. I am in good health and take no medications. COBRA seems very expensive as my employer is paying 450/2 weeks, so it will be around 1000/month. Wondering what might be the best options for covering for 3 months until I begin my new job in October.
Thanks
Guess what? Insurance is expensive. Those who are actually paying the premiums themselves for the first time usually get some serious sticker shock. I pay $1200 a month for my family, just by comparison, and I’m told that’s pretty good!
Here’s the good news. You can COBRA retroactively- i.e. AFTER you get sick or hurt. So you might not end up having to pay those premiums at all!
Other options include a catastrophic plan, an Obamacare plan +/- subsidy, applying for Medicaid etc. But I’d just plan to Cobra if you end up needing it.
And it is especially expensive when my premiums are used to subsidize insurance for someone else that cannot afford it. I pay $2505/MONTH for a family of 4 thru Blue Cross of Illinois. As someone earlier stated…..if the ACA was about evening out the costs between wealthy and poor, then that should have been stated during congressional debate. But the American public was lied to and told that everyone’s cost would go down. NOW do you understand why people are angry….Mr. Doctor person?
That’s Dr. Doctor person to you. 🙂
I’m not sure why you seem to be mistaking me for some sort of ACA supporter though.
The biggest concern when I decided to leave medicine and spend time pursuing my true passions (climbing, skiing, white water adventures, wilderness canoeing) was my ability to obtain affordable (or any) health insurance. I have struggled with health insurance since I retired and was no longer eligible for my physician group health insurance plan. ACA insurance became a bit of a hassle since I have no earned income but substantial assets – each year they denied me as they felt I was Medicaid eligible leading to delays and loss of insurance at times. Furthermore, my ACA bronze plan with a high deductible (between $11,500 and $13,500 deductible each year) increased in cost from around $900/month for a family of 5 to $1240/month. While we are very active and mostly “healthy”, we are in our mid 50’s and little things come up that tend to cost more than you would think. Last year our combined medical expenses including insurance were $22,700 up from about S16,000 the year prior. Our projected insurance costs for 2017 were $14800 plus the $11500 deductible. While I understand that insurance is expensive, these spiraling costs made me begin to investigate other alternatives as these expenses make up a fairly sizeable portion of our retirement budget. I read the post on this site relating to healthcare co-operative in February and was intrigued by the concept. Then I went on a humanitarian mission to Columbia where the other participants all were members of Christian Health Ministries. They felt it was a fair and reliable plan so I investigated further. My family of five could get their gold level plan for $450/month plus $40 month for the “brother’s keeper” which basically is disaster or major medical insurance. The deductible is $500/incident. As previously noted it does not cover routine medical care or medications, but neither does a bronze ACA plan with an $11,500 deductible for all intents and purposes.
Long story short, I switched insurance to Christian Health Ministries. I admit I had some concerns as it is not actually insurance and they can refuse payment, but I felt that all the reviews were positive and decided to take a chance. Unfortunately, 3 months after the switch we had a major medical expense. Our son suffered a significant hand injury on one of our kayaking trips. He required extensive surgery and our out of pocket expenses after negotiating a 30-60% fee reduction for cash payments exceeded $15,000. Christian Health Ministries was great. I simply had to obtain each bill with its discount listed, fill out a form, write a brief letter explaining the event and submit it to CHM. Within a few weeks, with NO hassles and NO denials, I was cut a check reimbursing me for 100% of expenses minus my deductible. In my entire career as a healthcare consumer and as a healthcare provider I have never had this type of experience with insurance companies. I swear part of their business plans is random denial of payments as many of those denials result in the patient assuming the cost and the insurance getting out of the bill. (Among several of my bad experiences, our first child’s delivery costs were denied for failure to get prior approval to have the baby – this despite paying for maternity insurance for years prior).
I cannot say enough good about the Christian Health Ministries plan. They are honest, reliable and affordable. I strongly encourage those interested in a change to consider this group as the provider of their health care coverage.
Tim Wolfe, MD
Always great to see you here Tim, and even better to hear about your positive experience with CHM. Sorry to hear about the hand. I’ve heard a lot of positive feedback since this post was written (see comments above) and in fact, can’t recall any negative feedback from anyone who actually bought one of these “policies.”
Way too complicated. I’m a 56 year old healthy non smoking male with no insurance and no plans to change being uninsured pending some great accomplishment from Congress and signed by the POTUS.
I take 2 rx meds daily, both are cheap ($10 for 90 days each). I see the doctor once a year and pay $90 for visit to go over a blood panel ($360). Working with econolabs is something worth exploring. Assuming I never have a catastrophic event, it is still cheaper to self insure. This being the risk I take.
I do like the concept of the CHM plans which cover catastrophic events, have a low deductible and I pay for my routine items as I have been doing. Since I don’t have much of an income, the tax consequences are nill (read: http://americanactionforum.org/weekly-checkup/loophole-gives-uninsured-way-around-aca-penalties ) and HSA’s don’t seem to be attainable.
Billy,
You can get a health share plan for $195 per month.
Your annual financial responsibility will be $2750. (deductible, out-of-pocket)
Because you only go once a year the $90 would go against the $2,750 you would have to pay.
Your prescriptions are generic so that would not change.
This plan would provide the catastrophic event up to 1 million dollars.
The plan is the Silver Select 2750.
https://myaccount.altruahealthshare.org/AltruaRegistration?ContactId=0033600001ZCAh3AAH&[email protected]
I am disturbed with how lightly the author and many of those making comments take the faith requirements of the CHM plan. The CHM plan requires applicants agree to and sign this pledge:
“To be CHM members, participating adults must be Christians living by biblical principles, including abstaining from the use of tobacco and the illegal use of drugs (1 Corinthians 6:19-20), following biblical teaching on the use of alcohol, and attending group worship regularly if health permits (Hebrews 10:25). ”
The sharing plans recognize that traditional Christian values result in a healthy lifestyle with fewer health issues, and are able to offer lower priced coverage because the members follow these practices. It’s deceptive and unethical to sign CHM’s statement of faith & practice when it is not true. Surprising to me how many people here are willing to exchange their honor for a cost savings.
There is a great deal of disagreement about what “Biblical Principles” are. That’s why there are dozens, perhaps hundreds, of different Christian sects in this country.
Actually….that is not true. Biblical principles emanate from the Bible. People contort scripture to mean want they want…..but the Biblical principles are consistent. But more important, as a doctor, you should applaud a healthcare group that gives incentives for good health behavior….such as non-smoking, non-drinking, non-risky sex practices, low obesity….instead of making light of them.
I agree that people contort scripture to mean what they want, including many people who feel they are living by “biblical principles.”
I have a question that I wondered if you could respond to and a statement that suggests that physicians know how to handle this insurance (Physicians should be expert users of economical health care due to their knowledge and access to professional courtesy.).
Physicians I work with do not know how to handle this. So my questions: 1)Physicians can refuse to see patients with this insurance when they are not providers of the insurance, right? 2) Or tell the patient they are not providers of the insurance so the patient would be a cash patient and could bill their carrier directly, right?
Thank you for any response you may be able to send my way. Kim Sweet
If EMTALA doesn’t apply no physician has to see anyone barring federal anti-discrimination laws. You don’t have to take self-pay patients, no. Health sharing patients are generally considered cash pay patients. So if you’re not willing to work with those, you won’t have any patients with a health-sharing plan.
Could you share the calculator?
At which premium price would the scale tilt towards ministry?
For a person in similar situation as yours but with higher ACA premium options…
Thanks!
It’s enrollment window time for 2020. I am 52 with a wife and four kids. Cheapest bronze plan = $26,000 annually. Most expensive platinum plan = over $50,000.
I am DONE with it. They have finally priced me out of regular insurance. Insurance premiums cost me $450 monthly just prior to the PPACA with much better coverage and access to doctors and hospitals than anything available on the exchange today even among the platinum plans.
I am now researching health sharing ministries, and the monthly share fore each is around 25% of the monthly premium of the cheapest bronze plan. While we have not decided which one to use, one decision is already certain: We will not be re-enrolling in the healthcare exchange prior to December 15 for the 2020 year.
[If you want to advertise on the site, buy an ad]
Caveat emptor.
Some are totally not legit, paying only 20% of their revenue towards health care. Others refuse to cover…ectopics?
Be safe out there….
https://www.houstonchronicle.com/business/article/Buyer-Beware-When-religion-politics-health-14065418.php#photo-17787873