What is a healthshare?
Neither are US health care plans. Nearly half of all Americans surveyed say they have difficulty in affording health care costs. For this reason and others it’s worth exploring how healthshares work.
Health care costs are rising far faster in the United States than other similar countries, even though the US struggles with issues around health care outcomes and access to care.
Unless you’ve been rolling the dice without a health plan lately or graced with great health plan options at work, this isn’t shocking news. Health care costs in the US have been rising for decades.
Traditionally, American companies have offered medical insurance as a benefit to their employees. Since companies can often take advantage of negotiated rates by being part of a larger group, they can opt to pass along some savings to their workers as a perk.
For entrepreneurs, contract workers, 1099 employees, and other self-employed wage earners without this resource, health care payments can be a stretch. The cost of purchasing traditional medical insurance on the Marketplace can be prohibitively expensive.
One lesser-known, more affordable option to consider is a healthshare. A healthshare, or a medical cost sharing program, can offer great coverage at a lower cost.
It helps to have a strong idea how healthshares work to help you decide if they’re the right option for you. Here are some things to know.
Healthshares: What They Are
A Membership-based Healthcare Cost Savings Plan
A healthshare is a type of membership-based medical cost sharing plan—like a co-op for your health care. In a healthshare, members agree to pay into a communal monetary fund that can be used to share in each other’s medical costs throughout the year.
Healthshares help cover their members’ medical needs while reducing their monthly payments and out-of-pocket expenses.
Healthshares are not insurance. They are nonprofit organizations in which members agree to abide by a commonly-shared code of conduct to help keep the overall care costs for the community down.
Many healthshares ask members to commit to living a healthy lifestyle, avoiding things like illegal drugs. Other healthshare programs require members to be actively practicing a specific religion, but that’s not across the board.
Understanding How Healthshares Work
With a healthshare, you’re responsible for your monthly membership contribution which goes into the communal monetary fund used to pay eligible medical costs.
You’re expected to pay for your personal responsibility too, before the healthshare community shares in your medical expense. This amount can vary based on the membership tier you participate in and what the medical expense is for.
The amount you pay each month will depend on the membership tier that you choose, plus factors like the number of people in your family you want included in the membership, and your age. The medical cost-sharing program shares in eligible costs above that personal responsibility. Any limitations on sharing, as well as the medical expenses eligible to be shared, are outlined in the organization’s Member Guidelines.
As a member of a healthshare, you have to be more engaged with your healthcare than many people are accustomed to. When you incur an eligible medical expense, you have to collect bills from your provider and submit them to the healthshare as a need. The healthshare will then review your need to ensure it meets sharing qualifications agreed to in the Member Guidelines. If it does, the healthshare community helps to pay that expense for you.
The advantage of healthshares is your out-of-pocket personal responsibility costs are often far lower than what you’d pay for a traditional health insurance plan.
Healthshare programs often keep monthly costs down for the whole community by capping the age of membership (usually at 65), and implementing pre-membership condition limitations.
Healthshares: Who They Benefit
Healthshares can be particularly appealing for people who:
- Are generally healthy with few pre-membership conditions
- Are under 65 (at which age they can sign up for Medicare)
- Want some protection in case of a major accident or unexpected illness
- Can’t afford high medical insurance payments, but make too much money to qualify for tax credits
- Don’t have a health care option provided through work but want to protect themselves and their families
- Are running their own businesses and want to keep health care costs low
- Don’t want to participate in the traditional health insurance industry
- Missed out on open enrollment. Oops!
That’s right—if you weren’t able to sign up for new health care during the November-December open enrollment time, you’re in luck! You can enroll in a healthshare program at any point throughout the year.
Healthshares aren’t bound to the traditional insurance industry rules around new member enrollment—you don’t need a qualifying event to enroll.
However, you should read a healthshares’ member guidelines to learn about any waiting periods or sharing exclusions around conditions that existed prior to membership or within a certain period after signing up.
How Healthshares Can Protect You
The Survey of Consumer Finances shows that people who are self-employed are less likely to have health insurance. That same survey shows that female entrepreneurs are more likely than male entrepreneurs to go without medical coverage.
You leave yourself open to significant financial risk if you choose not to get any type of protection for unexpected major medical events. One accident or unexpected illness while you are without any type of protection can leave you with mountains of medical bills.
Healthshares can help provide financial protection from these unexpected medical events.
One core purpose of a healthshare program is to help members get access to the medical care needed while controlling costs. The costs to treat an injury or unexpected illness can quickly add up if you do not have any coverage.
If you want to learn more about how healthshares work and how they could work for you, you can start by booking a presentation to get more information from Clearwater Benefits.
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