The Affordable Care Act, the ACA, or Obamacare turned the medical world and health insurance upside down. People were sick of paying high premiums and Obamacare was simply the icing on the cake.
Soon after, hundreds of thousands of Americans were scrambling to find a health care solution that worked for their needs. Health insurance was too costly and the ACA seemed to have too many regulations. Many individuals and families didn’t know where to turn.
Enter medical cost sharing plans. These types of policies are not state regulated and are not considered insurance. Yet, many have signed up for this new type of health coverage. In 2010, only 200,000 Americans were using medical cost sharing plans.
After Obamacare came into play in 2010, that number skyrocketed. Now, there are more than 500,000 individuals using medical cost sharing plans as their primary form of health care or protection.
Why has this form of coverage recently taken off? How are medical cost sharing plans exempt from the ACA? Let’s find out.
What are Faith-Based Medical Cost Sharing Plans?
Faith-based medical cost sharing plans are a little more complex than traditional insurance. Most of us understand what health insurance entails. Medical cost sharing is similar in premise. You pay a monthly share amount that allows you to enjoy the sharing guidelines if need be. This is similar to a deductible.
Next, you pay out-of-pocket for medical expenses until your unshared amount is met. Then your medical expenses will be paid by the group’s administrative staff after that in a similar manner to health insurance.
It’s important to note that these plans do not offer guarantees like insurance policies. With these plans, you are simply eligible for sharing. There’s no guarantee you will be covered, but the plans did spend nearly $700 million in medical expenses in 2016. So, the guarantee is more or less implied.
How Medical Cost Sharing Plans Work?
Medical cost sharing plans are based on the premise that people are not cost-conscious when looking for medical care. So, the plans attempt to place the onus on members when small medical costs are concerned.
Many plans make members pay for small medical bills out-of-pocket and then the sharing network kicks in when a large bill must be paid. In most of these plans, you get to keep your current doctors and not much will change from when you had health insurance.
In many ways, it’s just like health insurance, but in other ways – these plans are very different. For young, healthy people and families – these plans can be a great way to save money and avoid government regulation. For older people and those requiring significant medical care, medical cost sharing may not be a great idea.
Why are Plans Exempt From the ACA?
As medical cost sharing is not considered insurance and does not meet the minimum essential coverage that is mandated by the ACA, many are curious why the plans are exempt from Obamacare regulations.
Before we get into the reasoning, it’s important to understand that these plans are not required to offer the same benefits and coverage as insurance policies. As such, it’s absolutely vital you pay attention to the sharing guidelines and eligible medical services of any plan you’re considering joining.
Now, under Obamacare, health care sharing ministries can qualify for an exemption – meaning participants don’t have to carry health insurance and won’t need to worry about getting a tax penalty.
A health care sharing ministry must follow a few guidelines to qualify:
- Must be a non-profit organization under 501(c)(3) and thus would be exempt from tax under 501(a).
- All members must share a common belief system and then they can share certain medical expenses amongst themselves while in accordance with those beliefs, regardless of if they are employed or what state they reside in.
- Every member must be able to retain membership even if they develop a medical condition.
- The plan must have allowed members to share medical expenses without interruption, since December 31,1999 at minimum.
- Every health care sharing ministry must conduct a yearly audit by an independent and certified public accounting firm.
If health care sharing plans meet these requirements, then they are free from Obamacare regulations and members do not have to carry minimum essential health insurance.
The Benefits of Faith-Based Medical Cost Sharing
While many individuals are nervous about dropping health insurance in favor of a medical cost sharing plan, there’s no denying these plans have their benefits. Health care coverage that is exempt from government regulation, tax-free, and low-cost appeals to many Americans.
If you and/or your family are healthy, exercises, and on the younger side of things, then joining one of these plans could save you a significant amount of money. If you have any questions or need assistance call now at 1-844-699-6873 to speak to one of our agents.