How Exactly Does Health Sharing Work?

Health sharing offers an alternative approach to managing healthcare costs that differs from traditional insurance. It is a community-based model where individuals and families, often united by shared ethical or religious beliefs, contribute to a collective fund to help cover each other’s medical expenses. This framework emphasizes mutual support and a cooperative spirit rather than a contractual insurance relationship. It provides a pathway for individuals seeking to align their healthcare choices with specific values and potentially lower their monthly outlays for medical cost management.

The Health Sharing Model

Health sharing organizations operate on the principle of members voluntarily contributing to assist with the healthcare needs of others in the community. These organizations facilitate the sharing process, acting as administrators for the collective funds. Members agree to a set of guidelines that dictate how contributions and medical costs are shared.

These organizations are typically non-profit entities, often structured as 501(c)(3) organizations. They do not assume risk in the same manner as insurance companies, meaning they do not guarantee payment of medical bills. Instead, they facilitate the sharing of eligible expenses among members, upholding a community-driven model. This administrative role distinguishes them from traditional insurers, which bear the financial risk of covered events.

Member Contributions and Medical Expense Sharing

Health sharing involves members making regular monthly “share” contributions. These contributions, which vary by plan, family size, and sharing level (e.g., $64-$600+), are pooled to cover eligible medical expenses. When a member incurs a medical expense, they submit a request with itemized bills for review.

Before expenses are shared, members pay an “unshareable amount,” similar to a deductible. This Initial Unshareable Amount (IUA) or Annual Unshared Amount (AUA) is the out-of-pocket portion of a medical event cost. These amounts vary widely, from a few hundred to several thousand dollars per incident or annually. Once met, remaining eligible costs are shared from collective funds.

Contributions to health sharing ministries are generally not tax-deductible for federal income tax purposes. However, business payments for employee benefits to these ministries may be tax deductible.

Membership Requirements and Program Structure

Joining a health sharing organization involves adhering to specific membership criteria, often including faith-based principles or commitments to a healthy lifestyle. Many organizations require members to attest to certain religious beliefs or avoid behaviors like tobacco or alcohol use. This alignment of values forms the community’s foundation.

Programs outline specific medical needs eligible for sharing, such as acute illnesses, injuries, and certain maternity costs. Many plans have limitations or exclusions, including pre-existing conditions (some may cover after a waiting period). Elective procedures, mental health services, or conditions from behaviors contrary to guidelines are also commonly excluded.

Some programs implement annual sharing limits or per-incident maximums, defining the total amount that can be shared.

Key Differences from Health Insurance

A fundamental distinction between health sharing organizations and traditional health insurance lies in their regulatory status. Health sharing ministries are generally not regulated as insurance companies by state insurance departments. This means they are not subject to the same consumer protection laws, such as guaranteed renewability or specific coverage mandates like those under the Affordable Care Act (ACA).

Unlike ACA-compliant plans, health sharing organizations are not required to cover essential health benefits. They also do not typically guarantee coverage for pre-existing conditions or limit annual and lifetime benefits.

While traditional insurance involves “premiums” and “claims,” health sharing involves “shares” and “sharing requests.” The legal framework for health sharing ministries often includes exemptions from state insurance codes, with about 30 states explicitly exempting them from insurance regulation.

These organizations do not offer the same legal recourse or regulatory oversight as traditional insurance, meaning they are not legally obligated to pay a member’s medical bills.