What Is a Health Sharing Plan and How Does It Work?

Health sharing plans are not traditional health insurance policies; instead, they function as cooperative arrangements where members share each other’s medical costs. These plans are typically offered by non-profit organizations, often referred to as “sharing ministries” or “sharing organizations.” Members make regular financial contributions, which are then pooled together to create a collective fund. This fund is subsequently used to help pay for the medical expenses of other members within the community.

These plans emphasize a voluntary, cooperative approach where members directly support one another’s medical needs. While the operational mechanics might resemble insurance, the fundamental difference lies in the absence of a contractual guarantee of payment, as seen with traditional insurance providers. This community-driven framework allows for potential cost savings compared to conventional health insurance.

Key Characteristics and Membership

Health sharing plans frequently require members to adhere to specific ethical, religious, or lifestyle beliefs. These shared values often form the foundation of the community, influencing the types of medical needs that are eligible for sharing. For instance, many plans are faith-based, often requiring members to affirm a statement of faith or maintain a healthy lifestyle, such as abstaining from tobacco or illicit drugs.

These plans typically handle pre-existing conditions with specific limitations or waiting periods. A “lookback period” defines the timeframe before membership during which a condition’s symptoms or treatment would categorize it as pre-existing, often ranging from one to ten years. Following enrollment, a waiting period, commonly 12 to 36 months, is usually imposed before expenses related to these conditions become eligible for sharing. Even after the waiting period, sharing for pre-existing conditions may be limited, with tiered sharing amounts that increase with continued membership.

Certain medical needs are generally eligible for sharing, while others are commonly excluded. Plans typically cover significant, unexpected medical events like hospitalizations, surgeries, and specialist care. However, routine preventive care, elective procedures, mental health services, and substance abuse treatments are frequently not covered or have limited sharing. The specific guidelines for eligible and non-eligible expenses vary significantly among different health sharing organizations.

Financial Mechanics

Participating in a health sharing plan involves regular financial contributions, often referred to as a “monthly share amount” or “contribution.” This payment, similar to an insurance premium, is directed into the community’s shared pool rather than to an insurance company. Monthly contributions can vary widely, typically ranging from a few hundred dollars to over a thousand, depending on factors such as the chosen program, household size, and age group.

A significant financial component is the “Annual Unshared Amount” (AUA) or “Initial Unshared Amount” (IUA), which functions similarly to a deductible in traditional insurance. This is the amount members are responsible for paying toward their medical expenses before the sharing community begins to cover costs. AUAs can range from a few hundred dollars to several thousand, with higher AUAs often correlating with lower monthly share amounts. Some plans may cap the number of IUAs a household must meet in a given period.

When a medical need arises, members typically submit their itemized medical bills to the health sharing organization. The organization reviews the submission to determine eligibility for sharing based on its established guidelines. Some plans may require members to pay providers directly and then seek reimbursement, while others might facilitate direct payment to the provider once the AUA/IUA is met. The funds are then dispersed from the collective pool to cover the approved medical expenses.

Regulatory Landscape

Health sharing plans generally operate outside the purview of state and federal insurance regulations. They are typically exempt from the requirements of the Affordable Care Act (ACA), including mandates to cover essential health benefits or adhere to specific consumer protections. This exemption stems from provisions within the ACA itself, particularly for health care sharing ministries that have existed since a specified date and conduct annual independent audits.

The implication of this regulatory difference is that health sharing plans are not legally obligated to guarantee payment for medical claims, unlike regulated insurance companies. They are not required to cover pre-existing conditions or offer the full range of essential health benefits mandated for ACA-compliant plans. While they are not regulated as insurance, some states may have specific disclosure requirements or data reporting mandates for these organizations. This distinct legal standing means members do not have the same consumer protections as those with traditional health insurance.