What Is a Healthshare Plan and How Does It Work?
Discover how healthshare plans offer a community-based approach to managing medical expenses, distinct from traditional insurance.
Healthshare plans offer an alternative approach to managing healthcare costs, differing significantly from traditional health insurance. They provide a community-driven model for covering medical expenses.
Defining Healthshare Plans
Healthshare plans operate as voluntary cost-sharing arrangements, not as health insurance. They consist of individuals who unite based on shared ethical or religious beliefs, agreeing to help one another with medical expenses. This cooperative model allows members to contribute a regular “share” amount, which covers eligible medical needs across the membership. Unlike traditional insurance, healthshare plans are generally exempt from many state and federal insurance regulations, including some provisions of the Affordable Care Act (ACA).
How Healthshare Plans Operate
The core mechanism involves members making monthly financial contributions, or “shares,” into a collective pool. These pooled funds assist other members with qualifying medical expenses. When a member incurs a medical bill, they submit a request for sharing. Many plans require members to satisfy an “unshareable amount,” similar to a deductible, before sharing begins. Healthshare plans facilitate cost-sharing but do not provide a legal guarantee of payment for medical services.
Key Distinctions from Traditional Health Insurance
Healthshare plans differ from traditional health insurance, particularly concerning regulation and consumer protections. Insurance companies are subject to extensive federal and state oversight, ensuring compliance with mandates like guaranteed renewability and coverage for essential health benefits under the ACA. Healthshare plans are typically not regulated as insurance and are not bound by these same requirements.
Traditional insurance policies must cover pre-existing conditions without waiting periods or exclusions, as established by the ACA. Healthshare plans often implement waiting periods (typically 12 to 36 months) or may exclude sharing for pre-existing conditions entirely. While many traditional insurance plans use defined provider networks, healthshare plans often offer more flexibility, allowing members to choose any licensed provider.
Contributions to healthshare plans are generally not tax-deductible as health insurance premiums for federal income tax purposes, nor do they qualify for pre-tax treatment under employer-sponsored Section 125 cafeteria plans.
Common Features and Member Responsibilities
Healthshare plans frequently have specific eligibility requirements, often rooted in faith-based principles or lifestyle choices. Criteria might include abstaining from tobacco or illicit drugs, and adherence to healthy living guidelines. The cost structure involves a monthly contribution amount, varying by age, household size, and chosen sharing level, typically ranging from $100 to $500 or more for individuals.
Before costs are shared, members are responsible for an “unshareable amount” or “member responsibility amount.” This functions similarly to a deductible and can range from $500 to $5,000 per incident or annually. Eligible medical expenses typically include hospitalizations, doctor visits, and lab tests. Many plans exclude costs for cosmetic procedures, routine dental or vision care, and sometimes mental health services or preventative care.
Members are often encouraged to negotiate prices with providers and manage their initial medical bills directly.