What Is Health Share Insurance and How Does It Work?
Explore health share programs: an alternative, community-based approach to medical expense sharing that operates differently than traditional insurance.
Health share plans offer an alternative to traditional health insurance for managing healthcare costs. Members voluntarily share each other’s medical expenses, typically based on common ethical, moral, or religious beliefs. These programs emphasize mutual support, assisting individuals with healthcare burdens without a contractual guarantee of coverage.
Understanding How Health Shares Operate
Health share programs operate through monthly financial contributions, called “shares,” from their members. These contributions differ from insurance premiums, as they are part of a voluntary sharing mechanism. Members submit “needs” for eligible medical expenses, which are then presented for sharing.
Before expenses are shared, members are responsible for an “Annual Unshared Amount” (AUA) or “Personal Responsibility Amount.” This functions like a deductible in traditional insurance. AUAs vary significantly by program. Once this threshold is met, remaining eligible medical costs are shared among the membership.
Health share programs do not offer a contractual insurance agreement. They facilitate a community-based sharing process, meaning there is no legal guarantee that medical bills will be paid. Members often have flexibility in choosing healthcare providers.
Defining Characteristics of Health Share Programs
Health share programs possess distinct characteristics that differentiate them from regulated health insurance. They are non-insurance entities and are not supervised by state insurance regulators. This exemption from state oversight means they are not bound by many consumer protection laws that govern traditional insurance, such as mandated coverage for certain benefits or financial protections like caps on out-of-pocket spending.
These programs are founded on a shared set of religious or ethical beliefs among their members. This commonality underpins their voluntary cost-sharing model. Health share ministries are exempt from certain provisions of the Affordable Care Act (ACA), particularly the individual mandate requirement that previously imposed a federal tax penalty for not having health insurance. Although the federal penalty for the individual mandate was reduced to $0 as of 2019, this exemption remains a defining aspect of their legal status.
Unlike ACA-compliant insurance plans, health share programs are not required to cover essential health benefits or pre-existing conditions. For tax purposes, contributions to health share ministries are generally not tax-deductible as medical expenses under current federal law. However, there have been legislative proposals to allow these expenses to be classified as eligible medical care expenses for deduction. Certain “extra blessings donations” made voluntarily above regular monthly shares may qualify as charitable contributions to the ministry. To qualify for ACA exemption, a health care sharing ministry must be a 501(c)(3) organization, have been in continuous existence since December 31, 1999, and conduct annual audits by an independent certified public accounting firm.
Membership and Sharing Eligibility
Membership in a health share program requires adherence to a statement of faith or a set of ethical principles. Many programs encourage or mandate a commitment to a healthy lifestyle, which often includes avoiding tobacco, illicit drugs, and excessive alcohol consumption. The strictness of religious or ethical requirements can vary significantly among different health share organizations; some may require more stringent proof of adherence, while others simply ask for agreement with general principles.
Regarding pre-existing conditions, health share programs handle them differently than traditional insurance. They are not obligated to share expenses related to pre-existing conditions and may even decline membership to individuals with certain health issues. Many programs implement waiting periods, often ranging from 12 to 24 months or longer, during which expenses for pre-existing conditions are not eligible for sharing. Following these waiting periods, sharing for pre-existing conditions may be phased in, starting with limits and potentially becoming fully shareable after several years of continuous membership.
The types of medical needs eligible for sharing generally include acute illnesses, accidents, and specific preventative care. However, the scope of what is covered can be more limited compared to traditional health insurance. Some health share programs may not cover services such as routine wellness exams, mental health counseling, substance abuse treatment, or certain women’s health services, reflecting their distinct operational guidelines and foundational beliefs.