Insurance has been around a long time. Some historians believe insurance may go back as far as Babylonian times. The basic concept of insurance is that of spreading risk. At its essence, insurance is a group of people who pledge to underwrite another member’s losses; the many can help protect the one. Today’s insurance markets are far more sophisticated and far less personal. Unless one is speaking about a Health Care Sharing Ministry.
This issue of Legislative Review provides an overview of Health Care Sharing Ministries which have gained members as a result of the Affordable Care Act (ACA).
ACA and Health Care Sharing Ministries
The ACA specifically names health care sharing ministries (HCSM) in reference to the individual mandate. A person participating in a HCSM is exempt from the ACA’s individual mandate. Of note, however, is that HCSM is not considered minimum essential coverage (MEC).
HCSM plans may vary from entity to entity. But, the purpose of any HCSM is for individuals to help meet each other’s needs. The bible quote to support this is that of “carrying each other’s burdens.”
According to the Alliance of Health Care Sharing Ministries, there are 104 known and active HCSMs in the United States with almost one million individuals participating. Illinois is one of the top states for individuals participating in these arrangements.
Videos and information on one HCSM site provide insight into the benefits and limitations of HCSMs. The caveats expressed on the site clearly state that the HCSM is “not insurance, it’s a ministry.” It goes on to expound that the arrangement is not “a company with contracts and legally binding language.” There is no guarantee of payment and no assignment of risk. Individuals in a HCSM are responsible for paying their medical bills which they submit for consideration to the HCSM.
The arrangement calls for an individual to send preset “financial gifts” on a monthly basis. Different levels of gifts provide access to different levels of benefit.
Each level is built around the concept of “personal responsibility.”
Some ministries are more restrictive regarding membership requirements than others. The ministry reviewed had the following requirements:
• No tobacco use
• No illegal drugs
• Regular group worship attendance
• Requirement to follow biblical teaching regarding alcohol.
When a member of the HCSM receives medical care, they are encouraged to identify that they are “self-pay” patients. They are also encouraged to seek discounts from providers. If an individual receives a discount, the discounted amount may offset the amount of a person’s individual responsibility. For example, if the personal responsibility amount is $500 and a person obtains a verifiable $300 discount, their personal responsibility amount is reduced to $200. The concept of the offset is to encourage negotiation on the part of the member. Ministry providers may also have personnel dedicated to seeking provider discounts once a claim for sharing has been submitted.
HCSMs may have different levels of arrangements available with different monthly gift requirements. One HCSM offered three (3) levels with only the gold level allowing reimbursement for providers other than hospitals. The lesser levels only allow reimbursement for services billed by a hospital.
Pre-existing conditions are taken into consideration for HCSM arrangements. A pre-existing condition is one where “signs, symptoms, testing or treatment” occurred, even without a diagnosis, before becoming a HCSM member.
Pre-existing conditions may have a limited benefit during the first three (3) years, if at all. The plans that were reviewed allowed for limited payment if a pre-existing condition was considered “maintenance” and not an active condition. It is unclear based on the materials on the website exactly what this means. During the limited period, a person may receive some reimbursement through the “prayer page.” The “prayer page” lists a member’s name, address and medical need explanation. Individuals may choose to send a “gift” to these listed individuals.
Someone who is pregnant upon joining is not eligible for reimbursement for services related to the pregnancy. The due date for the pregnancy to not be considered pre-existing must be 300 days from the date of joining the HCSM. Not all HCSM levels cover maternity.
An individual eligible for Medicare may become a member of the ministry. However, they must be covered by both Medicare A and B or any reimbursement received through the ministry will be made as if the person was covered by A and B.
Each level has a capped reimbursement level. A separate program was available that allowed a member to “buy-up” the maximum reimbursement amount. At the highest program level, the “buy-up” allowed for an unlimited benefit.
Filing claims seems to be straightforward. Since there is no assignment of benefits, members are encouraged to submit claims as soon as possible. Bills that are received later than six (6) months after the date of service are discouraged as providers are not as willing to negotiate discounts on bills that are so late.
Members have to submit itemized bills and other paperwork to seek reimbursement. Once a claim is submitted, the HCSM checks for duplicate billing, negotiates for discounts and other forms of review and verification. The goal of the ministry reviewed was to complete their assessment and make any payment within 90-120 days from receipt of the itemized bills. Any check for payment is sent to the member.
Employers have expressed interest in HCSMs. The IRS has stated that a HCSM is “not employer-provided coverage under an accident or health plan.” Therefore, the cost of employee participation is not excludable from an employee’s gross income.
Employers who are applicable large employers under the ACA also should note that HCSMs are not considered minimum essential coverage (MEC). As such, an employer cannot count a person with ministry membership toward meeting the goal of the 95% offer of coverage than an employer must meet to avoid the “no offer” penalty.
Employees may also be put off by an employer plan that is so closely linked to religion and religious practices.
Since an HCSM is not insurance, it is also not subject to regulation by state departments of insurance. Similarly, if one of these plans experienced financial failure, there is no state guaranty fund to cover a person’s expenses. State regulators have expressed concern regarding their lack of authority to regulate these ministries.
The growth of HCSMs was fueled by the individual mandate of the ACA. Individuals with HCSM plans were able to file an exemption to the individual mandate
and avoid the individual mandate penalty for not having coverage. When the individual mandate reduces to zero in 2019, individuals will no longer have the need for the HCSM exemption. Experts can’t agree on how much effect the zero penalty will have in general, let alone how – or if – it will affect HCSM membership.