The price of healthcare keeps increasing yearly. Insurance costs rise with each open enrollment, adding to the stress that employees and their families experience. Those ineligible for a tax credit would feel forced to choose between paying expensive monthly premiums or forgoing coverage altogether (while paying the substantial tax penalty). However, there are other options, like a health sharing plan (“HSP”), that may be able to help people save a lot of money on medical expenses or penalties for having inadequate or no insurance.
Although alternative health care insurance appears to be similar to traditional health insurance and provides important practical and legal advantages, they are not insurance. In further detail, let’s examine these plans’ operations and how they differ from traditional insurance coverage.
A Health Sharing Plan: What is it?
Health care sharing ministries (HCSM) or health care sharing programs are other names for health share plans. The rules for member acceptance and coverage of alternative treatments varied significantly amongst the various programs. The programs frequently have a religious or spiritual focus. This does not, however, obligate them to adhere to that religion or creed.
Instead, the majority of these programs urge participants to lead morally upright lives.
What Distinguishes Health Sharing Programs From Conventional Health Insurance Plans?
In exchange for a premium, insurance is a promise that specified losses, illnesses, damages, or deaths would be covered. HSPs are not insurance because there is no assurance of payment. Despite this, HSPs typically qualify as insurance products for purposes of the ACA. HSP members are exempt from the ACA’s previous mandate that everyone maintains minimum essential coverage (MEC).
While there is no longer a federal fine for not having health insurance as of 2019, many states that have individual mandates are still exempt from the federal penalty.
Typical HSPs are nonprofit institutions committed to assisting members with their medical bills, in contrast to most health insurance policies. Even though they were primarily managed by religious organizations and were created on Christian values, many HSPs now concentrate on a giving community that transcends all forms of faith. However, this does imply that each HSP has unique member needs. Members should look at HSPs and pick one that fits their principles and lifestyle preferences.
What are a Health Sharing Plan’s Legal Requirements?
The following specifications must be met by an HSP in order to comply with the definition provided by the Affordable Care Act (ACA):
- A 501(c)(3) organization is required (aka a nonprofit)
- Members must adhere to similar moral or religious principles.
- It cannot terminate membership owing to the emergence of a medical condition, nor may it discriminate against membership based on the state of domicile or place of employment.
An independent CPA must conduct an annual audit, and the results must be made publicly available upon request.
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