What is a Health Sharing Ministry? We’ll let us start with what it is not. It is not insurance. Insurance is a regulated industry. It requires proof of fiscal solvency and proof that certain precautions are taken to prove future solvency. Let us go into some minor detail.
Health insurance companies accepts risk on your behalf to pay certain medical expenses in exchange of a premium payment. After the ACA law went into effect, health insurance plans had to cover the 10 minimum essential benefits. A health insurance company must get a certified actuarial analysis that shows that the planned premiums and estimated subscribers, their gender, marital status and number of dependents along with the typical claims the health insurance company expects to incur are able to be paid. A health insurance company is required to keep a reserve with an amount of money set aside based on the above-mentioned actuarial analysis in case of a subscriber having a catastrophic event such as a heart transplant or a loss of subscribers. Such as for non-payment) by law, most health insurance accompanies must pay 85% of all premiums to medical claims. Most health insurance companies pay much more.
Health Insurance companies must report their financials to the state governments such as the size of their reserve, membership counts, claims paid and normal accounting reports such as cash flow, balance sheets and profit/loss statements. Most health insurance companies are required by law to pay claims within 30 days of receipt in some cases 7 days or less. Health Insurance companies must also cover subscribers for all benefits of the first day of coverage.
Health Care Sharing Ministries do not offer coverage. They often state there is no guarantee of your bills being paid. In fact, most Health Care Sharing Ministries inform their members that they are self-pay and are alone responsible for the payment of their own medical bills. Health Care Sharing Ministries simply facilitate the sharing of member to member for the receiving member to be able to pay their bill. The sharing is completely voluntary. The last member who shared will typically share into the last member who had a bill shared into. However, some Health Care Sharing Ministries will publish member’s names with their medical need cost and the other members will share directly to that member.
Health Care Sharing Ministries are not regulated like an insurance company. They are not required to have a reserve and are not required to do actuarial analysis to make sure they have the capability to pay future claims. They are also not required by law to pay claims in 30 days.
Health insurance companies run what are called Actuarial, Utilization Management and Medical Management Processes to keep track of what services their membership is using and what it costs to make sure that their ability pay future claims in 30 days. Health Care Sharing Ministries do not. In fact, during a lawsuit between one Ministry and a large hospital in Virginia a Health Share Ministry’s executive testified that the ministry does not partake in any actuarial analysis at all. Some of the other larger ministries do some analysis, but they call it something other than “Actuarial.”
Without these types of analysis, it is virtually impossible for a Health Care Sharing Ministry to be able to forecast future claims and without the ability to forecast it is virtually impossible for the Ministry to know whether they can pay future claims.
When a health insurance company pays more in claims than it takes in premiums it is called “Over Utilized” Its reserve should give it ability to continue to pay claims on time, however, once the over utilization happens more than 3 or 4 months in a year, the state will require the health Insurance company to recapitalize their reserve.
Health Care Sharing Ministries do not have a reserve. Nor it is required to keep one so when its claims out strip its contributions the bills sit until the following month when new contributions come in. As you can imagine this can grow exponentially and many Health Care Sharing Ministries are as of this writing almost 6 months out on paying bills.
A HealthShare Ministry will advertise an “Admin” fee of 12% (except for one Ministry that s posted an 80% fee. They are currently being pursued by multiple states for fraud.) to be in line with health insurance companies’ admin fees. However, that is not the entire fee. Most if not all Health Care Sharing Ministries post that member cannot share their needs until the third month. That’s because the first month goes to marketing and the second month goes to admin. Therefore, if the ministry is claiming a 12% admin fee the percentage is 27% when the first two months are factored in.