‘Health Care Sharing’ Mimics Medigap, but Isn’t Insurance

People looking to supplement their Medicare coverage might find options that aren’t private health insurance compelling. Health care sharing ministries, or HCSMs, advertise themselves as one of those options: faith-based alternatives to health insurance that can help with medical costs.

Several HCSMs offer programs that closely resemble a Medicare Supplement Insurance plan. But these programs aren’t insurance, so many of the laws and consumer protections for health insurance don’t apply to them.

In fact, there’s no guarantee that an HCSM will pay for your medical bills.

Here’s what Medicare beneficiaries should know about health care sharing ministries and how they compare with health insurance.

What are health care sharing ministries?

As defined in federal law, an HCSM is a 501(c)(3) nonprofit with members who “share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs.”

More than 1.5 million Americans participate in HCSMs, according to the Alliance of Health Care Sharing Ministries, a trade organization for the industry.

When it comes to the basics, HCSMs look a lot like health insurance. Members pay monthly, and once they’ve spent a certain amount out of pocket for the year, they’re eligible to be reimbursed for certain health care costs.

But the specifics differ. Members pay “contributions” or “gifts,” not premiums. Medical bills aren’t covered, they’re “shareable.” And many of the underlying rules for health insurance coverage don’t apply.

“Our members don’t rely on legal obligations but on the faithfulness of God providing through other members of our community,” Rebecca Barrack said in an email. Barrack is the communications manager for HCSM Medi-Share's parent company, Christian Care Ministry.

Whether the lack of legal obligations is an advantage or a disadvantage might depend on your values and your tolerance for risk.

Do health care sharing ministries work with Medicare?

Not all HCSMs accept members of Medicare age (65 and older), but several HCSMs have programs specifically for Medicare members.

These programs reimburse costs left over after Medicare has already paid for services — the same kinds of costs for which people buy Medicare Supplement Insurance, or Medigap.

For example, according to a Liberty HealthShare press release announcing the program, “Liberty Assist members can share the difference between the Medicare allowable amount of their eligible medical expenses and the amount paid by Medicare.”

For Medicare Part A, that means the health share might help pay for certain copays and coinsurance, such as the daily copays that apply after the 60th day of an inpatient hospital stay (there’s no copay until the 61st day, and once you’ve met your Part A deductible).

And for Medicare Part B, most covered outpatient services have a 20% coinsurance. The HCSM might help pay for that 20%.

What are the key differences between insurance and HCSMs?

HCSMs’ Medicare programs look a lot like Medicare Supplement Insurance, but there are some significant differences between these programs and health insurance policies.

Not all insurance laws and regulations apply

“HCSMs do not necessarily currently comply, and have not historically complied, with federal health insurance requirements,” according to the nonpartisan Congressional Research Service in a 2019 report. The programs aren’t insurance, so the laws and consumer protections in place for health insurance policyholders don’t always apply.

Here are a few examples of those federal health insurance requirements:

• Coverage for certain essential health care benefits and pre-existing conditions.

• Maximum out-of-pocket costs.

• Prohibitions on annual or lifetime benefit caps.

• Minimum percentages of premiums that must be spent on members’ claims.

Certain HCSMs may work the same way as health insurance policies in at least some of these areas. But because they’re not required to do so by law, individual programs’ approaches might vary.

Payment isn’t guaranteed

HCSMs make no guarantee that members’ medical bills will be reimbursed. Medi-Share’s guidelines, for example, state that “each Medi-Share member is solely responsible for the payment of his or her own medical bills at all times” and “the payment of your medical bills through Medi-Share or otherwise is not guaranteed in any way.”

Barrack explained that Medi-Share isn’t insurance, and it differentiates itself from insurance. “Members do not exchange a premium for a promise to pay. Instead, members contribute their monthly share to pay for others’ eligible medical bills,” Barrack said in an email. “And since 1993, all eligible medical bills have been shared by our members.”

But not all bills are eligible. “On average, about 50% of medical bills submitted by HCSM members in Massachusetts in 2020 and 2021 were determined to be eligible for sharing,” according to a 2021 report from the Massachusetts Health Connector, the state's health insurance exchange.

And not all eligible bills were paid. For example, Medi-Share reimbursed Massachusetts members for about 58% of their eligible bills in 2020.

In 2020, the five HCSMs for which Massachusetts provided exact numbers collected a total of $4,173,925 from members and paid out $2,218,012, or about 53%.

For comparison, Medicare Supplement Insurance policies spent an average of 72.3% of their premiums paying members’ claims in 2020, according to data submitted to the National Association of Insurance Commissioners.

There are religious and lifestyle rules for members

HCSMs have rules for who can join based on lifestyle choices. For example, Christian Healthcare Ministries’ guidelines state that members must “live a Christian lifestyle consistent with CHM’s Statements of Beliefs, attend worship regularly as health permits and actively follow the teachings of the New Testament in its entirety.”

Examples of specific lifestyle requirements include refraining from using any form of tobacco or illegal drugs, exercising regularly, eating healthy food, avoiding alcohol abuse and abstaining from certain sexual practices.

Members might be terminated from the program, charged extra fees and/or required to take and pay for health coaching sessions if they violate these rules.

Are health care sharing ministries a good idea for Medicare beneficiaries?

In some cases, Medicare members could get some help with their health care costs by contributing to an HCSM that shares their values. But other options like Medigap policies, which have certain consumer protections built in under the law, are more reliable.

HCSMs might be a risky proposition. There’s no guarantee your bills will be covered, for example, and HCSMs sometimes spend much less covering medical bills than they collect from members. And because many health insurance laws don’t apply to HCSMs, there aren’t as many protections around things like pre-existing conditions, denied claims or how the organization spends its money on care.

Individual HCSMs might be more or less consumer friendly in their practices, but without much data publicly available, it’s difficult to compare them.

If it passes, a bill in Congress might make more HCSM data available to the public. “The fine print really matters,” says Rep. Jared Huffman, a Democrat from California who authored the Health Share Transparency Act of 2022. The bill would require “much greater disclosure of the limitations of which costs they will share and which ones they won’t,” Huffman says.

This article was written with the support of a journalism fellowship from The Gerontological Society of America, The Journalists Network on Generations and The Silver Century Foundation.