In the search for affordable healthcare, some Americans are turning away from traditional health insurance and exploring alternative models like Healthcare Sharing Ministries (HSMs). These programs often promise lower monthly costs and a faith-based approach to covering medical expenses. But while the savings can be appealing, understanding the differences between HSMs and health insurance is critical, especially before you consider dropping traditional coverage.
Healthcare Sharing Ministries are nonprofit organizations where members, typically united by religious or ethical beliefs, agree to share each other’s medical expenses. Rather than paying a premium to an insurance company, participants contribute a monthly “share” that helps cover other members’ eligible health costs.
Unlike health insurance, these ministries are not bound by the same legal and regulatory standards. They are not required to cover pre-existing conditions, preventive care, or even emergency services. Participation often comes with strict lifestyle requirements, such as no tobacco or alcohol use, and some limit coverage for certain procedures or prescriptions based on religious beliefs.
Traditional health insurance, whether through an employer, the ACA Marketplace, or private plans, is heavily regulated. It must meet federal minimum essential coverage standards, meaning it has to cover essential health benefits like maternity care, mental health services, and prescription drugs.
This regulation provides insured individuals with legal protections, including coverage for pre-existing conditions, limits on out-of-pocket costs, and appeal rights when claims are denied.
While some families may report positive experiences with HSMs, others have faced unexpected out-of-pocket costs or even outright denial of coverage. A 2021 survey by the Colorado Division of Insurance found that only one in six complaints about HSMs were resolved in the consumer’s favor, compared to two in three for traditional insurance companies.
According to the National Association of Insurance Commissioners (NAIC), over 1.7 million Americans are enrolled in healthcare sharing ministries. Yet many don’t realize that HSMs are not considered insurance and do not guarantee payment of claims. In fact, a New York Times investigation in 2021 revealed that some HSMs had denied tens of millions of dollars in member medical expenses.
Healthcare Sharing Ministries are not regulated by state or federal insurance laws, and they do not guarantee coverage. They often exclude pre-existing conditions, offer limited or no formal appeals process, and were exempt from tax penalties under the pre-2019 individual mandate.
Traditional health insurance is regulated at both the state and federal levels and must provide guaranteed coverage, including for pre-existing conditions. These plans include a legally mandated appeals process, and they were also exempt from the pre-2019 tax penalties tied to the individual mandate.
Healthcare Sharing Ministries may seem appealing, especially to those with strong religious values and few health concerns. But they come with significant risk. If you’re considering joining an HSM, understand it’s not a true insurance product, and if a major health event occurs, you may not be fully protected.
Before making the switch, speak with our office to weigh the risks, compare costs, and understand how different options align with your personal health and financial goals.