Why I Chose a Health Sharing Ministry over Traditional Medical Insurance

health-insurance-form-my-personal-finance-journeyThe following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

Landing my first professional job out of college was exciting. I was more than ready to work at a real full-time job and earn real money just like other adults. On the other hand, I wasn’t fully prepared for what came with earning real adult money – real big expenses. Healthcare was one of my huge expenses.

Normally, your employer offers a healthcare plan and they pay a portion of the premium while the rest of the payment gets deducted from your paychecks along with taxes. However, within the past decade, more and more employer sponsored health insurance plans have declined leaving employees with the responsibility of obtaining their own healthcare.

My first big job at a start-up paid decent money, but I quickly found out I’d be responsible for obtaining my own healthcare or facing a tax penalty.

The Burden of Medical Expenses

Medical expenses can be quite a burden. While the Affordable Care Act helped medical insurance plans become more accessible to everyone, the law didn’t help ensure that medical coverage would be affordable for everyone. Younger adults have the option of staying on their parent’s insurance plan until they turn 26. I didn’t have that option.

I was prepared to insure myself when my employer started offering health insurance plans a few months after I started working. The premiums were astronomical and would take a large chunk out of my check. I expressed my concerns with my boss and he advised me to look into the marketplace to see if I could get a tax credit, since the plans he offered employees were the best he could do since our staff was small.

The marketplace didn’t seem any better even with the tax credit. The only low rates were HMO plans with picky restrictions. Not being able to afford health insurance can put you in a tight spot. You’ll not only owe the federal government money the following year as a penalty, but you’ll risk getting sick and not having any coverage to reduce your medical bills. Unpaid medical bills can be one of the most crippling forms of debt in this country. With all the odds against me, I decided to do something untraditional and try a healthy sharing ministry.

I Opted out of the Affordable Care Act

I was talking to a co-worker about my frustration with obtaining medical coverage that I could afford and he ended up sending me a link to a popular health sharing ministry as an alternative option. Health sharing ministries are faith-based programs that are community driven and can help fund a member’s medical expenses by sharing monthly dues of other members.

Members of health sharing ministries pay a monthly fee or ‘premium’ which can go toward another member’s medical expenses. Then, when you have medical expenses that need to be covered, other members’ monthly payments will go toward your expenses.

Health sharing ministries are not traditional insurance, but they are often compared to insurance policies because they help provide coverage for various different medical expenses. There are several valid health sharing ministries to choose from including: Liberty HealthShare, Samaritan Ministries, Medi-Share, and Christian Healthcare Ministries. Most of these organizations have an annual unshared amount or ‘copay’ that each member is responsible for.

I choose to look into Liberty HealthShare and realized I would pay $131 per month for up to $125,000 in coverage per medical incident with a $500 annual unshared amount that needed to be met before Liberty shared or ‘covered’ my medical expenses.

After speaking with a rep on the phone, I decided to give it a try and opt out of the Affordable Care Act and the expensive premiums I was being matched up with.

Health Sharing Ministries vs. Traditional Health Care

I chose to give a popular health sharing ministry a chance because I figured it was better than having no type of medical coverage at all. I’ve been with my particular organization for over a year now and there are quite a few things I like about it:

  • I can join and leave at any time (there is no open enrollment period)
  • By choosing a health sharing ministry, I was able to avoid the penalty fee around tax time for not having medical insurance. Health sharing ministries fall in the gray area between being insured and being uninsured. Hospitals and clinics will still accept my membership card and bill the organization just like with traditional insurance.
  • I can visit any doctor I like and don’t have to worry about them being in-network.
  • The annual unshared amount I pay, which is comparable to a deductible is relatively low. It’s much easier to set aside $500 for medical expenses, instead of a $1,000-5000 deductible.

While my health sharing ministry allow me to see any doctor I want and protect me from accumulating thousands of dollars of medical debt through their coverage, there are quite a few aspects I don’t like.

  • Even though I can be seen at any hospital or clinic of my choice, that doesn’t stop the staff there from being reluctant to expect my health share membership card. Most clinics are super strict and picky about not dealing with patients who don’t have insurance that is in their network. I find it a little frustrating that more healthcare facilities don’t do their homework and become more flexible and accepting of patients who have a health share membership, but the alternative option I usually go with is to be a self-pay patient for the visit, then submit my receipt to Liberty HealthShare for reimbursement within 30 days.

With Liberty HealthShare I also like the fact that they are working on generating a list of providers throughout the country and if you have a particular doctor you would like to see, you can ask them to call their office ahead of time in an attempt to get them to accept your membership card for billing purposes.

  • Another disadvantage to choosing a health sharing ministry is that most of them do not share expenses for pre-existing conditions during the first year of membership. If you have any conditions or have been treated for something in the past, this could be a red flag.
  • You also can’t deduct the monthly payments from your taxes each year since it’s not actual insurance and you won’t be eligible for an HSA (health savings account) if you choose to use a health sharing ministry.

While there are clear pros and cons of this option, it’s safe to say that no solution for medical coverage in this country will be absolutely perfect so you need to determine your wants and needs so you can choose the best option for you.

As someone who’s pretty healthy and can’t afford to pay high premiums and deductibles right now, a health sharing ministry was worth it for me and the benefits outweigh the disadvantages.

How about you all? What do you think about health sharing ministries? What has been your experience with health sharing ministries?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/130100316@N04/16161362110/

How To Read A Medical Explanation Of Benefits Statement

medical-explanation-of-benefits-my-personal-finance-journeyThe following post is by MPFJ staff writer Travis.  Travis is a customer blogger for Care One Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family. Note: Terms used are taken directly from the author’s explanation of benefits statement. Equivalent terms used by other insurance companies may be slightly different. Please refer to the glossary generally included with your explanation of benefits statement for further clarification.

A person flips through the mail, stopping at an envelope from their medical insurance provider. The envelope is ripped open, and after a brief glance it appears the mailing describes the charges for a recent doctor visit. However, the words “THIS IS NOT A BILL,” are plastered across the top of the page. Looking closer, there is no amount due or due date. The information is crumpled up and thrown in the trash in favor of waiting for the actual bill from the medical center.

Does this sound like you, or anybody you know?

The discarded document was an Explanation of Benefits Statement, which supplies patients with detailed information about the charges incurred during a visit to the doctor. In fact, it contains much more detail than the actual bill that will be received from the medical center’s billing department. A bill which likely won’t show up for several more weeks.

It’s important to understand how to read an Explanation of Benefits Statement. They provide us the opportunity to review what charges were incurred, how they were categorized, and how much we will be responsible to pay out of pocket. It can be inspected for errors, and the amount owed can be determined such that a patient can begin to plan financially to pay the bill when it finally does arrive.

Let’s take a look at some of the more important parts of an Explanation Of Benefits Statement:

Basic Information

Your name, policy number, and claim number should be easily located on the form. They should be verified to ensure the information is correct. The date of the medical visit should also be listed.

Description

A very brief description of each service provided. Example descriptions include Lab Tests and Medical Care. Many times there will be several itemized services for a single visit. For example, my explanation of benefits statement listed three several Lab Test services, one for each classification of blood tests that were performed. Additionally, there was another service labeled Medical Care that referred to the actual consultation and exam with the doctor.

Patients should look over each service provided and call their insurance company if they have any questions regarding specific medical services listed. For example, I once saw a sport’s medicine doctor for problems I was having with my feet while running. My explanation of benefits listed a charge labeled as surgery. During the office visit, the doctor taped my arches to try to hold them in place. Because he altered my body in some way, the service was classified as Surgery.

Amount Charged

This is the amount the medical provider charges for the service performed before any insurance benefits are applied. Think of this as the sticker price, or what you would pay for the service if you didn’t have any insurance.

Allowable Charges

This is the amount you are actually charged for the service based upon an agreement between your medical provider and your insurance company. It’s usually a discounted rate given to the insurance company because they bring volume business to the medical provider.

Copay

If your specific insurance plan specifies a set amount you will owe for a service, that will be shown here. This is common for Health Maintenance Organizations (HMOs). For example, if your plan specifies that you pay $15 for each office visit, that copay amount would be listed here. You are responsible to pay this amount.

Coinsurance

If your insurance plan specifies that you pay a percentage of each service, that will be shown here. This is common for Preferred Provider Organizations (PPOs). For example, if your plan specifies you pay 30% of each office visit, that amount would be listed here. You will have to pay this amount.

Applied to Deductible

Medical insurance plans have a deductible amount of varying sizes that patients are responsible for as medical bills accumulate during a calendar year. After that deductible has been fulfilled, generally plans then apply a higher level of coverage. For example, let’s say a plan has a deductible of $3200 for charges in that category. Once the patient has incurred $3200 of out of pocket expenses, the plan may then cover 100% of the charges. You are responsible for any amount listed here.

Amounts Not Covered

This column is reserved for services that are just not covered by your policy. You are responsible to pay this amount.

Amount Paid

Once the insurance benefits have been applied, the insurance company will send funds to the medical provider. This column shows the amount of insurance benefit sent to your medical provider.

How much will I owe?

You can determine your actual medical bill by adding up the liability columns for each service:

  • Applied to Deductible
  • Copay
  • Coinsurance
  • Amounts Not Covered

I typically write down the total on the bottom of the explanation of benefits document, and tuck the form away. When I receive the medical bill, I compare how much I owe to what I thought I would owe from the explanation of benefits.

The ability to read an explanation of benefits form is a skill that everyone should have. It allows patients to be informed as to how their medical benefits are being applied, and to review that it has been done correctly. If anything seems incorrect, it’s best to call the insurance company and ask questions as soon as possible.

How about you all? Do you carefully review your explanation of benefits forms, or do you just throw them in the trash and pay the bill when it comes? What are your habits in terms of reviewing benefits forms?

Share your experiences by commenting below.

****Photo courtesy of phasinphoto at FreeDigitalPhotos.net (http://www.freedigitalphotos.net/images/health-insurance-claim-form-photo-p249032)

How Much Money Are You Wasting on Insurance?

health-insurance-my-personal-finance-journeyThe following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

In my opinion, insurance is a necessary evil. Many of us shell out thousands of dollars a year for that ‘just in case’ disastrous moment, and it might never come. All those payments seem like a waste, but we all know that without it, we could be devastated in a moment. For this reason many of us have a wide variety of insurance policies, and it makes us feel responsible and secure in our everyday lives. However, so many of us are overpaying these insurance companies that it’s flat out ridiculous. Just last year I discovered I was overpaying, and I bet you might be too.

How I Made My Discovery

A wise man once said that ‘you can’t get to where you’re going if you don’t first know where you are.’ I mean think about that. If you wanted to drive to Chattanooga, Tennessee, but you didn’t know if you were currently in Cleveland, Ohio or St. Louis, Missouri, you’d have a pretty tough time finding your way wouldn’t you?

The same is true with your insurance. If you don’t know how much you’re paying in each month or what your coverage details are, then how on earth can you expect to save money on your insurance? I never thought about this until I actually started budgeting last year. By budgeting, I was forcing myself to look at all the dollar figures and gain an understanding of why each expense was the amount it was. To say the least, this was an eye-opening experience.

Escrow

When I first dug into the numbers, I discovered that a portion of my house payment was going toward an escrow account that was set up by my bank. This is simply an account where the bank stock-piles your money for your property tax payments, which means that you don’t get hit with a hefty bill once a year. And, it gives the bank the assurance that you’ll have the funds to pay the tax and continue to make your mortgage payment rather than defaulting on your loan.

The whole set up sounds well and good, but many of these banks take a small cut to manage this escrow account for you. Plus, this means that a portion of your money (often to the tune of thousands of dollars) is inaccessible by you for an entire year. Finally, to cover their butts, the banks often overcharge you each month to make sure that the account has enough money when tax time rolls around. It’s something that no one really thinks about, but it’s quite the raw deal for you, the customer.

To get out of your escrow (which means you’ll have to budget and save for your taxes on your own), many banks require you to own at least 20% of your home. When you get to this point, you can simply make a phone call to the bank, have them close the account, and then mail you a check for the account balance. In my experience, this small move saved me about a hundred bucks a year.

Private Mortgage Insurance

Private Mortgage Insurance (PMI) is another way that the banks cover their butts. They’ll allow you to take out a loan by paying only 10% down (or less) on your house, but by paying less than 20% of your home’s value, you’re allowing the bank to charge you extra as an insurance policy to your default. In other words, they’re trying to get as much money out of you now because they’re not so sure that you’re going to pay them all that you promised. If you end up defaulting on your loan, then they hope that your PMI will cover the expenses of them repossessing the house and reselling it to the public.

Want to stop paying PMI? It’s simple. Just pay off enough so that the bank owns less than 80% of your home’s value. Then, let them know it and by law they need to stop charging you for private mortgage insurance.

Auto Insurance

Everyone has auto insurance, but very few of us shop around regularly. I even admit that I went a couple of years before considering another insurance company to cover me and my Honda Civic. When I looked at my monthly bill and realized that in one year, I was paying nearly half of my car’s value just for insurance, I quickly searched around for something else. Sure enough, I was getting screwed. By getting just two quotes, I was able to reduce my payment of $85 a month down to $55 a month. That was an easy annual savings of more than $300, just with a few minutes of my time.

Home Owners Insurance

Home owners insurance is pretty standard and is typically paid once a year. Asking around for quotes is simple, but if you still have an escrow account, switching insurance providers can be a pain in the butt (which is another great reason to just pay your tax bills yourself) since you have to coordinate the switch with more than one entity. First ditch your escrow, then see what kind of deal you can find out there.

Life Insurance

If you don’t have a spouse or kids or anyone that depends on you or your income, then you don’t need life insurance. If you are married with no kids and both you and your spouse work, then you probably still don’t need much life insurance. So when do you need it? The answer to that is simple. If someone would be financially impacted upon your death and would have a difficult time surviving if you were gone, then you likely need life insurance.

The next question is typically, “What type of life insurance should I get?” Almost always, the answer is, “Term Insurance.” At this point in my life, I’m 30 years old and have a spouse. We both earn enough to take care of the bills on either one of our incomes and therefore wouldn’t be financially strapped if one of us tragically passed away. Therefore, there’s no need for us to have insurance.

If however, we had two kids, then the answer changes. If I passed away, my wife would still have to work, but she would also need to put them in daycare while she was away during the day. Due to this expense, I might take out a 20 year, $300,000 term insurance policy to take care of those many years’ worth of expenses.

To reduce your insurance costs severely, do your best to put yourself in a position where you don’t need it – either by living cheaply or by having a large net worth.

Medical Insurance

Everyone should have medical insurance, but how much should one be paying for it? Just like in the auto insurance example, you should choose the type of coverage that works best for you. If you have a bunch of money stashed away for a rainy day and you are never sick, then get the high-deductible insurance. You’ll almost certainly save yourself money in the long run and you might even get the benefit of some HSA funds from your company.

If you’re constantly sick or have a history of medical problems, then you might want to get some better coverage and pay a little extra per month. It can sometimes be tough to save money on your medical insurance, especially if you only have the option of one company through your workplace, but you can still alter the deductible to attempt to save some money here and there.

The Extras

Having a lot of stuff can be expensive. Not only does it cost more in maintenance, payments, and storage, but it can also cost you in insurance! That boat, snowmobile, and sports car are adding to the amount of money that you’re throwing away in insurance. The more stuff you own, the more expensive and stressful life can get. Sometimes it’s best to wait on all the toys until you’re actually wealthy and can afford it. That’s what we’re doing, and let me tell you, it’s allowing us to get wealthy quite quickly.

How about you all? Have you saved money on your insurance costs lately? What did you do?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/pictures-of-money/17307624302/