Medishare Industry (2)
Health Care Sharing Ministries (HCSMs) are exclusive organizations that offer memberships to individuals that share a common ethical or religious belief. Medishare, Samaritan Ministries, and Christian HealthCare Ministries are some key players in this group. HCSMs are considered non-profits and must have been created before December 31, 1999, to be exempt from tax payments. Thirty states have established by law that HCSMs are exempt from requiring an insurance code. However, numerous states have recently decided to warn its residents to highlight the fact that these organizations are not insurance companies. Currently, there is a proposal to make payments to HCSMs tax-deductible, which could increase the number of people interested in becoming members. HCSMs have similar guidelines and business models, with a foundation based on charity and sharing the burden of medical bills.
Health Care Sharing Ministries
- Health Care Sharing Ministries are defined by Title 26 of the U.S. Code § 5000A as an organization that is included in section 501(c)(3) and does not pay taxes as stated in section 501(a). This means the ministry is registered as a non-profit.
- Members of such an organization share religious or ethical beliefs and they commit to sharing any future medical expenses, regardless of the state in which they reside or work.
- Furthermore, the members can keep being part of the organization after they develop a medical condition.
- Importantly, the organization must have been "in existence at all times since December 31, 1999, and medical expenses of its members have been shared continuously and without interruption since at least December 31, 1999."
- Lastly, the organization must perform an audit annually, employing an independent firm to do so.
Key Players and State Regulations
- MediShare is a Health Care Sharing Ministry (HCSM). Other HCSMs include Samaritan Ministries, Liberty HealthShare, Christian HealthCare Ministries, Trinity HealthShare, Altrua Ministries, and Sedera Medical Cost Sharing.
- According to MediShare, this organization has over 400,000 members. Meanwhile, it has been reported that by 2018, Trinity had approximately 100,000 members, Christian HealthCare Ministries had 350,000 members, and Altrua had approximately 10,000 members by 2017. Overall membership to HCSMs has been estimated at 1 million.
- According to a 2018 report evaluating health care sharing ministries in the United States, HCSMs are explicitly exempt from state insurance codes in 30 states. These states are Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Mississippi, Missouri, Nebraska, New Hampshire, North Carolina, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming.
- Twenty states and the District of Columbia do not explicitly consider health care sharing ministries, such as MediShare as exempt. However, no states explicitly consider them insurance companies.
- Due to this exemption, Americans have an alternative to the individual mandate established by the Affordable Care Act (ACA). Those who fill the form 8965 can request a waiver as HCSMs are considered an acceptable alternative to more traditional health care.
- Healthcare ministries formed after December 31, 1999, are not exempt from taxes, as established by the ACA.
Legal Cases and Legislation Cases
- The Kentucky Case
- There have been a wide number of cases and lawsuits related to HCSMs throughout the years. One that stands out took place in Kentucky and involved MediShare, one of the largest players in the market.
- MediShare was found to be an insurance company by a ruling made by Kentucky Supreme Court in 2011. The organization continued to be active, and a judge ordered it to stop all its activities in 2012, until it obtained an insurance license.
- The same judge, Thomas Wingate, lifted this ban in 2013 after state legislators made changes in the law to allow the organization to renew its activities in this state.
- The law, passed on June 25, 2013, requires members to sign an affidavit stating they understand the organization is not a medical insurance company and their bills might not be paid.
- MediShare also made changes to its cost-sharing model, changing it from a common fund to individual accounts, which allowed it to continue to grow its presence in the state.
- In Iowa, the Supreme Court of this state determined that an HCSM was not an insurance company after a case involving a Christian newsletter used by members to share health care expenses. Furthermore, the ruling found the newsletter exempt from taxes.
- ACA and Legislation Changes
- The creation of the Alliance of Health Care Sharing Ministries led to a considerable effort made during the creation of the ACA in 2010. HCSMs worked together to ensure they had a place after the ACA was approved and they achieved recognition as non-insurance organizations.
- That said, HCSMs are not regulated by ACA as they are an alternative to health insurance, making people enrolled in these exempt from the individual mandate. This is part of what has allowed them to exponentially grow in the past decade.
- A legislative action that could have an impact on HCSMs is the tax reform bill that was passed in 2017 eliminating the individual mandate. This mandate made having insurance mandatory, which is believed to have driven numerous Americans to HCSMs as a way to be exempt from this norm and pay lower membership fees.
- Recent Events — Decisions, Warnings, and Implications
- In December 2019, Washington state banned Trinity HealthShare and fined it $150,000 for considering it an unlicensed insurer.
- It was found non-compliant with the law that allows these organizations to be considered as non-insurers as it was founded in 2018. This organization has also been banned in Texas and Colorado.
- Recently, numerous complaints have been filed against Liberty HealthShare, which has led the Better Business Bureau to grade it with an F. These claims have been issued due to a rising number of claims not being paid.
- Other states, such as New York and Connecticut have started cases against Aliera, a company that contracts and markets Trinity. This increase in cases and complaints could change the landscape of the HCSM market as more actions are taken.
- States like Nebraska, Nevada, and West Virginia have issued a warning to help residents understand that HCSMs are not insurance companies and do not offer the coverage these do as it is an entirely different model.
- Similarly, the National Association of Insurance Commissioners has issued a consumer alert to warn current and potential members about the risks of having an HCSM.
- An article from the Commonwealth Fund proposes that states that explicitly do not recognize HCSMs as insurance companies demand compliance proof from these organizations. This would be done to ensure they in fact meet the requirements to be exempt from an insurance code and obligations.
- In addition, this research group proposes that operational and financial information be disclosed both to members of the HCSMs and to the state.
Impact of Political Change on Medishare
- The election of President Donald Trump has represented changes for HCSMs. One of the most relevant being the Executive Order issued by the President in 2019.
- Part of the order stated that the Department of Treasury should "propose regulations to treat expenses related to certain types of arrangements, potentially including direct primary care arrangements and healthcare sharing ministries, as eligible medical expenses under Section 213(d)."
- This led the Department of Treasury to propose that payments made to HCSMs be considered deductible medical expenses, stating that these payments could be considered as payments to an insurance company.
- That said, the same proposal states that this does not mean an HCSM is an insurance company.
- The proposal has not been approved and the public hearing concerning it will take place on October 7. If approved, this could also be a determinant factor for greater enrollment in HCSMs.
- Also, the Republican Study Committee, which is a caucus of members of the House of Representatives has as one of its health care concerns the promotion of HCSMs as alternatives to health insurance.
Community Governance and Guidelines
- Community governance across HCSMs vary, although they have in common that members must share a belief as well as similar values.
- Some common requirements include attending church regularly, abstaining from drug consumption of any kind, believing only in marriage between a man and a woman, not engaging in sexual activities outside of the marriage, and taking care of personal health through a healthy lifestyle.
- Liberty HealthShare is one of the most flexible HCSMs, inviting members of different faiths. Their main requirement is that the subscribing member accepts that "everyone has a fundamental religious right to worship the God of the Bible in his or her own way."
- Meanwhile, MediShare is more strict, requiring a statement of faith as well as a potential interview with one of the leaders of the potential member church to verify the veracity of their statement.
- Samaritan has similar guidelines, although in their case they always verify with a church leader and members must attend church at least three out of four weeks every month.
- Other common foundation considerations include collaboration, charity, support between members, and HCSMs clearly state they are not insurance.
- Most HCSMs do not cover pre-existing conditions or they only do so when members are part of the higher-tiered option.
- Another common characteristic is the exclusion of mental health treatments, birth control, and abortions. Other exclusions often include prescription pills as well when these are required for over six months.
Current Model of Operation
- Just as guidelines vary across organizations, the model of operation can also change. While some HCSMs establish direct money shares from one member to another, others have an escrow account from which the money is administered.
- The general model requires members to contribute a monthly share. This amount will be determined by the characteristics of the member and their household.
- Furthermore, most HCSMs have different membership levels, which determine both contribution amount and benefits.
- In most cases, the HCSM does not pay directly for the medical bill. Instead, other members perform the reimbursement, which is presented as a gift.
- Usually, the patient is the one that has to negotiate how much they have to pay directly with their provider. However, some HCSMs have advisers that can help the member in this process.
- Some HCSMs have preferred provider networks and penalties might take place if providers outside of this network are used.
- Also, while most programs are offered to individuals, some HCSMs also work with employers. In addition, brokers can also work with HCSMs.
After identifying that MediShare is only one of multiple players in the group of Health Care Sharing Ministries, we decided to broaden our research to include information pertinent to different key players, aiming to identify common characteristics to provide a complete overview of HCSMs.