As we dive headfirst into the unchartered waters of self-employment (surprise!… we’ll be talking more about this soon), we find ourselves faced with a few new financial considerations. Some aspects of our budget that were dictated by our various employers are now 100% dictated by us. For example, when our contract is up with our cell phones, we’ll likely be switching to a cheaper carrier since Johnny no longer gets a subsidy. The same goes for our health insurance. Something that we’ve grown accustomed to having taken care of and either covered at 100% or highly subsidized by an employer is now completely and totally on our shoulders. Insert grimacing emoji here.
So where to begin? Before, we typically had three fairly limited choices through our employers: a low-deductible choice, a high-deductible choice, and an HSA that often sat squarely in the middle of the other two options. Now the healthcare medical insurance industry is our oyster… yay.
At first, our (okay, mostly my) gut reaction was to go with a plan that sounded comforting, familiar, and that would put my anxious medical insurance heart at ease. That would be the easy solution, and Johnny looked into finding a plan that fit very snuggly into my medical insurance comfort zone (which I didn’t even know I had up until a month ago). Looking on our state’s healthcare exchange, Johnny found a nearly identical HSA plan with a fairly low deductible and out-of-pocket max with a decent network. Score! And then he told me the premium would be north of $1000/month. Uhhhhhh… f’real?
After doing hours and hours of research, Johnny presented another idea to me. It was something called a healthcare ministry. Just hearing the name had me feeling extremely skeptical. And then he started explaining it to me and I started worrying that my mostly mentally sound husband was losing his mind. After a half hour or so of me asking him questions, it started making a little bit more sense. A little.
I’m sure we’ll do another post diving into all of the specifics soon, but for now I’ll do my best to explain it how he did to me. Basically we’d pay a monthly “premium” of about $450 for our family of four to be enrolled in the healthcare ministry. Under their highest plan, any and all medical bills that cost less than $500 would be paid out-of-pocket by us. So we’d be on the line for basic checkups, well visits, vaccines, etc. We’d also be on the line for a $500 “deductible” for the year. But after we had paid out $500 for the year, any bill that exceeded the $500 price tag would be “covered” by the healthcare ministry 100%. The end. So where does the money come from, you might ask? The money that members of the ministry pay toward their monthly premium is pooled together to pay for other members’ medical bills as needed. It’s actually not insurance at all, but a giant non-profit that traffics money to and from members.
See why I was skeptical? It just sounded so… different. But I trusted Johnny’s hours of research and read some articles he had found that spoke to their credibility and legitimacy.
But despite all of this, I still had some concerns about how we’d make it work. If we paid for doctors visits completely out of our own pockets (rather than a small copay), we might avoid going to the doctor because of the higher price tag. I’d never want our daughters’ health to be compromised because we wanted to save some money. If we opted for the healthcare ministry, we decided that we’d put money aside each month just for those situations so it wouldn’t be a should-we or shouldn’t-we issue. We’ve also been asking our various doctors’ billing departments what we’d be looking at for typical visits if we moved to self-pay. We’ve been mildly surprised to find out it’s a lot cheaper than we assumed. Our peditrician offers 30% off all self-pay services and our primary care physician charges a $70 flat rate for regular visits. Knowing some of these numbers has also helped to ease my troubled mind.
Anyway, we haven’t made our decision for sure yet. But you can tell which way we’re leaning. In the meantime, we’ve got about a dozen appointments between now and the end of the month to maximize our final month of insurance with a capped out-of-pocket max.
Any insights, pros, cons, or other words of wisdom you’d like to share with us before we take the plunge into self-insurance-dom?
I believe Holly over at Club Thrifty is doing a health care ministry. She would be a good source to talk to.
Personally, I would stick to more traditional healthcare, since kids tend to get sick a lot and those easy doctor visits are usually much lower than $500. I will interested to see how this works out for you. Good luck!
Will you be penalized on your taxes for not having formal health insurance?
In the case of health care ministries, they are ACA-penalty exempt. So despite the fact that they’re not ACA “compliant”, they were given special waivers when the bill was drafted.
As you are living in Utah, one of the largest healthcare organizations (think Live Well) offers an upfront 40% discount for hospital visits. They always have a 25% discount for all uninsured patients and 30% off when you are uninsured and pay in full within the first 30 days of receiving your bill. The healthcare ministry seems very intriguing, but if you ever have any lab work or a very very short ER visit ask about the Pay In Full upfront discount. Each service has a 40% cost estimate/standard deposit. If the charges are a little higher than they had planned on if they see you paid the standard deposit they will still honor the discount. The one trick is you can’t bill insurance and take advantage of the discount.
P.S. Love your blog.
I’ve heard about these from some frugal people before. I’ve thought about it as an option for when we retire early. I would be hesitant to use it with 2 young kiddos, simply because urgent care visits can be frequent, and you’d be stuck paying out of pocket for all of them! It is tough though. I work in healthcare, and it always strikes me as bizarre when families suddenly have chronic illness and are shocked by their poor coverage. On the bright side, you’d be covered for hospitalizations and extreme circumstances. On the not-so-bright-side, you wouldn’t be covered for smaller things that could come up frequently. Honestly? I think it would be an awesome idea for just you and Jonny. I wouldn’t do it since you’ve got the girls! (Sorry to add to your worry…I think it’s legitimate worry!)
I wrote about this about a month or so back if you’d like my take:
It looks like you are clear on the “per incident” deductible as opposed to the traditional annual deductible. That is certainly a downside and makes it more difficult to plan for annual health expenses.
I would also consider looking at comparable plans. With the bare bones nature of the health share ministry, it’s most similar to a high deductible HSA. For a family of four, a traditional HSA monthly premium would be close to the $450 monthly contribution of the health share ministry. As your family grows, the flat family fee starts looking more attractive.
An upside is maternity coverage, which is something actually covered by these ministries that might not be offered in a low cost HSA unless you are searching on the exchange.
There are also tax implications that you should look into. No more tax deductible HSA contributions and you cannot report your monthly contributions as a health related expense.
I am still in the camp of traditional HSA’s but if health insurance premiums continue their steep upward trajectory, We may be headed in that direction. There is some comfort knowing you could jump back to a traditional plan if things aren’t working out or a major illness were to occur that exceeds the ministries benefit maximums.
Do you know anyone personally that signed up? I think that would be the absolute best source, especially if they’ve been on it for a while.
I checked into Medi-Share (I think) several years ago. Since I try extremely hard to live a healthy
life I was more concerned with coverage from car accidents etc rather than diseases.
I called them to be sure accidents were covered. I was shocked to find out they wouldn’t cover me
if I was in a car accident. They would cover diseases though. That was all I needed to know.
NOT FOR ME.
Granted that was about 5 years ago – perhaps they have changed their rules by now?
It does sound a little odd but if you have ever needed to study for a state insurance license exam (booooorrrrring) you would have learned the history behind insurance! In the days of farming and small villages everyone would contribute items to the community food stores. When the “man of the manor” passed away those food stores would be used to help the family get back on their feet. The others in the community would help by continuing to provide food/milk from their farms and also help the widow work the land until either the male children could take over or she married again. Later people would also do this with money to help each other…insurance was born!!!
I’m so excited to hear all about what is happening with your new career paths!!! Sounds like a super adventure!
Honestly, I don’t think it is a very smart idea. Basicially, like the poster above me said, originally and historically insurance worked in a smilar way to those healthcare ministries. However, a smaller system is not as able to compensate for high expenses as a big system is, because it has less paying members.
Any insurance company in current time partly uses the paid money by all the members to “shift” it to the ones who have medical bills which need to be paid for under their insurance plan – this is pretty much the same as with any health ministry. However, the other part of the money is invested and therefore is able to cummulate interest. Not only the insurance company, but by extension also every member, benefits from the compound interest of such high amounts of money paid by hundreds of thousands of members. The more money an insurance has to invest, the better it is able to cover all members expenses and make smarter investments on the open market. Therefore, by using the available money of all the members, the insurance is able to make a better use of your money and give the company a better financial standing.
Additionally, you have to keep in mind, that while insurances try to spread their risk for taking on too many “expensive” members by checking your health records, your parents diseases and your way of life, the healthcare ministry is open to anybody regardless of their predispositions. While this might be a good way looking at it from a compassionate point of view, it also means the ministry potentially has more “expensive” members than a normal insurance company and might put a higher strain on both the whole system as well as the single member.
In the end it comes down to the question whether or not you want to take on the risk of an insurance system which might not be backed up financially in a way any normal insurance company would be. I looked at the homepage of the healthministry and was not able to find any information on how they make sure the money doesn’t run out. If they have a good plan for that, I think it is a fine way to go. But if they cannot provide you with a conclusive business plan and certain numbers I would refrain from joining them. Your health is not something you want depend on a financially unbalanced system, especially because in your personal finances you strive to make the best use of your money and be prepared for any emergency – your insurance company should do the same!
I think the healthcare ministries are very interesting, but haven’t had to go that route because my husband’s employer has a healthcare plan we like. It’s a high-deductible plan and the monthly premium cost to US (I’m honestly not sure what the company pays) is less than $200 for our family of five. We put money into a pretax savings account to cover most of our expected annual visits, plus a little extra that could be used toward sick visits or glasses/contacts and chiropractic. Our emergency fund contains more than the annual out of pocket max. I never hesitate to take the kids to the doctor for well-checks or if they’re really sick, and neither will you! That said, we don’t go in to be seen for every sniffle, but I didn’t do that back when we had a $20 copay, either.
Although the high deductible scared me at first, I like the freedom of choice that comes with the financial responsibility. Since we pay out of pocket or out of our savings account for everything (never having exceeded the deductible, thankfully), we don’t feel tied to an in-network doctor or hospital for smaller expenses. I’ve even been able to get waivers to have pregnancy and childbirth expenses under the care of my homebirth CNM count toward our deductible since no in-network docs or midwives provide the same services.
My husband and I are looking at a healthcare ministry as well. We’re trying to decide between two and are really interested to hear your thoughts on it. I think they are a wonderful idea. A “normal” healthcare policy for my husband and I who are both under 25 is ridiculous. There’s no way we can afford it. We like the idea of having this other more affordable option. Please let us know what you decide!
I’m currently in the same situation right now. My husband has a new job (I’m currently unemployed) but the employer doesn’t offer sponsored healthcare. This is a first for us, having to wade through healthcare without an employer and HR department to guide us along. So, I’m glad I ran across this post! We’re hoping to find suitable coverage sooner than later, I don’t feel comfortable going without coverage for much longer.