More than 11.3 million people in the United States have signed up for health insurance via the Affordable Care Act (ACA), according to the most recent figures from the U.S. Department of Health and Human Services. The ACA requires almost everyone who doesn't have insurance through an employer or Medicare to purchase health insurance or pay upwards of $695 per adult in fines.

As the cost of health insurance has continued to climb, a growing number of Americans are seeking cheaper alternatives to Obamacare for paying their medical bills. One option that fulfills the ACA’s individual mandate is participation in a health care sharing ministry (HCSM). An exemption in the law allows members of HCSMs to avoid fines. Here’s a look at what they are and how they work.

Belief-Based Health ‘Insurance’

A health care sharing ministry is a faith-based nonprofit that offers a healthcare-sharing arrangement through a network of members who hold the same set of beliefs. The root of such nonprofits in the United States can be found in the early 20th century in the form of mutual aid societies, like the Odd Fellows or Masons. Those and similar organizations helped families in need pay for medical expenses and funerals before the New Deal came along and created a wide societal safety net.

Of course, the concepts of charity and helping one’s neighbor predate American history. According to the Alliance of Health Care Sharing Ministries, an advocacy and educational organization, these nonprofits are founded on the “biblical mandate” to apply Galatians 6:2: “Bear one another’s burdens, and thus fulfill the law of Christ.” There are approximately 50 health care ministries in the United States, according to the Wall Street Journal. Many of them are Amish or Mennonite, or based in other churches that have programs tailored to the needs of their parishioners. Among the largest operating ministries are United Samaritan Ministries International, Christian Medi-Share, Christian Healthcare Ministries and Liberty HealthShare.

Many of the large-scale health ministries cater only to Christians, with rules regarding members’ behavior. One, Liberty HealthShare, has an open-door policy. While it is affiliated with the Gospel Light Mennonite Church Medical Aid Plan, Inc., it allows everyone – Jewish, Muslim, Christian or otherwise – to take part in its ministry, as long as they agree to the church’s “shared beliefs.” Meanwhile, Medi-Share requires its members “live within biblical standards,” which include no sex out of a traditional Christian marriage, no use of illegal drugs, and no tobacco or alcohol abuse.

The ACA Exemption

With the passage of the ACA, interest in health care sharing ministries has grown exponentially. The Alliance reports that nearly 530,000 Americans are now relying on this kind of membership to pay their medical bills and eschewing Obamacare – without penalty. This option is perfectly legal. That’s because written into the ACA is an exemption for groups whose members “share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs.” If someone joins this kind of group, the ACA states, “no penalty shall be imposed.”

In order to be exempt, “you’ve got to have faith” and in most cases, you have to prove that you are putting it in God. The fact that most of these groups are Christian, as noted above, may be due to the fact that the ACA only extends its exemption to those ministries that have been operating continuously since December 31, 1999. Any group thinking of starting up a faith-based health ministry now to join the exempt list is out of luck.

What HCSMs Cover – and Cost

Relying on a ministry to meet the health care needs of your family is not without risk. First, what is offered isn’t truly insurance. There is no guarantee that legitimate claims will be paid (those related to birth control, the treatment of sexually transmitted infections or abortion would likely not be considered). While most ministries conduct annual independent audits, there is little to no oversight by state or federal officials.

Pre-existing conditions, mental illness and preventive care are typically not covered. Unexpected medical expenses – from an illness or accident, say (unless the accident is the result of reckless or immoral behavior), are usually paid out. Maternity and child-related medical needs (think ear tubes and tonsillectomies) are also covered.

Each ministry operates with slight differences. Some require members to pay into the ministry on a tier-like system, similar to insurance based on age and whether the members are paying as an individual, a couple or a family. Depending on the ministry, payments can be less expensive than ACA-compliant insurance and range from $40 (for an individual under age 25) to $500 or more (for families). The funds go into a general escrow account and when bills come up, the ministry disperses the funds. Others will match members with members, and the money will be sent directly to the family in need. Some families have reported receiving get-well cards and gifts – and, of course, prayers – sent to them along with monetary funds.

Medi-Share and Samaritan, for example, operate in similar ways. Each month, both ministries publish and distribute a publication to members who have offered to give a specific amount of money to participants to assist with medical bills. One Samaritan member family of four now pays a flat rate of $405 each month, the New York Times reported, which is the standard for supporting a family of three or more. They joined in 2015 after learning that their ACA insurance deductible was going to climb to $10,000.

Many ministries have what could be considered a type of deductible. Samaritan, for instance, requires that families pay the first $300 of their first three medical bills of the year before they ask the ministry for assistance. Since most bills have to be paid up front and are later repaid though the ministry, families have to plan ahead and may need access to temporary funds: Some members have reportedly had to wait up to 90 days for checks to arrive in the mail. And as the New York Times notes, HCSMs don’t guarantee that every member’s bills will be paid, but simply ask that they “trust God will provide.”

Before You Join

If you are thinking of joining a health care sharing ministry, here are some points to consider:

  • HCSMs are able to make their own rules, and they do discriminate – if you smoke, partake in illegal drugs or are obese, an HCSM is probably not for you.
  • The ministry can decide not to cover any medical procedures or care that it deems morally wrong.
  • An HCSM can and does have caps on the amount of money its members receive for medical bills – anywhere from $250,000 to $1 million.
  • Not all HCSMs cover annual check-ups or preventive care.
  • HCSMs may cost less than traditional insurance.
  • The coverage you receive may be limited.

The Bottom Line

Joining an HCSM involves risk, but it appears to be a risk that some are willing to take rather than sign up for standard health insurance. However, if you are not a Christian, your options are considerably limited. In addition, there are no guarantees, oversight or legal protections in place to protect you and your loved ones. One HCSM member told the New York Times that she worries about the costs of her upcoming hernia surgery but has decided to put her beliefs to the test: “What if people don’t pay their share and what if the money doesn’t come in? But that’s where the faith-based part comes in – I’m really going to rely on God.”

You may also be interested in Cutting Your Cost for Marketplace Health Insurance and 20 Ways to Save on Medical Bills.

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