Friday, January 5, 2007

Pennies From Heaven

As health insurance premiums rise, people seek other ways to cover the cost of health care. Some raise deductibles & eliminate copays, taking on more risk rather than transferring it to a carrier. Others go to mini-med plans or discount health plans which are fine until you have something serious. Some simply go naked while a few turn to Christian ministry "sharing" plans.

Some examples include Samaritan Ministries, Medi-Share and Christian Brotherhood.
The plans share similarities in that the members pay monthly dues to cover some of the administrative fees associated with these plans. Above the dues comes the sharing of others burdens. The plans are based on biblical principles according to Galatians 6:2: “Carry each other’s burdens, and in this way you will fulfill the law of Christ.”

All fine and good, but these plans are not foolproof.

They are not insurance. This alone can create issues when the chips are down so to speak. If your claim is not paid, where do you turn? They are not insurance and as such are not regulated by the DOI (Dept of Insurance) in any state. There are no guaranty funds to step in and bail you out if the plan fails.

Some medical conditions that would be covered by insurance are not covered by these plans. Typically you will find there is no coverage for STD's, abortion (even if the mothers life is in jeopardy), substance abuse treatment, mental illness and more.

Because the members are not covered by insurance, and there is no guarantee the claims will be paid. Some providers may refuse to treat you for expensive procedures unless you can prove in advance you are capable of paying the bill. This may take the form of signing over the equity in your home or investments as collateral.

The plans are not creditable coverage. If you ever leave the plan and try to secure coverage through an employer you will run afoul of HIPAA laws and may find yourself without cover for a pre-ex condition.

One of the more notable cases involved the Christian Brotherhood. An investigation revealed that Bruce Hawthorn, the founder of the Christian Brotherhood, had fraudulently taken funds from the ministry and used them for his personal gain. Mr. Hawthorn was ordered to repay monies to the fund but in the interim they were managed by a court appointed trustee. Some $34M in unpaid medical bills could be delayed by as much as 18 months while the financial mess was settled.

The ministry is now back on track but who is to say this cannot happen again with this or any other ministry?

The organizers and managers of these funds are mostly free to do as they wish with no outside accountability. There are no regulatory agencies, other than the Attorney's General in various states, who have jurisdiction over these plans.

No doubt, many members have found these plans to be just what they needed. Several of the plans have operated for years without scandal.

Personally, I have mixed emotions. My religious background and business experience with some of these plans allows me to applaud what they do. (At one time I had the medical stop loss in place on one of the plans. Another time a start up organization approached me about securing stop loss cover for them as well. Due to several issues, we were unable to conduct business. I have no idea if that group ever got off the ground or not).

On the other hand, these groups are nothing more than self funded MEWA's with one exception. There is no advance funding for claims. At least MEWA's are regulated under federal law and, in some cases, by the state DOI. This is not true for these plans.

Right or wrong, these plans exist and offer an alternative to traditional health insurance.


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