Last November, I dedicated a podcast episode to the topic of unconventional options to traditional healthcare insurance for freelancers.
The two types of alternatives we discussed in that episode were medical cost sharing and health indemnity plans.
In this episode, I wanted to circle back to the topic as the open enrollment period for 2019 health insurance runs from November 1 to December 15, 2018.
I wanted to use this as an opportunity to solicit feedback from my listeners to see whether any of them had ventured into either of these two alternative healthcare coverage options—and if so, to learn more about their experience.
Before we get started, a few reminders:
- If you’re outside the U.S., there’s no need to listen to this episode.
- I’m not a financial advisor or insurance professional. You need to do your own due diligence and investigate these and other options on your own while consulting with your financial advisor before making any final decisions.
- These options are NOT for everyone. I realize that. But the sad fact is that there’s no perfect solution out there. Our healthcare system in this country is broken. We can (and need to!) do better as a country.
- It’s not just the politicians’ fault. We all need to take ownership in this area. Many people have no choice in the matter. But many of us can do simple things to improve our health and become smarter consumers of healthcare.
- Don’t send me hate mail because you don’t like these options … or because you disagree with one (or both) of them. I’m simply trying to share good information. And please don’t send me emails or private messages asking me questions about these and other alternatives. Again, I’m not a financial or insurance professional.
- I do NOT profit in any way by informing you of these options. I’m not affiliated with any of these companies nor do I have any kind of personal or financial interest in any of them.
- Again (I can’t say this enough), I’m not a financial advisor or insurance professional. Do your own homework and consult with your financial professional.
- Download the resource guide on this page for additional links and resources, including a list of medical cost sharing organizations, comparison charts and detailed articles on these unconventional options.
The notes that follow are a very basic, unedited summary of the show. There’s a lot more detail in the audio version. You can listen to the show using the audio player below. Or you can subscribe in iTunes to get this show delivered straight to the Podcasts app on your smart phone, tablet or iPod.
What Are Medical Cost Sharing Plans and Health Indemnity Plans?
As you may recall from our previous podcast episode, medical cost sharing is based on principles of mutual aid and assistance.
Every month members set aside a “share amount” into a secure account. Then, your share amount is matched to another member who has expenses that month and vice versa.
Health indemnity plan coverage is a type of insurance policy. You have a “menu” of healthcare services with the fixed dollar amount the insurance company will cover for each service. If the cost of your healthcare service is less, you keep the difference. If it’s more, you pay the difference.
For more on these types of plans, check back to our earlier episode which describes them in more detail.
A person’s medical history is a sensitive topic. I want to assure you that I have permission to share these individual stories and info with you.
Having said that, I have anonymized these stories by assigning pseudonyms to the listeners who shared them (aside from myself).
Medical Cost Sharing Plans
Medical cost sharing plan
I went with the medical cost-sharing plan. I never heard from your guy who did the indemnity plans. I pay $2200 per year for the medical sharing plan. I’ve got the top level plus the add-on for unlimited sharing. I didn’t have any expenses that were at the level to share (> $500) so I can’t speak to their promptness at reimbursing for expenses.
I also switched to a primary care doctor who charges a flat monthly fee ($60) and then all office visits are no additional charge. Appointments are 30-60 minutes vs. seven minutes for a typical medical insurance doctor appointment. (That’s all Blue Cross Blue Shield allows.)
Just eliminating my endocrinologist and getting my prescriptions through my new doctor, I’ve saved enough to cover his monthly fee for 10 months. I’m able to call, text, or message him anytime and get a response. Lab work by my primary care doctor is about 80% less than what I used to pay with insurance.
I’ve discovered the discount you get for paying cash for a doctor visit is usually less that what my cost would have been with insurance. (I had a high-deductible plan previously so most of my cost was out of pocket anyway.)
Barring any unexpected health issues, I’ll end the year with less than $3500 in total medical expenditures … and a much more positive experience with my care. Had I stayed with Blue Cross Blue Shield my expenses would have been closer to $14,000 for premiums and costs under the deductible.
Medical cost sharing plan
I’m a self-employed person who does not, by choice, have an individual health insurance plan. Earlier this year, I signed up for a Christian Healthcare Ministry. The way I see it, it’s not much different for me than a high deductible health plan. But it’s $45/month instead of $500/month.
I also set aside a little bit each month into an HSA (health savings account). Although I read you’re not supposed to do this, I couldn’t find any information as to why, or any information about any consequences. So I do it my way. I pay for occasional chiropractor visits, an annual visit to my primary care doc, and an annual OB-GYN visit out of the HSA.
Most people think I’m stupid or crazy. I can afford health insurance. I just don’t see spending $6,000 a year or more on health insurance I’ll never use. I’d rather invest that money.
I have a lot of reasons for going this route, but as far as the basics: I’m single, healthy, no chronic conditions and no real family history of chronic conditions like cancer or heart disease. I take one prescription that costs $12 every three months. I don’t get sick. I don’t have kids and at 47, don’t think I’ll ever need maternity coverage.
When I find an association health plan that suits my needs and is affordable, I’ll consider it. I’m pretty darned liberal, and I know a lot of Democrats don’t like them, but the concept makes sense to me!
All that being said, I am probably an odd case.
Medical cost sharing plan
I’ve just ended a six month plan with Aliera Healthcare, which is a cost sharing plan. It cost me $320/month. (It was to bridge between an international health plan I had with Cigna that had ended and Medicare, which I became eligible for this month.)
I got that because I am totally healthy and just wanted major medical coverage. But as fate would have it, I had a horrible flu virus in May, one month after the plan started, which may or may not have caused what presented as a stroke. For about 15 hours, I lost most of my words—actually nouns and the names of everyone including my kids. I couldn’t complete a sentence.
This started while on a business call and I chalked it up to being exhausted from having a horrible cough. But after two hours of lying down, I couldn’t make sense of some texts on my phone and I had a tingling/numb sensation run down the right side of my body. I managed to get to my neighbor, who drove me to the ER. By the time I got there, I was so confused I couldn’t check myself in.
They decided I was having a stroke and gave me CT scans and gave me tPA treatment to break any potential blood clot. They then sent me to ICU, where I had an individual nurse watch over me for the next six hours. By morning my vocabulary was back, and an MRI showed no signs of a stroke. I stayed in ICU one more night. I have absolutely no risk factors for a stroke, so the cause of the symptoms remains a mystery. Maybe it was viral or caused by a migraine. (I had a headache a few days prior but never in my life have I had a migraine.)
The whole ordeal cost about $137,000, and I’m still waiting for resolution to the claim. I am supposed to have a $10,000 “deductible.” The plan says it covers all life-threatening emergencies that happen within the first six months of the policy. Otherwise, hospitalization and specialists aren’t covered until after six months.
On the first claim submission go-around, the person who reviewed the claim was a trainee from another department who rejected the claim. She thought it was for something elective. Then I worked it out with the woman who sold me the policy/plan and she and her managers were totally apologetic and said my claim would be covered. But here it is months later and still no resolution. I think that is not uncommon even with major insurance companies.
I did compute that if I had a policy through ACA (Covered California), which would have cost me $750/month with a $6,400 deductible and $9200 out of pocket, my total cost would have been the same. So the only way I’d end up with a better settlement would be if I’d paid over $1,000/month in premiums. The annual cost may still have been as high.
So the jury is out on coverage, but if Aliera covers the costs, leaving me a $10K deductible, I’d say the plan was worthwhile. The people were very kind. They are a Christian organization, which I think has to do with making the plan eligible within the ACA without a tax penalty. So you have to verbally agree to their philosophy (no problem for me). And you have to use their video or phone telemedicine conference when you’re sick before they’ll approve an in-person doctor visit. (Doctors in my area were limited, but they all had really great backgrounds.) I used the telemedicine option with the flu and got very responsive care.
My story is a good warning that anything can happen to you out of the blue, and you need some form of insurance.
Also, these cost sharing major medical plans seem to be national and cost a lot less than plans through the ACA when you can’t qualify for subsidies (which is hard when you’ve taken [Ed’s] classes and are starting to succeed!)
I’m still a fan of the ACA, but not the limited amounts they use for providing subsidies. It was okay when I still had a dependent and wasn’t making that much money. But I lost the subsidies when I became a single taxpayer and started making more. And the limits for getting subsidies really don’t make sense in CA, where the cost of living is so high. I’d have to triple my income to afford regular premiums! So, without getting into politics, it made sense to go for a major medical cost sharing plan.
Medical cost sharing plan
We’ve used Liberty Health Share for two years. They aren’t the most organized company in the world, but they aren’t bad, rates are fair, and it isn’t too much of a hassle. They covered my wife’s hysterectomy in the spring.
We have to get pre-approval for major costs, pay for them up front (we use a health savings account), and then get reimbursed (eventually — it takes a long time). There was some miscommunication from their end early on in our relationship that was frustrating. But we eventually found a customer service rep that volunteered to be our “personal contact” for questions. That was a great help.
We always need to get detailed receipt with codes, and doctors often scoff at this request (which is ridiculous). It is amazing that people generally do NOT ask a doctor for billing details (that’s another story). It is still confusing at times and not really the perfect solution.
We spend a lot of time managing and following up with health care providers, and that can be stressful at times. Our monthly “bills” are lower than they would be on the affordable health care (i.e. on a standard ACA plan), but we have not been able to evaluate a true value based on the amount of time we have to spend managing it.
This is a less expensive model than many other options, but it comes at the cost of time.
Health Indemnity Plans
Health indemnity plan
We are about eight months in. We had to wait a couple of months for the product to become available in Florida. We haven’t used it at all yet but probably will before year end for my wife to have some services.
However, I’ve had lots of different types of coverage over the years as a freelancer (since 2001) and for me this is one of the best values we could have in this current market. If it performs in the ways [our insurance rep] explained initially, it should be worth it for us.
We are also part of a Direct Primary Care physician relationship, so we pay a monthly subscription for physician services which we’ve also only used once. The Health Indemnity Plan is a great structure for working with this kind of primary care too.
I can’t speak to the claims process because we haven’t had any. But for just my wife and I (our five kids are in their 20s now) we pay less than $1K per month for the combination of our health/accident plan ($670, we are in our 50s), and direct primary care ($185, which in this case also includes our 20-year-old son on the plan).
In a former scenario, I was paying nearly $1500 a month for the three of us. We almost never used this plan but the few times we did were 100% out of pocket because of plan deductibles. We were also paying about $125 a month for a separate plan for our son (now 23 and graduated with an employer plan) while at Florida State, so about $1600 in total per month is what we were paying.
So yeah, very happy with at least the cost of this new setup. I’m planning to stay with it in 2019, we always hope not to use this stuff much, but if we have to, it seems like the features will work well.
Health indemnity plan + medical cost sharing
I enrolled my family in a healthy indemnity plan and medical cost sharing (as a back up) in September 2017—dropping the traditional health insurance policy we’d had for 11 years.
The plan we dropped was a high-deductible policy with a health savings account attached to it. Our premiums had nearly tripled over the 11 years we had held the policy.
But while premiums went up, the plan coverage did not improve. When my son needed oral surgery, our plan declined it. And that was the last straw for me.
I contacted my accountant to see if he had any ideas. That’s how I learned about health indemnity plans. He had started offering a health indemnity plan to his employees the prior year.
I liked what he had to say, so we went with the same health indemnity insurance company he was using. Our total premium (we added an extra hospital coverage option) is a little over $700 per month for our family of four. That’s about half of what we were paying with our traditional policy.
Basically, I went with a plan that pays 2X what Medicare pays out for hundreds of different treatments or procedures.
For example: A doctor’s visit and some tests might pay out $500 according to the 2X Medicare table. But if your doctor only charges you $450, the insurance company doesn’t care. They pay the doctor the $450 and then send you a $50 check. Because, again, they pay out the full amount. And in my case, they pay 2X Medicare.
Another example: You need shoulder surgery. It’s $20,000 with your surgeon. The insurance company will help you shop around and find other options. Say you find a local surgeon who can do it for $17,000 and the insurance company pays out $19,000.
If you go with your surgeon, you’ll need to pay $1,000. If you go with the surgeon who will do it for $17,000, you pocket the difference ($2,000).
We’re a healthy family and haven’t had to use the plan very much. But when we HAVE used it, it has worked very well.
For example, we had a couple of urgent care visits and annual well visits for all of us. I believe they covered everything, and I got a check for a recent urgent care visit for my son.
The only major medical expense we’ve had this year has been chiropractic care. My wife started seeing a chiropractor in February. She’s gotten great care, but this plan covers only six or so chiropractor visits per year.
We also decided to add medical cost sharing as a supplement to this policy. We went with Christian Healthcare Ministries and opted for their lowest-cost plan, which is $135 per month for our entire family.
I added this in case there’s a situation where our indemnity policy only covers some of the total costs. I wanted to limit our risk exposure and have a safety net to help with the difference.
Also, we’re continuing to save a portion of what we used to pay for our traditional policy every month … and putting that into a checking account that’s reserved for medical expenses. We got debit cards for this account, and we use those when we have a copay, have to buy medicine, have to pay the chiropractor, etc.
A recent unexpected benefit: The day after Halloween, my youngest child woke up with a bad reaction to his Halloween makeup. Under my plan, I have access to a third-party tele-doctor service. (You connect with a doctor virtually, without leaving the house.)
I had to register online for the service. Once registered, a doctor called me within 10 minutes. She asked some questions and had me check a couple things. She confirmed that it was a rash and nothing more serious. She sent a prescription for my son to our pharmacy and issued me a note that I could give to my son’s school. All at no charge.
A year ago (under my old plan), I would have had to go to urgent care in the middle of flu season. It would have taken up most of the day. And I would have had to pay $80 or more.
The tele-doctor service was fantastic, but registering did take some time. If you get a similar benefit from your health plan, I recommend you register before you need assistance.
I don’t know if/when our current health insurance system will change or improve. But don’t wait for the government to do something. Take control over your own situation.
Keep an open mind. Do your homework. Get creative.
You might end up having to manage more of this on your own. But if that means the difference between having coverage and not having coverage (or the difference between $18,000 in annual premiums and $9,000), it’s probably worth the extra effort!
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