Comparing Health Share to Traditional Health Insurance: Pros, Cons, Cost

Health share plans and traditional insurance differ in terms of operation, pros and cons, costs, best fits, and tax implications. Health share plans are non-profit entities where members share medical costs, while traditional insurance involves paying premiums for coverage. They each have their own pros, cons, and cost differences that can make one a better fit for certain individuals. Tax implications also differ, with health share plans not offering the same tax benefits as traditional insurance.

What Are Health Share Plans And How They Work?

Let's delve into the world of Health Share Plans - a novel, non-insurance approach to managing healthcare costs. (Mayo Clinic). These plans, also known as health care sharing ministries (HCSMs), operate on a model in which members share the cost of each other's medical expenses rather than paying premiums to an insurance company. It is based on a community approach, with people uniting to support one another's medical needs.

So, how do these plans work? Each member pays a monthly 'share' into a common pool handled by the HCSM. When a member incurs medical expenses which he or she cannot afford, these costs are then compensated using the common pool. The logic relies in that the monthly shares provided by all the members collectively cover all the necessary expenses (American Journal of Public Health). It's a system necessitating trust and co-operation amongst its members.

Notably, health share plans may vary in their specifics; for instance, Christian Healthcare Ministries and Samaritan Ministries mandate members to lead lifestyles in line with specific religious principles. However, there are also secular health share plans like Sedera, which don't base their principles on religious tenets (NCBI). Despite their differences, they share the fundamental concept of community-based sharing of healthcare costs.

What is Traditional Insurance?

Switching gears, we explore Traditional Insurance – a more regular, commercely-operated method of covering healthcare expenses (National Association of Insurance Commissioners). In this case, the individual or employer pays premiums to an insurance company against a promise that they'll cover certain healthcare costs when needed.

In essence, the operation of traditional insurance relies on risk pooling. Individuals pay predictable periodic premium payments to an insurer, in return for financial protection against unpredictable medical costs. When an insured individual incurs healthcare costs covered under their policy, the insurance company steps in to pay for those costs (National Library of Medicine).

As examples of traditional insurance, we can highlight popular plans such as Blue Cross Blue Shield, Aetna, and Cigna. Although their benefits may vary in detail, they all function on the premise that an individual pays premiums in order to receive coverage for healthcare costs from the insurer.