As premiums for Affordable Care Act and other traditional health insurance plans have skyrocketed, alternatives to traditional health insurance models have been rising in popularity. One type of alternative is medical cost sharing plans. Consumers who are reasonably healthy can enroll in these and often enjoy lower costs by answering a few basic medical questions.
In this model, member contributions are received by a community organization, as opposed to premiums paid to an insurance company. The community will help to pay medical costs for their community members. Some of these organizations are faith-based, such as Christian health-sharing ministry plans.
Others are strictly community-based with no specific religious affiliation. In most all cases though, members generally are required to agree to adhere to certain moral principles, and may either be denied membership for lack of adherence to these, or required to pay higher contribution rates if they are a smoker , for example.
The rates for these plans are generally considerably less than comparable insurance plan models, primarily due to the fact that such plans often screen for and deny applicants who have severe major medical pre-existing conditions. These plans will of course share the costs for major medical chronic conditions which develop AFTER a member is approved membership, but they are not taking applicants who already are currently being treated for such illnesses as COPD, stroke, cancer, etc. This serves to keep the rates for the community lower, as the much higher cost ACA (Affordable Care Act) plans are required to accept applicants regardless of how poor their existing health is coming into the plan.
Another common benefit is that members are often exempt from the federal mandate which requires taxpayers to maintain ACA qualified health insurance or face a tax penalty. Membership in many of these medical cost sharing plans exempt ones from this penalty. Some states like California have also started to penalize taxpayers who forego health insurance, and so these plans can exempt ones from the state levied penalties as well.
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