Is a health care sharing ministry a good deal?

There was a good question asked over at the Money StackExchange site dealing with an alternative to conventional health insurance called a health care sharing ministry.

The cogent parts of the question are below:

… The basic idea of a health share is that it is a non-profit organization where members pledge to pay a certain amount of one another's medical expenses. Technically, it is not insurance, but it sounds similar to insurance.

I would like to know more about what the difference is between a health share and health insurance, as well as the risks and benefits of using one versus the other …

The question mentions an organization called Libertyâ„ HealthShare, so I visited the site to learn more about it.

Checking the box on your taxes

First and foremost, a health care sharing ministry, if it meets certain criteria, is one of the nine ways to claim exemption from minimum essential coverage under the Affordable Care Act. These criteria are:

The organization must be tax-exempt under 501(c)(3).
Members must share common religious or ethical beliefs.
The organization must have been continuously in existence since the end of 1999.
Annual audits of the financial books (by a CPA) must be publicly available upon request.
The organization cannot discriminate by state of residence or employment.
Members cannot be kicked out if they develop a medical condition.

This exemption is the interesting part for most people: satisfy the ACA requirement as cheaply as possible. For Liberty, $449/month is the upper tier for a family, and that 100% cost sharing (note, not “coverage”, since this is not insurance) of up to $1 million per incident. The amount is even less for younger families.

That's the carrot. Where's the stick?

There are drawbacks, of course. Not all expenses are eligible for sharing, but that's also true of traditional health insurance. These are drawbacks specific to health care sharing ministries:

Since this isn't insurance, you become a “self-pay” patient. No preferred-provider networks, no pre-negotiated rates. You get treated as if you don't have insurance, which … you don't. That can also be translated as “full price.” If there are discounts to be had, or payment plans to be arranged, you'll need to pull out your negotiating skills.
You gotta have faith. These groups aren't for everyone — on purpose. These sharing organizations would fall apart without a common basis of faith. If you don't share the faith of the group, then you don't share your medical expenses with the group.
You have to keep it clean. The premise of Liberty is that the body is the temple of the Holy Spirit. As such, the temple can't have cigarette butts, lots of liquor bottles, or any illegal drugs strewn in it. In addition, a healthy lifestyle (or movement toward one) is required through regular exercise, good eating habits, etc. (Is this not the case? Then consider looking into fixing this, perhaps at one of many free rehab centers.)
Preventive care costs aren't shared. Dovetailing on the point above, preventive care is something you should be doing anyway as part of a healthy lifestyle, so it's not eligible for sharing.
Small expenses aren't shared. Liberty has an “annual unshared amount” which serves the same purpose as a deductible. But beyond this, if the amount of any incident is less than this amount, it's not shared.

Considerations for whether to apply

What should be considered when thinking about applying for a health care sharing ministry? Try these questions on for size:

Do you share the beliefs of the ministries? This can be a deal-killer even if you're healthy and otherwise qualified. There are only a handful of organizations that qualify for the ACA exemption, so this can be a real issue.
Do you have a huge family? The family plan doesn't seem to say anything about family size. It's a bit like a family discount if you have a large family.
Are you healthy? Health improves your application if you're healthy, and kills it if you're not. They keep costs low by accepting people less likely to incur major medical expenses.
Can you get affordable traditional insurance elsewhere? If so, there may not be a need for this kind of sharing arrangement (though it can be a secondary reimbursement mechanism).
Do you have ample cash? The monthly sharing contribution is on the whole lower than for insurance, but out-of-pocket expenses could be full price, and immediate. Just like health (or auto) insurance with a high deductible, you should expect to pay more at the time service is rendered than someone who only has a copay.
Can you take advantage of the sharing for what you expect you'll need? Read the fine print. Pre-existing conditions can be an issue, though Liberty, for example, does “phase them out” completely after three years, and offers partial sharing in the first and second years.
Do you support the mission of the ministries? This is separate than qualifying for sharing in one based on faith. You still have to sleep at night.