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Wednesday, August 13, 2014

Religiously Exempt Health Care Reimbursement Plans-A Closer Look

Insurance Exchanges-Who Didn’t Enroll
This article reviews the federal mandate that all American citizens or those with legal residency status (and their dependents) must purchase medical insurance and identifies sociological groups who choose not to participate. Since the Supreme Court upheld this ruling in 2012,[1] the mandate has begun, and as of 2015, individuals will face tax penalties if they do not show proof of insurance. First, we have the allowed federal exemptions to the insurance mandate:[2]

Economic hardship (you can’t afford the premiums)
Incapacitated individuals, such as those under institutionalized care (in which case there should be some public benefit, most likely Medicaid for health care)
Incarcerated individuals (United States has one of the largest prison populations in the world)
Religious exemptions
Medicare recipients
Military personnel or anyone covered by the Veterans Administration for health care

This paper analyzes the religious exempt group and the proliferation of health care plans which are not considered insurance.  It is difficult to establish a firm number on the actual participants in religiously exempt health care plans, so the top three entities as defined by media research are reviewed.

Christian Healthcare Ministries was founded in 1981 as a 501 C-3 and it offers a health care program, which mirrors some of the provisions of the Patient Protection and Affordable Care Act Insurance Exchanges, including gold, silver, and bronze plans, and prices based on covered “units” (their word not mine). [4]

Samaritan Ministries was founded in 1994 as a 501 C-3 organization and it offers a monthly heath care reimbursement model which covers 36,000 households and spends one-hundred-eight-million dollars annually on health services.[5]

Christian Care Ministry was founded in 1993 as a 501 C-3 entity and it offers a medical care reimbursement program based on tithing.[6]

Common Qualities of the Religiously Exempt Health Expense Sharing Programs

Pre-existing Conditions Restrictions
Unlike the Affordable Care Act insurance exchanges, which do not have pre-existing conditions limitations, the religious groups are free to deny people coverage. Specifically, Christian Ministries does provide a limited reimbursement amount of $15,000 in the 1st year of enrollment for pre-existing conditions. In the 2nd year it allows up to $25,000 for treatment of a pre-existing condition, inclusive of whatever was paid in the first year. The stipulation for pre-existing conditions limitations expires after three years of enrollment. This plan also distinguishes between conditions which are in active treatment (like chemotherapy) and those in a maintenance state (like medication for hyper tension). Samaritan Ministries does not list any pre-existing condition exclusion on its web site.  Christian Health Ministry has an exclusion for any maternity conceived prior to enrollment, nor will the child be covered on their medical reimbursement plan.  Additionally, Christian Care Ministry requires enrollees to sign an affidavit saying they haven’t smoked in 12 months nor have they abused any drugs in that time frame. Also, they must agree to sex only within the confines of marriage, which may disallow treatment of sexually transmitted diseases for unmarried people.

Benefit Restrictions
The religiously exempt health care reimbursement plans also have very limited benefit caps, unlike the health exchanges, which are not permitted to do so. Christian Health Ministries restricts health care reimbursement to $100,000 per year and $1,000,000 per lifetime. They do allow a renewable $125,000 per illness add-on for those who choose the gold plan. Samaritan Ministries is even more frugal, with a cap of $250,000 per person for medical care reimbursements. Under the Christian Care Ministry program there is a fixed $100,000 limit for accidents each year but the restrictions get murkier after that.  For example, there is a 15% increase in out-of-pocket cost if a seat-belt was not used or a helmet was not worn in the case of a biking incident.

Plan Restrictions
All of the religiously exempt organizations which are offering health care reimbursement plans have morals clauses based on their religious beliefs and these preclude coverage for any of the following conditions:
Alcoholism or alcohol related conditions
Birth control of any kind
Drug addiction
Invitro fertilization
Treatment not vetted through church based principles

In the case of Christian Care Ministries, any female who becomes pregnant outside of marriage will be subject to their morals clause and neither the baby nor the mother are eligible for health care reimbursement. 

Maternity Coverage Restrictions
Maternity coverage has no limit under the national insurance exchange options, but under the Christian Care Ministry program wedded mothers must contribute a $1,250 co-payment and the well child care is limited to $775 for two years. Unwed mothers get zilch.

Enrollee Contributions to Religious Health Share Programs
The religious organizations all have monthly contributions into the ministries’ health plan and here are their schedules which were drawn from their web sites:
Christian Ministries-Defines enrollee costs per unit; $150 per Gold Plan unit, $85 for Silver Plan unit, and $45 for Bronze plan units
Samaritan Ministries-Contribution is based on the size of the family, $495 for a family of four (less if you are under 25)
Christian Care Ministry-Contribution is based on the age of the eldest family member; $713-$325 per month for a family of four; if the member is able to demonstrate healthiness the premiums are lower; all members pay a $5 per month billing fee.

Regulating Exempt Entities Offering Health Care Reimbursement
These religious health sharing plans are exempt from federal regulations except for the minimal requirement to make an annual filing to the Internal Revenue Service. Essentially they function as large self-insured health plans, which are not subject to the McCarran Ferguson Act, and there is no statewide regulatory oversight. This means that contributions made to these church groups are not insured or monitored by any independent regulatory agency. Although, Christian Ministries does abide by the consumer protections under the Sarbanes Oxley provisions and Samaritan Ministries does pay for an independent audit each year. Under the Affordable Care Act insurance companies have to disclose how they spend your insurance premiums and if they collect too much money, they actually pay refunds. Religiously exempt plans are not subject to strict reporting standards on how member contributions are used.

The religiously exempted health care plans have designed their medical sharing programs to limit their liability for large long term health cost exposure and to offer enticements for the young and healthy folks to join. This is precisely what some private employer groups used to do before the government put a stop to this discriminatory practice.  Another extraordinary fact was the amount of cost-sharing that members of these religiously exempt plans happily accepted and still believed they were being well served. For example, an Ohio family reported feeling blessed to only have to share expenses for $51,884 for an illness which ran $149,350, as proclaimed on the Christian Healthcare Ministries web site.[7]  Excuse me, but that means the Coup family paid 35% of the entire tab, quite possibly with smaller provider discounts than the insurance companies negotiate. This type of plan may be OK for the very wealthy, but it hardly seems doable for the middle class and working class low-income families of America.

This article was written by Roberta E. Winter, MHA, MPA, and independent health care analyst and author of Unraveling U.S. Healthcare-A Personal Guide, Rowman and Littlefield, 2013. Feel free to share it virally.