Tip #2: Convert Your Health Insurance To A Cost-Sharing Plan. I Saved $900 A Month!

Tip #2 of 10 from the not-for-profit Spend Less on Healthcare Foundation

I speak from personal experience when I tell you that regular health insurance is not the only way to cover yourself and your family. Let me tell you a little bit about what I went through and how Tip #2 can help you.

Some years ago, I was the CEO of a large hospital… and then was replaced without notice. I had a wife, young children, and all the trappings of a young family, including a mortgage, car payments – and suddenly a $1,400 a month COBRA health insurance choice to consider that I had to cover myself – with no income in sight! My wife and I chose to go without health insurance for more than six months as we could not justify the expense of COBRA, even with elementary school-aged kids!

Now, hospital CEOs come and go frequently, but it's challenging to get one of those jobs. So, here I was with large bills and a very specialized set of skills that was not in great demand at the time.

We learned a lot from this experience and a few years later, even when I was employed, we chose to opt-out of our commercial insurance sponsored by my employer as well. My monthly payroll withhold for my employer-sponsored plan was more than $1,500 for my family, plus it was a $5,000 annual deductible. That's $23,000 a year before I see a doctor or pick up a single prescription! So I opted out.

As I write this, I do not have insurance coverage but prefer a cost sharing plan.

We chose to enroll in a cost-sharing plan called FitHealth at the cost of $610 a month. That's a $900 per month savings or almost $11,000 a year right out of the gate! Who doesn’t love that? Even if you still spend $5,000 out of pocket during the year as you would with your $5,000 deductible, you are still $6,000, or $500 per month, for the better. 

Switching to a cost sharing plan is one of the Ten Free Tips to Spend Less on Healthcare today offered by the not-for-profit Health-Wealth Foundation on the website designed specifically to provide resources to Americans seeking to eliminate wasteful personal healthcare spending. To get an immediate download of the Ten Free Tips to Spend Less on Healthcare, text the word “JOSH” to 72000, and you can have it within minutes.

By joining a cost-sharing community I was able to get my family the health coverage we needed and also keep my expenses down. We are now part of the cost-sharing program FitHealth (https://wearefithealth.com/drluke) by Sedera. These are programs specifically designed as an alternative to traditional health insurance model and provide access to quality healthcare. But we knew that we would have to become EHC’s -  Engaged Healthcare Consumers and engage in the healthcare process to truly save – and we did! 

One of the first things we learned is that doctors, pharmacies, and other providers often offer you a 30 percent discount off of regular rates (often without even asking) when you let them know you are a “cash patient,” which is what you become when you join a cost sharing plan (we explain that in the paragraphs below). We all love a 30% discount don’t we? Especially when we don’t even have to ask - but don’t forget to ask if they don’t automatically offer it! 

It has become my passion as a former hospital CEO and truth-teller to share this information with others and to leave a legacy of being America's Healthcare Affordability Authority. My goal is to save people frustration and money, and be an advocate for taking charge of your own health. It's why I speak to religious groups, businesses of all sizes, and organizations – I help them get control!

Cost-sharing programs, doctor memberships, and health apps are fast replacing traditional health insurance and regular allopathic care. Today, we're going to talk about switching over to a cost-sharing plan and if this type of approach will work for you or not.

What Is A Cost-Sharing Plan?

A cost-sharing plan is basically where you pay cash directly to providers (including doctors, pharmacy, and labs among others) for your care, and for higher cost episodes your cost sharing community often pays the balance. Most people know your initial payment as your co-pay from traditional health insurance. Basically, you share the cost, but with cost sharing you start with the approach of being a cash patient and when a specific health episode reaches a certain threshold of $500 to $2,500 for example (the amount per episode depends on the level of your plan), your cost sharing community is then eligible to kick in the remaining balance. 

One cool thing I learned about FitHealth and Sedera Health is that both often step in and attempt to negotiate a lower rate for the service before paying a large claim to a provider. The entire arrangement is a true partnership, not just between your family and the cost sharing plan, but the entire cost sharing community that you are a member of.  Each cost sharing plan provider collects a huge database of what that provider has charged previously, and what competitors are charging as well and uses it to negotiate the lowest rate they can get for its members. 

There are also plans where you pay a smaller monthly fee into a community pot. Then, as people experience medical needs, they're able to tap into the pot, and everyone shares the cost. Traditionally, these plans originated out of faith-based organizations. 

There are several different types of cost sharing plans available to faith based networks, mostly Christian. A few of them border on secular, for people who are not devout religion followers, but still share a group belief.  Some have formal physician networks like insurance, and others do not.

But cost-sharing has evolved significantly. Read on.

Cost-Sharing Community Models (CSCM)

Cost-sharing models have existed since the early 1990s. They combined consumer-driven incentives and discounted value services with technological advances that allow more timely access and are thus less expensive than traditional plans. But they have evolved greatly over the last twenty years. And then came a little twist on cost sharing with the passing of the Affordable Care Act in 2010. 

The Affordable Care Act included a mandate requiring every American to enroll in an approved insurance plan. This was nearly a deathblow to the cost sharing model. The federal government established the Minimum Essential Coverage (MEC) requirement, which excluded almost all cost sharing plans except for a few faith based providers like MediShare. Several of the plans remain connected to a specific religions. However, if you are not a regular church attendee or member these are not plans that you should likely consider, as the premise is that you belong to a community of active church attendees. The cost sharing provider is required to be rigid on their requirements to keep in compliance. Thus, there are plenty of cost sharing options, so look for one that feels like the best fit. 

Many of these programs evolved out of the Trump administrations healthcare strategy, which helped open the door to the creation of smaller, association-based health plans. His policies help loosen several requirements within the Affordable Care Act that directly benefited individuals who do not have access to corporate health benefits. This is how I became involved with FitHealth, which helps provide programs that encourage people to pursue health and fitness goals.

As I stated in my book Health-Wealth for You, "one example of a leading CSCM is Sedera Health. Sedera members present themselves to medical providers as self-pay patients. Sedera then assists in offsetting medical expenses that exceed $500 to $2,500, depending on the membership level. Sedera programs can also be paired with additional products such as MEC plan (minimal essential coverage level for preventive needs), an HSA, or direct primary care."

Although the Federal Government repealed the mandate requiring every American to enroll in health insurance, a few states passed the same requirement, usually accompanied by a financial penalty on your tax return if you cannot prove you have registered for Minimal Essential Coverage (MEC). Although cost sharing plans may not qualify for MEC in some states (including my home state of California), both Sedera Health and FitHealth have detailed information on what steps need to be taken in each state to meet these requirements as a member of their respective plan.

Cost Sharing as Alternative to Health Care Insurance

As an alternative to traditional health insurance, these cost-sharing plans are becoming much more popular because of:

·      Lower Monthly Payments

·      Better Access To Doctors

·      More Control Over Health & Wellness

·      Partnerships & discounts with preferred providers such as labs & pharmacy

·      Partnerships with Direct Primary Care practices (read below for detail)

Some plans, like Sedera Health, use apps and online consultations to provide much more cost-friendly programs. And, like Fit Health, which I belong to, it uses a combination of the services that take advantage of apps, online consults, and membership options, along with the community pot, to help keep costs down.

Some of the plans are just cost-sharing plans. There's a community pot, and anyone can tap into it if you need. Typically, these plans base around reimbursement. You are responsible for the initial payment and the community pot reimburses you.

Other plans have developed membership options with certain doctors and hospitals for a cash-pay option which is previously negotiated. Typically, these prices are much lower, and members use a specific set of doctors. Some of these plans see some services at 80% less than what would be charged to insurance companies. 

Many of the CSCM plans help you with scheduling appointments, physician searches, bill negotiation, and discount surgeries, and prescription costs. Many of the programs partner with various applications, such as Sedera Health’s partnership with TelaDoc.

Direct Primary Care (DPC)

Direct Primary Care (DPC) is another option, and exceptionally cost-effective one when used with cost-sharing plans.  Once you select a provider, you may qualify for a $100 a month discount off of your cost-sharing premium as a result. Cost sharing plans offer this discount as they have experienced healthier members with a much lower financial risk when their community members are affiliated with a DPC practice.  

My family pays $150 a month for an all-access membership for walk-in appointments to our DPC doctor. We love it. Once we signed up, we qualified for and received a $100 discount from our cost-sharing provider for joining a DPC practice, so the total cost of a way better approach to accessing our primary care doctor only cost us $50 a month! That's less than what one visit to a Minute Clinic or Urgent Care often costs me.  

Also, keep in mind that DPC doctors care for only you, the patient and your wallet.  NOT THE HOSPITAL OR PHARMACY! The business model of pharmacy-based clinics (often hospital or pharmacy owned) and urgent care (usually hospital-owned) is that they make more money when they order more expensive tests, and then refer you to the hospital. That is YOUR money they are spending unnecessarily. DPC doctors are incentivized to do the opposite and simply focus on your best interests!

How Cost Sharing Can Benefit Your Family

One of the ways they can keep costs down is that most programs do not cover several preventive procedures commonly covered by traditional insurance plans. For example, colonoscopies, birth control, and mammograms are generally not covered, and members are left to negotiate a cash price and payout of pocket. But, the out-of-pocket costs get significantly reduced because of being part of the group.

If you or a family member has a chronic disease or is on permanent medication, you should review other opportunities in this series for managing the disease and the cost of medications before switching to cost sharing.

Often, these programs are reimbursement-based. And, if there are any problems, you then communicate directly with the organization, because there is no governmental or federal oversight.

Pros of Cost Sharing 

1.    Significantly lower monthly cost

2.    Elimination of $5,000 deductible

3.    Cost for regular doctor visits and prescriptions lower than typical co-pays

4.    Better Access To Doctors

5.    Partnerships & discounts with preferred providers such as labs & pharmacy

6.    Partnerships with Direct Primary Care practices (read below for detail)

Cons of Cost Sharing

1.    Often not enough for large hospital bills

2.    Delay in reimbursement as you pay cash up front and then request reimbursement

3.    You are classified as a "cash patient" with providers (this has benefits as well, read on!)

4.    Usually does not cover preventive care, routine prescriptions, and mental health

5.    Some states require Minimum Essential Coverage 

6.    Not always a fit for high risk patients and those with chronic disease 

7.    Health Savings Account contributions do not always qualify under cost sharing

If you currently have a tax-free Healthcare Savings Account (HSA) with your employer, it is imperative that before making any changes to your personal coverage, you check with your benefits consultant to confirm what costs are eligible to be paid from your HSA when enrolled in a cost sharing plan.

Deciding What Is Best For You and Your Family

You will need to decide if this type of plan will work for you and your family. These types of programs work best for people who are in a bit better health, take care of themselves physically and mentally, have a strong background in religious participation (sometimes optional), and are willing to shoulder the cost of health responsibility. The most important factor is that all members, your teenagers included, must become engaged healthcare consumers. 

For my family and me, we have always maintained a healthy diet and remain active. Thankfully, our health needs are minimal. Many of you are the same. Using telehealth consultations and negotiating prices, we’re  able to take care of regular doctor visits and the in-between needs for our children using the many benefits of the cost-sharing approach. Getting free access to Teladoc consults through our FitHealth plan has become a huge convenience for my family when someone wakes up with a basic cold or fever, it saves hours and the consult is done from our couch within minutes. Those who are skeptical of telehealth consults for basic needs need to get over it – it’s that simple.  

Overall, I believe we save thousands of dollars every year by utilizing a cost sharing plan.

These types of plans may not be suitable for you if your family includes a high risk patient, someone with a chronic disease or continuous need to see a doctor regularly. If this is the case then the cost sharing approach may not be for you. For example, a person with Type 2 Diabetes or heart disease might be required to undertake nutritional advice and regular exercise to qualify for some programs. Even with a disease management program their needs may be better served with traditional insurance. 

Overall, cost-sharing programs help take the pressure off of some families to obtain regular health insurance. In contrast to paying over $1,300 a month for health insurance, that cost might reduce to $500. But, it comes with significant responsibility for your health and wellness. You have to become an EHC, an Engaged Healthcare Consumer, and an active participant in your healthcare.

I hope this article has been helpful for you in your mission to eliminate your family’s wasteful healthcare spending. To get the complete list of Ten Free Tips to Spend Less on Healthcare, text “JOSH” to 72000 for an immediate download. 

The not-for-profit Spend Less on Healthcare foundation was created to provide independent resources for American families and businesses to learn how to eliminate wasteful healthcare spending and live a healthier lifestyle. Company's interested in supporting and being featured on www.SpendLessOnHealthcare.org can email [email protected]. 

The author of this story, Dr. Josh Luke is a former hospital CEO, award-winning healthcare strategist, Futurist, and Founder of the Spend Less on Healthcare Foundation. Dr. Luke is also the author of the Health-Wealth book series, including Health-Wealth: Is Healthcare Bankrupting Your Business? and Health-Wealth for You: 11 Steps to Save Big & Live Healthy (both Amazon #1 Best Selling titles) and host of Spend less, Live Well on the Dr. Josh Luke YouTube channel and on all main podcast outlets (audio only). Join the movement and visit www.SpendLessOnHealthcare.org today!