If you’ve turned on the news recently, or have followed any of the recent political debates, there’s a 100% likelihood you’ve heard about the exorbitant costs of health care. Depending on who you’re watching or listening to, you’ve heard a multitude of reasons as to why healthcare costs are through the roof; the insurance companies are taking too much of a profit, the layers of regulation create barriers to entry, the population is too unhealthy, etc, etc, etc...
While we do have some insight into what the rising costs are caused by, that’s not the purpose of this newsletter/article. The point of this article is to give you some insight into a possible solution and why many employers and organizations are turning to Medical Cost Sharing Communities (MCSC) over traditional health insurance. In many instances, they are also using both.
Some of the key benefits for joining a MCSC are:
- Monthly premiums are, on average, 30-60% lower
- Initial Unshareable Amount (IUA), similar to a deductible, normally doesn’t exceed $1,500 and can be as low as $500
- No restrictions due to a network, HMO or PPO
- Overall reduced cost of care
- Promotes healthy lifestyles
- Increased convenience due to technological implementations
- Provide competitive pricing with quality care for small employers (only 3 employees are required to enroll)
What is a Medical Cost Sharing Community and is it insurance? The short answer is no, it is not insurance. The long answer you might be able to put together by the name. A Medical Cost Sharing Community is a large group or organization that pools together the costs of medical care. This sounds like insurance, but for compliance and regulatory purposes I need to be clear; It is not insurance.
Medical Cost Sharing Communities tend to be substantially cheaper than traditional health insurance and for most individuals, do not sacrifice coverage or service. They are able to do so for several reasons, but the primary reasons are; members are more informed of their coverage, there’s an emphasis on preventative care, and technological advancements of services like Teledoc greatly reduce the overall costs of care.
If you have insurance through your employer, or if you’re an employer providing the insurance, you probably know that you have health insurance and what your deductible is. If you’re a member of a MCSC you will know substantially more about your care, and there’s a decent chance you’re taking measures towards preventative care. This is due to the enrollment process being more in depth and having a focus on member education. Most MCSCs have identified that preventative care drastically reduces the cost of healthcare in the long run.
So how does it work then? If you’re a member of an MCSC, you will likely be enrolled in a group accident insurance plan, and possibly a group hospital indemnity insurance plan as well. These 2 types of insurance are generally much cheaper than standard health insurance and are sometimes referred to as “gap” insurance. A Minimum Essential Coverage (MEC) health insurance policy is often included as well. However, with the repeal of much of the Affordable Care Act, a MEC is not always required. These types of coverage help with the overall costs, reimbursing and/or reducing the cost of your IUA, and catastrophic costs as well.
If you’re a member of a MCSC you can go to any doctor or hospital, because you are a cash payer. This doesn’t mean you end up paying the bill in cash. This means you receive the bill as if you were a cash payer. If you’re a cash payer, that bill is normally much lower than someone who is using traditional health insurance. After you receive the bill, you upload it or send it to your MCSC by scanning or taking a picture with your phone through the MCSC app. Once you do so, the MCSC will then negotiate the bill down and the MCSC pays the bill. The only obligatory cost for members is the IUA. Keep in mind that the accident and/or hospital indemnity insurance plans often help to cover a portion and occasionally all the IUA.
Well this all sounds great so far, right? And a MCSC is probably the right fit for anyone then? Unfortunately, they are not. MCSCs are great for those who are willing to be proactive when it comes to their healthcare, but they are often not ideal for:
- Tobacco users over 50 years old
- People with pre-existing conditions
- People who have a history of illegal drug use
- And people who have high cost prescriptions
A MCSC will likely still be cheaper for people who fall into the above categories, but their coverage normally has limitations for those in said categories. Most MCSCs do offer counseling for drug users and tobacco secession programs for tobacco users, as that is part of the preventative care mentality. There are also other programs to help reduce the cost of prescription drugs that are normally incorporated as well, but these measures are not always the preferred form of care individuals in the above categories desire. This also explains why many employers are often using both a MCSC and a traditional healthcare provider, to ensure that their employees are not just receiving the care they need, but the care they prefer as well.
Determining if a MCSC is right for you, your business, or your organization will require substantially more information than I could portray in one newsletter or article. If you’d like to determine if a MCSC is right for you or your business, then it should start with a call and a quick discovery conversation. To do so you can reach out to our office here, or reach me directly at the contact info listed below.
Founder, Managing Partner
Finance For Thought