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Today, Devin and John explore one popular alternatives to traditional health insurance: health care sharing arrangements.
Health insurance has gotten very expensive, and many of us never use all the coverage provided. Devin’s family is in an “affordable” old plan, and he’s still paying more than $10,000 per year in health insurance premiums for his family of five. But you need some sort of plan to pay for catastrophic health care costs, which leads people to look for different options.
A health care sharing arrangement is an agreement between members, where everyone contributes a set amount each month into a pot of money that pays for each other’s expenses. They look very similar to health insurance, where you pay a monthly amount (called your share), and then you have a portion of expenses for which you are responsible (called your annual household portion). But the cost of being in a health care sharing arrangement is almost always much lower than the cost of purchasing health insurance.
Because a health care sharing arrangement is not traditional health insurance, there are some important secondary results. For example, these plans don’t make you eligible to use a health savings account (HSA). It also doesn’t count as health insurance to be deducted as self-employment insurance premiums on your taxes. If you’re considering a health care sharing arrangement, be sure to understand all the things that could be related.
Bottom line: if you are out there in the open market looking for health insurance, you should at least explore these health care sharing arrangements.
- Why John’s kids are covered by a health care sharing arrangement
- How health care arrangements can refuse to pay for certain care
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Every few weeks, Devin and John answer reader questions during the show. Send your questions to firstname.lastname@example.org.