Exemptions of health care sharing ministries from insurance laws and regulations

Whether because of the cost of the policies, or their religious and political principles, many Americans are looking to avoid enrolling in a traditional comprehensive health insurance plan as required by the Affordable Care Act’s (ACA) individual mandate. One of the few alternatives is a health care sharing ministry (HCS Ministry). In an HCS Ministry, members make contributions that help other members pay their medical bills. In some Ministries, these payments are made directly from member to member; in others, the money is pooled into a common fund from which the money is disbursed to members with medical bills. The ACA exempts HCS Ministry members from the ACA’s individual mandate to purchase health insurance.

The seeds of the ACA exemption were sown by state legislatures, who have exempted HCS Ministries from state insurance regulation for years. Thirty states currently have some form of regulatory exemption for HCS Ministries. Many states exempt HCS Ministries entirely from the state insurance regulatory system, which both protects consumers from improper sales and claims practices, and oversees insurer solvency to guarantee insurers are able to pay claims.

Proponents of these exemptions view HCS Ministries as charitable organizations, not insurance companies, that allow individuals to voluntarily assist with each others’ medical expenses, while also providing spiritual and emotional support. Opponents of the exemptions argue that an unregulated environment could encourage scams. Critics also worry that even with the best of intentions, unregulated HCS Ministries could mismanage their finances and wind up unable to meet member needs if too many unhealthy people sign up or claims experience is worse than expected.

In exempting HCS Ministry members from the ACA’s individual mandate, federal lawmakers showed their confidence that HCS Ministries will facilitate payment of their members’ medical bills. And members themselves describe success stories of receiving money from fellow members along with supportive messages. Nonetheless, HCS Ministries are not insurance providers, their contracts are not insurance policies, and they provide no guaranty of payment for routine or catastrophic health expenses. Nor do they pay for many expenses covered by traditional health insurance, such as preventive care.

Thus, HCS Ministries provide an alternative to the traditional health insurance required by the ACA, albeit one with more risk. At the moment, HCS Ministry membership is growing, showing that many Americans are willing to take that risk.

ICYMI...

Noteworthy links from the past two weeks

General

  • The Department of Labor published its sweeping new rule applying fiduciary standards to advisors who make recommendations concerning retirement savings accounts [New York Times, The Wall Street Journal, The Washington Post]
  • The federal government announced it would appeal the court's decision in the case overturning MetLife's designation as a Systemically Important Financial Institution [Business Insurance]
  • In the wake of the ruling the Federal Reserve pulled its onsite examiners out of MetLife [The Wall Street Journal]
  • The judge's opinion in the MetLife case was unsealed on April 8 [New York Times]
  • The Minneapolis Federal Reserve president hosted a conference to consider whether the largest Systemically Important Financial Institutions should be broken up [The Wall Street Journal]
  • The National Association of Insurance Commissioners announced that the group capital calculation currently being developed will not become a model law [A.M. Best]

Cybersecurity

  • The insurance industry urged the NAIC to revise its Cybersecurity Model Draft [A.M. Best]
  • The federal Government Accountability Office found cybersecurity flaws in 3 state health insurance websites [New York Times]

Property & Casualty

  • Industry groups urged Congress to reform the National Flood Insurance Program [The Hill]
  • The New York Times reported on the growing use of sophisticated data analytics in risk analysis [New York Times]

Health

International

  • The IMF warned of growing systemic risk posed by the insurance sector [The Wall Street Journal]
  • The long-term impact of the MetLife decision on the federal government's ability to work with international regulators to supervise the world's largest insurance companies remained unclear [The Wall Street Journal]
  • The WSJ reported on how some European insurers use deferred tax assets to boost capital [The Wall Street Journal]