Health shares are typically quick to remind you that they are not health insurance companies. This is important because even though health shares do share the medical expenses of their members, they cannot guarantee payment.
In order to keep costs down, health shares will not share medical expenses related to certain conditions or treatments, but even still there is always the possibility that health shares will have insufficient resources to share all of the medical expenses their members have incurred in a particular month. This is a more serious concern for smaller HCSMs or disreputable health shares that are spending too much of their monthly contributions on administrative costs. But even large and well-established health shares could run in to this issue from time to time, so members should be aware of the risk regardless.
Ideally, health shares would always be able to share all eligible medical expenses within a month. But, in some cases, that may not be possible. Liberty HealthShare says in their guidelines, “we are always constrained by finite resources no matter how many members we have and have a duty to our members to be good stewards of the community resources.” That being said, Liberty also reminds members that whether or not they receive assistance for their medical expenses, members are ultimately liable for their own medical decisions and expenses.
How do health shares handle this?
Health shares are nonprofit, member-based medical cost sharing organizations, rather than for-profit companies. Members’ monthly contributions are required in order to share community expenses; but if the medical expenses accrued by members in a month exceed the monthly contributions, they may not be able to fully share those medical expenses.
In order to mitigate this problem, health shares prorate the incurred medical expenses. Paying out the highest possible percentage of those costs from the monthly contributions they have available, in a process called proration.
Sedera gives an example of proration in their guidelines: “if there are only enough shares available for 90 percent of the needs submitted for a particular month, only 90 percent of the needs for that month will be shared.” So, rather than not share in some members’ medical expenses while fully sharing in others, many health shares spread their resources as evenly as possible so that they can benefit as many members as possible.
In the event that proration occurs in multiple consecutive months, Samaritan Ministries has an interesting system in place. According to their guidelines, if proration occurs in three consecutive months, members will have the chance to vote on increasing the monthly contribution amount, which they call the monthly share. If three-fifths of affected members vote to approve the increase, then monthly share amounts are increased for all Samaritan members to help mitigate the risks of having to prorate medical expenses in the future.
Should you be worried?
That all depends on your situation and what health share you are with. This is a rare experience that many health share members may not encounter at all. If this is a serious concern, consider contacting your health share to discuss their cashflow and assess the risk, or research which health share has the best options and resources available for a member with your needs and medical history.