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Up a Creek Without a Paddle: Health Plans That May Fail Business Owners and Employees

December 29, 2024/by The Ark Insurance Team

As a business owner, providing adequate healthcare to your employees isn’t just a nice thing to do — it may be a requirement if you have over 50 full-time employees. But what happens when healthcare costs threaten to cripple your business? When traditional group health insurance premiums put an outsized strain on your budget, it can be tempting to look for an option that is more cost-effective. However, many of the alternative options out there tend to hide enormous risks and limitations for both you and your employees.

Let’s discuss the three most popular alternatives to traditional healthcare plans and their inherent drawbacks, so that you can make the best decision for your company and the people who work for you. Of course, when it comes to avoiding common health insurance pitfalls, consulting a broker like Ark Insurance Solutions is always the best way to safeguard yourself against potentially disastrous decisions.

Health Share Plans

Health share plans and healthcare sharing ministries often present themselves as cheaper alternatives to traditional insurance, promising lower monthly payments and free co-pays. However, these plans operate in a regulatory gray area that can leave your employees vulnerable and without coverage. Unlike regulated insurance plans, sharing ministries have no legal obligation to pay on claims. In fact, they operate purely on a voluntary basis. This means that if a health share plan decides not to cover a claim, your employees have no legal recourse.

The limitations don’t stop there. Most sharing ministries impose permanent exclusions or lengthy waiting periods for pre-existing conditions, often denying coverage to employees who need it the most. These plans also frequently refuse to cover preventive care, mental health services, or treatments based on religiously structured morality clauses. Many of them implement strict annual or lifetime caps on coverage, which can leave your employees exposed to catastrophic costs.

“Health care plans look great on paper, but they can be very dangerous because you don’t know what you’re buying and there aren’t always contracts.”
~ Rebecca Yates, CEO of Ark Insurance Solutions

Minimum Essential Coverage (MEC) Plans

MEC plans might barely squeak by the Affordable Care Act’s most basic requirements, but they offer little real protection for your employees. They usually only cover preventive services, leaving employees more or less uninsured for hospitalization, emergency care, prescription drugs, or specialist visits. When employees need actual care that extends beyond basic preventive services, they’re forced to pay full price out of pocket.

These plans don’t just leave your employees in the lurch with barely any coverage, they also provide a sense of false security. Employees often don’t find out how bare-bones their coverage really is until they face a significant medical event. By then, it’s too late. MEC plans can be incredibly enticing for business owners because they comply with certain ACA requirements, but your employees might be better off purchasing their own insurance through the marketplace.

“If an employer is offering coverage and it’s considered affordable, that employee would lose the ability to go to the ACA marketplace and get a policy that’s subsidized,” says Rebecca Yates, CEO of Ark Insurance Solutions. “You can unintentionally make it worse for your employees with these plans.”

If you’re considering a MEC plan, a consultation with Ark Insurance Solutions can provide you with an analysis based on all of your employees, their income, as well as IRS and ACA requirements, giving you the best recommendation for protecting your business and your workforce.

“These plans were designed to meet the absolute minimum that the government asked for… but they often will leave some very large exposures — and they don’t tell people that.”
~ Rebecca Yates, CEO of Ark Insurance Solutions

Fixed Indemnity Insurance

Fixed indemnity insurance seems straightforward, but it’s not. This type of coverage promises to pay a set amount for specific services, regardless of the actual cost. However, this simplistic approach masks some serious shortcomings.

This type of plan can be beneficial as a supplement to an already existing full health insurance plan, but it shouldn’t be used as a standalone option. When medical costs exceed the fixed benefit, employees must pay the difference out of pocket.

These differences can be astronomical, particularly for serious conditions or extended hospitalizations. And what they don’t tell you about fixed indemnity insurance is pretty glaring — your plan won’t negotiate for lower costs, which can ultimately leave you with bankruptcy-inducing medical bills.

For example, let’s consider a scenario where an indemnity plan pays $1,000 per day for hospitalization. In most cases, actual hospital charges can exceed $5,000 per day or more, leaving your employee responsible for a difference of $4,000 per day. And that’s a conservative estimate. A night in the hospital can easily rack up over $100,000 worth in costs, and your employees will end up paying full price for their care. Fixed indemnity plans also often come with a limit of $1 million, which you can easily churn through in just one week of hospital care.

Indemnity insurance can lead to some pretty disastrous outcomes, and they put your employees at risk — even if they never step foot in a hospital. The average costs of common prescription drugs can reach upwards of tens of thousands of dollars a month. Take for instance Skyrizi, a popular medication for psoriasis, arthritis, Crohn’s disease and colitis. It costs around $20,000 per month. A fixed indemnity plan wouldn’t even begin to cover the prescription, and it wouldn’t negotiate the price down, either.

“The downside to fixed indemnity plans is you don’t get any network discounts. The doctor may or may not take that payment in full and there’s a limit.”
~ Rebecca Yates, CEO of Ark Insurance Solutions

The Real Cost to Your Business

While these alternative plans may reduce your immediate business expenses, they often lead to hidden costs that can far outweigh the savings. Employees with inadequate coverage will often delay necessary medical care, leading to increased absenteeism and decreased productivity. The financial stress of medical bills can affect workplace performance and morale, while the discovery of coverage limitations during a medical crisis can severely damage trust between you and your employees.

Most of all, these plans can hamper your ability to attract and retain top talent. In today’s competitive job market, quality health benefits can be a deciding factor for prospective employees. Companies that offer substandard coverage often find themselves at a disadvantage when it comes to recruiting long-term staff.

“Insurance is just math. If it’s cheap, there’s a reason, and you need to know what that reason is,” says Yates. “It’s really important to know what you’re buying, especially if it seems too good to be true.”

A More Sustainable Approach

Instead of risking your employees’ health and financial security with inadequate coverage, consider exploring more sustainable alternatives. By finding a reputable broker, you can protect your business and your employees. “Not all brokers are created equal,” says Yates. “Avoid call centers like the plague. I would recommend someone who has been in the industry a long time and has a local presence in your community.”

Here at Ark Insurance Solutions, we’re committed to providing the best access to care at a cost that makes sense for your business. If you’re considering an alternative like those listed above, know that there are better plans out there, and we’ll work to consider all of your options with a dedicated team of experts that are passionate about what we do.

At the end of the day, the true measure of an employee health benefit plan isn’t its monthly premium, but its ability to protect your employees’ health and financial security while supporting your business goals. While health share plans, MEC plans, and fixed indemnity insurance might offer short-term savings, they often fail to deliver real value to anyone — not your business, and certainly not for your employees.

Remember that healthy, financially secure employees are more productive, more loyal, and more likely to contribute to your company’s long-term success. By investing in meaningful health coverage now, you’re not just providing an employee benefit – you’re making a strategic investment in your company’s future.

Navigating the complex world of health insurance can be daunting. The Ark Insurance Solutions team has the skill and experience to guide you. We’ll help you compare health plans to make the best decision based on your unique circumstances and budget. Give us a call at 801-901-7800 or click here to schedule an appointment with us.

Small Business Owners: With a Limited-Time Waiver, You Can Offer a Group Health Insurance Plan for Your Team at No Cost to You

November 22, 2024/by The Ark Insurance Team

If you’re a small business owner and you’ve been waiting to offer a group health plan, now might be the perfect time. Until December 15th, the U.S. government has waived the Minimum Participation Rate (MPR) requirement as well as the minimum contribution requirement. This temporary waiver aims to make it easier and more affordable for employers with 2 to 50 employees to get health insurance coverage for their team.

In Utah, the Minimum Participation Rate (MPR) is generally 75%, which means that without this waiver, 75% of your eligible employees would have to enroll in a health insurance plan you are providing for you to offer insurance. But here’s how the waiver helps. Even if you have 50 employees, with the waiver, you would only need two employees who wanted to sign up for health insurance to make it work.

During the rest of the year, employers are required to pay for a certain portion of their employees’ health insurance. During the waiver period, employees can configure the arrangement so that each employee pays 100% of the cost for their own health insurance. So, even if in the past providing health insurance to your employees seemed out of reach, during this special window it might just be possible.

If your company wants to take advantage of this special waiver, it’s important to understand that it takes a few weeks for a health insurance agent or broker to help you explore plans, choose a plan, enroll in the plan, and get all the paperwork signed and accepted by the carrier. Since all paperwork must be signed and accepted by December 15, 2024 (with coverage beginning January 1, 2025), you should book an appointment with an agent now.

Want to see which plans might best fit your needs? Click here to schedule an appointment with an Ark Insurance Solutions agent.

Not Insurance: Health Share Plans Could Leave You Unprotected

May 27, 2024/by The Ark Insurance Team

Health share plans and healthcare sharing ministries (HCSMs) are often marketed as “cost-effective alternatives to traditional health insurance.” However, as some Utahns are finding out, these plans have substantial limitations on coverage and lack the protections that ACA-approved health insurance plans provide.

If you’ve ever researched healthcare plans for yourself or your family, you know firsthand that searching for and comparing plans can be confusing—really confusing. There are so many different plans, pricing tiers, subsidies, and sign-up windows—the whole experience can be overwhelming. If you don’t know how to apply for subsidies made available through the Affordable Care Act (ACA), the cost of coverage can also seem impossible.

During your search for coverage, you may have encountered programs called health share plans or healthcare sharing ministries (HCSMs). These plans appeal to the human desire to be part of a community of people with similar beliefs and values. Members of HCSMs “share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs.”

A report from the Colorado Division of Insurance found that more than 1.7 million Americans rely on sharing plans and that many of the plans require members to ask for charity care before submitting their bills.

-First Annual Report on Health Care Sharing Plans and Arrangements from Colorado Division of Insurance, May, 12, 2023

Both health share plans and healthcare sharing ministries plans are touted as affordable alternatives to traditional health insurance—and it’s true that monthly premiums are sometimes lower than health insurance plans. However, the reason the premiums are lower is alarming: Health share plans and healthcare sharing ministries plans are not insurance plans. They don’t provide essential coverage and benefits and don’t have to meet the minimum health benefits mandated by the Affordable Care Act.

Unlike regulated insurance companies, health share plans and healthcare sharing ministries are not required by law to pay their members’ claims for medical expenses.

Choosing a health share plan over an ACA-compliant health insurance plan can have profound, negative implications on your access to healthcare. No one plans for a severe illness, injury, or medical emergency, but if you choose a health share plan instead of insurance, there’s a good chance it won’t be covered. If you have a serious illness, it’s also very possible that the cost of your care exceeds the annual limit (the cap on the amount the health share will pay in a single year). There are thousands of documented cases of Americans with health share plans who ended up with a severe illness or injury, only to find themselves up a creek without a paddle.

Let’s dive in and cover a bit more about why you should avoid these plans, and how a health insurance plan through the Health Insurance Marketplace is the better alternative.

How Do Health Share Plans Work?

Health share plans and healthcare sharing ministries operate on the premise that members of the plan pool their money to cover each other’s medical expenses. Members typically pay a monthly “share” or contribution, and those contributions are used to pay the medical costs of other members who file claims.

Don’t Be Fooled. Health Share Plans Are Not Health Insurance

Some health share options offer free co-pays or coverage for specialty appointments, but when it comes to your health (which is affected by your insurance coverage) it’s important to look farther down the pipeline. Here are some crucial differences between health share plans and health insurance.

Health share plans aren’t regulated: Traditional health insurance plans are regulated by state insurance departments, while health share plans aren’t. Health share plan providers aren’t subject to the same oversight, consumer protections, or legal requirements as health insurance companies. As a result, health shares have fewer guarantees regarding coverage, claims processing, and dispute resolution. Often, these limitations are buried in the fine print. According to the Utah Insurance Department’s own website, when it comes to these plans “Don’t expect coverage for pre-existing conditions, mental health, or other needs.”
Limited coverage: Health share plans impose restrictions on coverage. Pre-existing conditions, preventative care, and medical treatments (like cancer treatment) aren’t fully covered. Coverage varies based on the plan you’re on, and the preferences of the health share’s members.
“Morality” as a litmus test for coverage: Many healthcare sharing ministries have a morality clause that requires members to adhere to specific religious or lifestyle guidelines to qualify for a plan. This often leads to a denial of coverage for conditions that are connected to activity or behaviors the administrators of the plan deem as “immoral.” This often includes treatment of STDs, treatment of alcohol or drug abuse, cirrhosis of the liver, or maternity benefits for anyone who is unmarried and pregnant.
No guarantees: Health share plans operate voluntarily and rely on the willingness of members to contribute to the shared pool of money. There are no guarantees there will be funds to cover all the members’ medical expenses, especially when there is a large-scale healthcare crisis (like COVID-19) or an unexpected financial hardship among members (such as a recession).
No provider network and lack of negotiated pricing: If you do find yourself paying out of pocket for your medical expenses that weren’t covered by a health share plan, there’s another unwelcome surprise waiting for you. Since health share plans don’t have provider networks, you’ll likely be charged full price by the doctors and hospitals, instead of the lower, negotiated rates available to people covered by health insurance. To add insult to injury, some plans require the patient to try to negotiate a lower price for services directly with the doctor or hospital before submitting a claim. Some even have you pay the bill and then request reimbursement.

Real-Life Consequences: A Short Case Study

In 2019, Salt Lake City’s Jennifer Wunderlich received some terrible news. Her daughter was diagnosed with a rare form of cancer and needed to start life-saving treatment immediately. Unfortunately, Jennifer’s family was enrolled in a health share plan, which she believed was the only option her family could afford, based on the perceived cost of health insurance. Jennifer contacted her health share plan, and they informed her they would only cover up to $100,000 of her daughter’s cancer treatment. Since her daughter was going to need almost 18 months of care and Jennifer would not be able to work during that time, it was looking like the Wunderlich family was also headed for financial ruin. Even worse, the health share plan would likely only cover the first few weeks of her daughter’s cancer treatment. The doctors recommended that Jennifer transfer ownership of their family’s home to one of her younger children through a trust. While it’s devastating to hear your child has cancer, learning that your “insurance” won’t cover the cost of treatment is an additional, unfathomable blow to anyone.

Luckily, Jennifer was friends with Rebecca Yates, CEO and Founder of Ark Insurance Solutions, a Salt Lake City-based health insurance brokerage. Based on Jennifer’s family income, Yates was able to sign her up for an affordable health insurance plan through the Health Insurance Marketplace. With subsidies, the health insurance plan was only $16 a month, substantially more affordable than the $450 per month Wunderlich was paying on her health share plan. The new coverage (which was actual health insurance) covered the cancer treatment, and her daughter received the life-saving healthcare she needed. Here’s what Jennifer had to say about the experience:

“Rebecca was able to find a plan that gave us the coverage we needed because we knew this would cost upwards of one million dollars. She was able to lay it out for us, and let us know what would be the best option. It changed everything. We had to go to have proton beam radiation done, which isn’t offered in Utah. So we were able to go to MD Anderson Cancer Center in Houston, and we spent the summer there while [my daughter] had her treatments and underwent other surgeries. We wouldn’t have been able to afford that had we not had insurance coverage. So it literally saved her life.”

Prioritize Your Health With Real Insurance

The significant risks and limitations of health share plans can negatively impact your access to health care. Having good health insurance coverage is critical to getting the best care. The good news is that quality health insurance can actually be affordable when sourced through the Health Insurance Marketplace, which offers subsidies and pricing tiers based on your income.

Since health insurance brokers’ fees are paid by the insurance carriers, you can get the help of a health insurance broker or agent at no additional cost. This empowers you with a professional who can advocate for you, evaluate your coverage needs, and help you find the plan that best suits your family’s budget.

Want to learn more about what type of quality health insurance coverage you can qualify for? Ark Insurance Solutions can help. Let’s talk!
Navigating the complex world of health insurance can be daunting. The Ark Insurance Solutions team has the skill and experience to guide you. We’ll help you compare health plans to make the best decision based on your unique circumstances and budget. Give us a call at 801-901-7800 or click here to schedule an appointment with us.

News

A report from the Colorado Division of Insurance found that more than 1.7 million Americans rely on sharing plans and that many of the plans require members to ask for charity care before submitting their bills.

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