Faith-Based Groups for Health Coverage

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This article highlights an insurance policy that may be appropriate for you and your family – and may save you big bucks.
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More People Turn to Faith-Based Groups for Health Coverage
Some insurance commissioners say health-care ministries could put consumers at risk

Christian families are increasingly turning to health sharing ministries as an alternative to traditional health insurance after the Affordable Care Act passed. But the programs can bring risks.

By STEPHANIE ARMOUR
Updated Jan. 4, 2016 12:28 p.m. ET
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A growing number of people are turning to health-care ministries to cover their medical expenses instead of buying traditional insurance, a trend that could challenge the stability of the Affordable Care Act.

The ministries, which operate outside the insurance system and aren’t regulated by states, provide a health-care cost-sharing arrangement among people with similarly held beliefs. Their membership growth has been spurred by an Affordable Care Act provision allowing participants in eligible ministries to avoid fines for not buying insurance.

Ministry officials estimate they have about 500,000 members nationwide, more than double the roughly 200,000 members before the law was enacted in 2010.

The membership growth was largely unanticipated by ministry officials when the groups obtained an exception to the law. Only ministries in continuous operation since at least Dec. 31, 1999 are exempt from the ACA. The carve-out was intended to satisfy what at the time were relatively small religious groups that argued that their nonparticipation was a matter of religious freedom.

But now, some insurance commissioners are concerned that the ministries could put consumers at risk if bills aren’t paid. The ministries aren’t overseen by state commissioners, which generally guard against unfair practices and ensure solvency.

Ministry officials say they aren’t offering insurance, don’t guarantee claims will be paid, and don’t need to be regulated. The nonprofits are well managed, according to ministry officials, with third-party audits and a sterling history of sharing members’ claims.

Ministries generally don’t allow members to sue and require disagreements to be settled by arbitration and mediation.

Some ministries say they cost about 30% less than private insurance. Monthly payments, or sharing, may range from about $75 for a single person under age 30 to $500 or so for a family.

State regulators also say health ministries disrupt the insurance market because they tend to attract healthier consumers, siphoning them from commercial plans that can be left with sicker or older customers. Most ministries don’t always share bills for certain pre-existing conditions, whereas the ACA requires insurers to cover anyone regardless of their past or current medical history.

“They [ministries] have the potential to destabilize the market by drawing off the good risk,” said Mike Kreidler, Washington’s state insurance commissioner.

Many of the estimated 50 health-care ministries in the U.S. are small operations of Amish or Mennonite communities, and some churches have their own programs limited to parishioners. There are several large Christian ministries, and at least two other ministries open to people regardless of specific religious faith. For the most part, the largest are operated by not-for-profit ministries.

Members typically must abide by Biblical principles such as not having sex outside of marriage, and may have to sign a statement of religious faith.

Consumers generally pay a set monthly amount that goes into a general account or directly to others who have an eligible medical bill. They can also submit their own eligible bills to be shared by other members. In some ministries, members make contributions directly to others—and tuck gifts, personal cards and get-well wishes into the envelopes. Preventive care in some cases isn’t covered.

Some consumers say they joined ministries to avoid rising deductibles and premiums on the health law’s exchanges, and to be free from the law’s penalty, which starts at $695 next year.

Kristine Willington, 37 years old, of Beverly, Mass., found out that her family’s insurance was almost doubling in 2014 to $2,100 a month with a $5,000 deductible.

Last year, the family of six joined Liberty HealthShare and paid $475 a month, she said, with a $1,500 annual out-of-pocket cost. Her son’s $30,000 hospital bill was taken care of by members, alleviating her concerns about consumer risk.

“It’s a risk we’re willing to take,” she said. “Two of our children are in private school and we couldn’t afford that otherwise.”

Insurance commissioners in some states including Kentucky, Oklahoma and Washington moved to shut down the ministries’ state operations in past years. Their efforts were blocked by state legislatures, which backed the right of ministries to operate without interference. The ministries have gotten support from conservative lawmakers.

Past problems have led to concerns. Former officials of an Ohio ministry were ordered by a jury in 2004 to pay more than $14 million for embezzling member funds. Money for medical bills was instead spent on real estate, vehicles, and the living expenses of an exotic dancer, according to the civil lawsuit brought by the ministry and the Ohio Attorney General.

The group, now called Christian Healthcare Ministries, incorporated a list of financial safeguards since the lawsuit and now protects members with a stringent conflict-of-interest policy for board members and an annual certified audit.

“Our purpose is ministry, not profit,” said the Rev. Howard Russell, chief executive of Christian Healthcare Ministries, who also filed the lawsuit against the former officials.

Rev. Russell said the organization is vastly different than it was then and that when the problems were identified, he brought the matter to the Ohio attorney’s general office and requested their assistance. He said it was important to demonstrate the ministry’s stand against such behavior, and that their internal controls worked.

Separate lawsuits were filed in Montana, Illinois and Oklahoma by ministry members against another cost-sharing ministry, claiming particular medical bills that should have been shared were not. The cases were ultimately settled or resolved through arbitration. The ministry didn’t admit to any wrongdoing in the cases.

Even the ministries are surprised by their recent growth. A self-employed painter launched Samaritan Ministries International from a remodeled chicken coop in his backyard, and members began joining in 1994.

Leaders thought sign-ups would be slow because of subsidized insurance on the exchanges. Instead, the Peoria, Ill.-based organization has moved into three-story headquarters and recently threw a luncheon celebrating 50,000 members.

“None of us imagined it would be this big,” said James Lansberry, executive vice president of Samaritan Ministries International, a health-care sharing group. “The difficulties with narrow networks, high deductibles and premiums on the exchanges were much higher than even we expected. Our growth rate has been higher than ever before.”

Write to Stephanie Armour at stephanie.armour (at) wsj.com