The rising cost of traditional healthcare has some Americans seeking ways to access alternatives without busting their monthly budgets. Not all strategies can protect you in case of a medical emergency, though. Keep in mind that some form of standard, Affordable Care Act (ACA)-compatible health plan should still play a part in your healthcare.
It pays to shop around for health insurance. The American Rescue Plan Act of 2021 has lowered premiums for most people with a Marketplace health plan and expanded access to financial assistance for more consumers. Many people who buy their own health insurance became eligible for increased tax credits to reduce their premiums. Insurance premiums for Marketplace plans will dip, on average, by $50 per person per month. Four out of five enrollees will be able to find a plan for $10 or less, after premium tax credits, and more than half will be able to find a Silver plan for $10 or less.
As with any consumer product, if it sounds too good to be true, it probably is. Here’s what to know about four options that promise to lower your healthcare costs.
1. Primary Care Memberships
Some medical practices and independent primary care physicians offer services for a flat monthly fee, rather like a gym membership. This is often referred to as a concierge medical service or retainer medicine.
An individual or family can get the usual services provided by a primary care physician, including virtually unlimited doctor visits, blood tests, and pediatric care, all with no co-pay. Of course, such an arrangement does not cover surgery, hospitalization, major injury treatment, or specialist care.
Most who choose this option supplement the primary care membership with a high-deductible, low-premium health insurance policy.
The advantages to primary care memberships are the promise of almost unlimited access to a primary physician who you’ve chosen yourself, instead of needing to rely on a specific insurance network. This type of care works best in conjunction with an existing health plan, according to Consumer Reports.
One disadvantage: These practices tend to cover a narrow range of services. This means that you will still need to maintain some standard health insurance in case you need specialized treatment or major medical care. Since this is not considered insurance, it lacks the same consumer protections required by insurance regulators, which oversee traditional health plans.
2. Medical Cost-Sharing Programs
Participants in programs such as Medi-Share, a Christian health-sharing ministry, pay monthly fees similar to insurance premiums.5 However, note that health-sharing ministries are not health insurance—and therefore not subject to regulation by state insurance commissioners—but nonprofit organizations. Members pool their resources and theoretically “share” each other’s medical costs as they arise. Each member who needs medical services pays an “incident fee,” similar to a co-pay. The remainder of the medical costs is covered by the pooled fees.
The biggest advantage is lower costs. These programs often negotiate discounts with primary care physicians and hospitals to keep costs down. The monthly fee is typically less than traditional health insurance. For people who don’t qualify for ACA premium subsidies, these health-share arrangements generally carry less expensive premiums.
The biggest drawback is no guarantee that medical care will be covered. Many cost-sharing programs are from faith-based organizations that exclude some services, such as birth control and substance abuse treatment. Some programs don’t guarantee that you’ll be reimbursed at all for any bills (it might be “voluntary”), and many have very limited per-incident and lifetime caps. Health-sharing ministries are not regulated by the ACA, and they are not required to cover preexisting conditions, cap out-of-pocket costs, or cover essential health benefits. In fact, they have no legal obligation to cover health claims.
If you’re thinking about a medical cost-sharing program, be sure to read the fine print carefully.
3. Medical Services Discount Cards
You may have seen medical discount programs that say you can pay cash for discounted physician and hospital services, prescriptions, or a combination of these. Providers say the discounts can be substantial, up to 80% or more. But beware. Many of the programs are barred from operating in some states, and providers are coming under increasing scrutiny from state insurance regulators as well as the Federal Trade Commission (FTC).
There are several potential drawbacks to these programs. Keep in mind that these are discounted fee-for-service programs, not health insurance plans. The most common problems with these cards are that consumers believe they are buying insurance or are told that the card will provide insurance, according to a report made to the Florida state insurance regulator. The use of words such as “coverage” and “network of providers” can be misleading. Discounts are smaller than promised, and there can be few or no available participating providers, depending on where the cardholder lives, the report found.
One legitimate service is a prescription drug discount card, such as GoodRx and ScriptSave WellRx, which are generally free to join and use.12 AARP also offers such a service partnered with OptumRx. If your own plan does not cover a prescription until meeting a deductible, these cards can be an excellent way to save on prescriptions.
4. Catastrophic Policies
Younger adults in generally good health who do not expect to incur much in the way of medical costs during the year might consider a low-premium, high-deductible policy that covers only unexpected major injury or illness. A catastrophic health insurance policy ensures coverage in the event of such unforeseen medical expenses while keeping insurance costs to a minimum.
Catastrophic plans cover the essential benefits according to the ACA, but deductibles are quite high. They equal the top limit on out-of-pocket costs under the ACA: $8,550 for an individual in 2021 and $8,700 in 2022.
Catastrophic plans can be used only by people under age 30. Those 30 and older may try to qualify based on a hardship exemption. Some examples of hardship include death of a family member or economic hardship.
Aside from the main advantage of the low premium, the drawbacks are worth careful consideration. You won’t qualify for premium subsidy assistance under the ACA, and these plans do not allow you to set aside money in a Health Savings Account (HSA) even though they have high deductibles.16
Healthcare Cost Saving FAQs
What Is a Drawback of Joining a Primary Care Membership?
The biggest limitation is that it’s not insurance or a replacement for it, Consumer Reports points out. Because just a narrow range of services are covered, you’ll still need to maintain regular health insurance for any specialized treatments or catastrophic care. This arrangement does not have the same consumer protections required by insurance regulators.17
What Should You Watch Out for in Health-Sharing Ministries?
Many states do not consider healthcare sharing to be insurance, so consumers have little or no legal protection if a claim is not paid, coverage is denied, or the ministry goes bankrupt.18
What Is a Red Flag in Medical Discount Card Programs?
Believing that discount membership programs are equivalent to health insurance can have several negative results, according to one report. People risk facing significant financial and medical consequences as a result of switching from existing health insurance to a discount medical card.11
What Is the Downside of Catastrophic Policies?
Unless you are under age 30, you may find it difficult to qualify. Hardship exemptions include the following situations: eviction, homelessness, facing eviction or foreclosure, bankruptcy, domestic violence, damages to your home in a disaster, or a death in the family that causes you to care for a disabled or aging family member.19
The Bottom Line
Healthcare is expensive, and costs are expected to keep climbing. Even if you’re in perfect health today, you can’t count on staying healthy or avoiding injuries. If a traditional health insurance policy seems out of reach, research and see what premium assistance you qualify for with an ACA plan. Always do your due diligence when it comes to alternatives. Low monthly fees can be tempting, but you also can find yourself on the hook for substantial bills when a provider that is not an insurer refuses to pay. It’s essential to read the fine print, and check reviews online. Many state regulator websites have warnings about misleading language used by discount medical providers.20
Some providers offer a discount if you pay for services on the same day when you receive them, but you have to ask for it. Some health systems offer financial assistance—either interest-free payment plans or discounts, typically based on your household income. If you’re facing a large bill, always ask about discounts and financial aid.