Nourishing Stewardship

Ditching Health Insurance – Part Three: The Entrepreneur’s Cost Analysis

In my previous post, I addressed the cost differences between a Christian health sharing plan and an employer sponsored health insurance program.

However, most people considering the switch to health sharing don’t have reasonably priced employer sponsored health insurances available to them. And many are fellow entrepreneurs or self-employed folks looking to sponsor their own health coverage.

When it comes to the options available to self-employed people, you basically have the choice between bad and worse. Health insurance is cripplingly expensive when you go it alone. That’s why most people consider an employer that provides any level of health coverage to be a great employer.

In this post, we’re going to look at the difference between a standard health plan available on the Maryland health exchange and coverage options available to a family using a Christian health sharing plan. For the purpose of this post, we’re going to investigate costs of health coverage for a family of five residing in the state of Maryland in 2018.

Maryland Health Exchange Plan Health Insurance Costs

When browsing the Maryland health exchange, I’m concerned primarily with finding a plan that offers the coverage my family needs. We have two toddlers and a baby due in February. We need solid coverage for preventative care for the children, as well as maternal medical care and a nice cushion for coping with any illnesses or injuries that my crop up throughout the year.

Maryland health plans are ranked by metals (bronze – platinum), based on their premium to deductible ratio. A catastrophic care plan, for example, would be a bronze: low premium, very high deductible. For the purpose of this exercise, I chose a Gold level plan through CareFirst.

It’s got a good balance of the things I want, plus some extras, like included eye exams and dental exams for kids. The costs are neither the highest nor lowest among the plans we qualify for. Here’s the breakdown:

  • Monthly premium: $1437/month ($1437 x 12 = $17,244)
  • Deductible: $1,000/person; $2,000 family max.
  • Preventative care: 0%
  • Additional costs: Varies per service, $13,000 annual out of pocket family max.
  • Prescriptions: Varies
  • Emergency room copay: $300 copay after deductible
  • Urgent care copay: $50 copay
  • In-network coverage only: yes
  • Alternative medicine covered: mostly no, some exceptions possible

Ok, so let’s first note that the $13,000 out of pocket family max does not include the monthly premium of $17,244, which we’d pay just for the privilege of owning the health insurance plan. If all hell broke loose, we could theoretically be looking at $30,000 in health care costs for 2018. Thirty. Thousand. Dollars. For government sponsored “private” health care.

(While no family expects to pay that actual amount, the careful family budgeter should seriously consider this number. After all, when you’re self-employed and self-insured, there’s no safety net beyond yourself.)

For the purpose of our example, let’s again assume that we have six sick visits throughout the year (two for each kid, and one each for Josh and me – we’re going to also assume that breastfeeding gives the baby a hardy immune system to get him/her through without a serious illness). In my experience, after insurance kicked in, we would receive bills around $140 per visit. Let’s also assume that for three of the six sick visits, we find out that we’ve all shared a lovely case of strep throat and require antibiotics. It appears that generic antibiotics may be covered in full with this plan, so we’re going to assume that the prescription expense for this outbreak is $0. ($140 x 6) + $0 = $840.

Total so far: $18,084

Then, because we have toddlers, we’re going to factor in two urgent care visits at some point throughout the year: let’s say someone gets a nasty spider bite over Veteran’s Day weekend and another person ends up with a bad cut to the arm at 9 PM some evening. Factoring in our urgent care copay: $50 x 2 = $100. The spider bite victim requires a medication that costs us $10. Total urgent care costs: $110

Total so far: $18,194

Also, because toddlers and a newborn, we ought to factor in a random middle of the night scare of some sort that sends us to the emergency room. Copay: $300 after deductible.

If we assume that it’s a kid who’s already had one of their sick visits, we’ll put the cost for this at $860. But it’s also the middle of the night, which means we get slapped with an additional bill from our hospital’s oh so generous overnight doctors who impose an additional $40 fee for seeing you after 10 PM. (Yes, that’s a real thing.) Likely ER cost: $900.

Total so far: $19,094

Now I’m going to pause here to interject something that’s true at our hospital, and that I’ve come to understand is becoming standard throughout the country: the pediatric doctors on staff are not affiliated with the hospital. They’re instead supplied through a conglomerate of pediatricians, which means that families are billed separately for the pediatric care. I mention this because the group that our hospital has partnered with notoriously does not accept many major insurers in the area.

For the purpose of our exercise, I chose a CareFirst plan, which does somehow appear to be accepted by our hospital’s contracted pediatric group. However, most of the plans on my list from the Maryland exchange are Kaiser Permanente, which – surprise, surprise – isn’t one of the insurance carriers that the pediatric group will work with. The hospital doesn’t inform you of this in advance.

When you’re going in to have a baby (who will get seen by a pediatrician multiple times within those first few days) or are rushing a child to the ER in the middle of the night, perhaps the farthest thing from your mind is whether your nationally branded insurance company will be cover the care you receive from the pediatrician that you see. Additionally, you have no say in the matter.

When Paisley was born, our insurance didn’t cover the pediatric group and we had to pay every cent out of pocket. Costs that your health insurance simply doesn’t cover aren’t factored into your annual out of pocket max.

If you don’t know the providers that staff your hospital ER and children’s ward, contact your hospital to learn more. While your billing office likely can’t tell you whether your insurance provider and the health providers they staff are compatible, – after all, everyone bills separately – you can do some research on your own. If you’re providing your own insurance, make sure that you factor in coverage for physicians you’ll likely see once or twice throughout the year if you don’t want to get stuck paying for certain services a la carte – over and above your insurance’s OOP max.

Back to our health insurance budgeting example:

Let’s also consider those non-emergency weird problems that pop up from time to time – we’ll go with one per toddler (we’re again assuming the newborn is a superhuman). When we factor in testing (which is charged separately if you use a hospital or non-hospital imaging group), specialist visits, and possible therapy, we’re going to assume that we’ve whittled down the remainder of the deductible, which should only have $260 or so left on it. We also need to factor in an x-ray at $65 after deductible, blood work at $60 after deductible, and two imaging tests at $250 a pop. Let’s say also that someone’s condition requires a month’s supply of some medication or another, which is going to cost us another $50. $260 + $65 + $60 + ($250 x 2) + $50 = $885.

Total so far: $19,979

OH!

And we need to have a baby. Just a tiny medical expense here. Technically our baby is due in February, so we’d have a significant portion of my $1,000 deductible wide open. But we’ve already factored it away in other parts of the example, so we’ll pretend that all of our sicknesses and random incidents happen before February (kill me) and that the deducible is all gone.

For my remaining midwife appointments, of which there should be five after the new year, I’ll pay $30 apiece. Then we have the actual delivery. I’m going to tough it out and not get any medications (I’ll bring my own ibuprofen and sneak doses after delivery) or an induction – at this point, the sheer expense has me backed into a corner (let’s pretend I don’t care either way about natural birth). We’ll factor in a two day hospital stay for this, assuming a smooth delivery and perfectly healthy baby. Each day in the hospital is billed at $450.

Now I’ve had two babies and know that many of the baby’s health costs are billed separately and that those bills really add up. Unfortunately, from consulting the plan information, I can’t get many details about what the baby’s hospital expenses would be. I’m guessing there’s a reason this information is being withheld.

We’ll be conservative and assume that we’ll be on the hook for $500 of the baby’s care following the delivery – this is roughly what we would’ve paid for each of our other babies, had insurance actually kicked in and covered their portion of the costs. It’s also unclear whether the baby will also be charged the $450 room fee per day, but I’ll assume that since we’re sharing a room, the baby will not also be charged this figure.

Then let’s factor in my postnatal visit at six weeks post-birth ($30) and the cost of my prenatal vitamins throughout the year ($25/month). Total prenatal & birth cost: ($30 x 5) + ($450 x 2) + $500 + $30 + ($25 x 12) = $1,880.

Total so far: $21,859

At this point, I’m going to rule out any other sicknesses and incidents and call this figure our grand total. Here it is again:

Grand total: $21,859

I really have nothing more to say about this number. I don’t even drive a $21,000 car. This is absolutely unsustainable. The costs for this plan are nearly $2,000 a month.

If a health insurance plan through the Maryland health exchange were our family’s only option for insuring ourselves while self-employed, then we wouldn’t be self-employed.

Christian Health Sharing Coverage Costs

Thankfully, health insurance plans through the Maryland health exchange aren’t the only choices available to our family. When I quit my job this year, we made the decision to switch to Samaritan Ministries, a Christian health sharing group.

While much of the information I shared in the previous post will be rehashed here, I’ve updated the figures to reflect our expenses for 2018. The biggest changes that you’ll notice are the increased monthly share price, since Josh turns 26 in January, and the elimination of our startup fee since we’re already members.

  • Monthly share: $495 ($495 x 12 = $5,940)
  • Save to Share yearly contribution: $415
  • Preventative care: 100% at cost
  • Additional costs: $300/incident, up to $250,000 (though as Save to Share members we receive coverage above this $250,000 figure, should we require it)
  • Prescriptions: available for a significant discount with included Rx savings membership
  • In-network coverage only: no
  • Alternative medicine covered: yes

Our monthly shares, plus Save to Share contribution are our first big expenses. $5,940 + $415 = $6,355

Total so far: $6,355

Because preventative care isn’t covered at all, we have to factor in the cost of one well visit for Paisley, two well visits for Colm, and five well visits for Baby Rystedt v3. Additionally, we’ll need to factor a trip for vaccinations for Colm and three for the baby. Our doctor charges $90 for a self-pay well visit, and we’ll pay $25 per trip to the health department for vaccinations. ($90 x 7) + ($25 x 4) = $730.

Total so far: $6,985

Now we need to factor in sick visits for our family. (For more information about how medical practices bill self-pay patients differently than insured patients, please refer to my previous post.) Our doctor bills us roughly $50 per sick visit so: $50 x 6 = $300.

Total so far: $7,285

We also need to factor in random health episodes like broken bones, allergic reactions and random ER or urgent care visits. With our health sharing plan, each of these incidents is capped at a reasonable $300 cap per incident. That means if someone breaks an arm, the most we’ll pay for the ER visit, x-rays, medications, specialist appointments, physical therapy, and a followup appointment is $300.

Similarly, if someone ends up with a case of pneumonia that starts with a visit to our family practice, ends up with a day or two stay in the hospital, antibiotics, and any followup or specialist appointments, this incident is also capped at $300.

When we factor in self-pay rates and discounts (again, see my previous post for a more in depth analysis of these phenomena), we’re probably looking at between $100 and $300 for each incident. Since we accounted for five incidents in our health insurance example (two urgent care visits, an ER visit, and two random medical cases of some sort), we’ll do the same here.

In our experience most incidents don’t actually cross the $300 threshold in the first place. We don’t even submit these as needs to our medical sharing group, and instead pay out of pocket and go about our lives. For the sake of this example, let’s say that two hit the $300 incident threshold and are submitted as shared needs, one is priced at $90 because all we had to do was visit our family doctor, one ended up at $210, and the other totaled to $140. ($300 x 2) + $90 + $210 + $140 = $1,040

Total so far: $8,325

Lastly, we need to factor in the remainder of my pregnancy and delivery of Baby Rystedt v3. Because this need is considered a single incident, and we’ve already paid $300 out of pocket in 2017, the remainder of medical expenses will end up as a net $0. This is regardless of where I deliver, how I deliver, whether the baby needs to stay in the NICU for any period of time, and takes into consideration my postpartum checkup. Total: $0

I will need prenatal vitamins throughout the remainder of the year. January and February will be covered as part of my pregnancy, so we’ll just calculate for the remaining 10 months of the year. $25 x 10 = $250

Total so far: $8,575

We’re also done with this portion of our cost analysis, so let’s go ahead and call this total the grand total. Here is is again:

Grand total: $8,575

The Comparison

Total costs for a 2018 Maryland health exchange health insurance plan:$21,859

Total costs for our family using Samaritan in 2018: $8,575

Gee, I wonder which one we’ll choose.

Now I realize that Christian health sharing isn’t the answer for everyone. For more information on what Christian health sharing even is, consult my first post in this series, which covers the basics of Christian health sharing.

If you’re curious about how the transition from health insurance to Christian health sharing works in real life, stay tuned for my next post about how the transition worked for us. Obviously, we’re happy with our decision – both for fundamental reasons and for the cost savings from which we benefit.

Want to learn anything else about Christian health sharing? Reach out to me or leave a comment with your thoughts.

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Gabrielle Rystedt
Gabrielle Rystedt
Gabrielle Rystedt is a writer by day and a writer by night (because writers never sleep), who spends time balancing client orders, a couple of books and her blog at Raising Rystedts. She’s a business school grad who’s dabbled in management, both at the project and company level. She loves coffee and crafting, and enjoys settling down with a good book. Though as mom to three kiddos in three years, she realistically spends most of her time reheating her coffee and typing away like a crazy person on a laptop keyboard while surrounded by (clean) cloth diapers and cheddar bunnies.

What are your thoughts?