When a HealthShare encounters an influx of need requests that surpass available member contributions for a given month, the organization may implement proration as a solution. For those considering joining a HealthShare, it’s important to understand the various aspects of the organization’s policies, from pricing to contingency plans.
Understanding when HealthShares may prorate sharing
Proration may be employed by a HealthShare organization when the volume of need requests exceeds the contributions received in a given month. So, in the event of a shortfall, the practice of proration enables a fair and equitable distribution of available funds to those members with shareable expenses. While proration can ensure at least a partial payment for eligible medical expenses, it does not necessarily guarantee full payment.
How does HealthShare proration work?
When a HealthShare must prorate its available funds for a month, the members’ eligible needs expenses are shared proportionately based on the difference between contributions and requests for the month. For example, if a HealthShare collects $800,000 in member contributions, but faces $1,000,000 in shareable needs requests, the available sharing percentage would be 80%. This means that 80% of eligible member bills will be paid out by the HealthShare. So, a member with a $12,000 shareable medical bill would only see $9,600 of that bill paid by the organization.
Backup plans for different HealthShares
HealthShares typically evaluate member needs on a monthly basis, making it important to understand their shortfall contingency plans. While most of the leading HealthShares prorate if needs exceed contributions, the approach may vary from organization to organization. For example, Zion HealthShare expresses a more positive approach in their documentation:
“If shareable medical expenses are ever significantly greater than shares available in any given month, Zion healthcare may prorate the shareable amount requested for medical expenses. This involves an across-the-board percentage reduction of medical need request payments but does not necessarily mean that all member medical need requests will not be met in that month.”
Unlike others, Zion’s guidelines imply that they may dip into accrued savings to cover a deficit.
On the other hand, Samaritan Ministries clearly states their deficit policy, prorating needs expenses if they exceed contributions in a given month. However, they will consider carrying over unshared portions of the prorated needs from the previous month if the immediately following month has lower needs. However, it is worth noting that they usually do not carry over unshared needs more than one month.
A key consideration in joining a HealthShare
Proration and delayed payments are not ideal outcomes within the HealthShare industry, but prospective members should keep in mind that HealthShares are not insurance companies, and payments are never guaranteed. To safeguard their interests, prospective members should be sure to research HealthShares to assess the financial stability of the organization and be aware of these types of contingency policies. Organizations boasting a high share rate may be leaving themselves overly exposed to these types of unexpected shortfalls, as they may not have allowed for sufficient savings funds to be accrued.
