What is Medishare?

Something that has popped up in the last few years that has enjoyed some popularity is referred to as medishare coverage. When I first heard about these policies, my understanding was that a person/family could get a sort of insurance coverage where the person/family would pay a low premium for this coverage and then if anything happened, the person/family would make a claim and other insured’s payments would be used to pay those bills. The big benefit was the low cost of coverage to get peace of mind.

Recently I had the opportunity to look more closely at one of these medishare policies. While I won’t discuss what company’s materials I reviewed, I will discuss what struck me from that review. First, the materials repeated multiple times that the product was not insurance. This warning is an attempt to keep these types of products from being subject to insurance laws of the state. The materials talk about the benefits of the product, but when you get into the so-called weeds, the way the product works is that the covered person pays their premium for service. Then if they get injured or fall ill and utilize medical services, the first thing they are likely to find is that no provider accepts these products as any type of insurance coverage because they are not insurance as they tell you in their product descriptions. Now most people probably don’t realize the distinction, but what is means is that you end up signing paperwork at the hospital (this is the most likely scenario since you probably can’t get an appointment with a doctor unless you pay cash without insurance) indicating that you will be personally responsible for any bills incurred in your treatment. Most people in this type of situation assume they are covered, or will be because it is an emergency, or are in too much pain to care or argue about it.

The Catch

So you get the care and may not think about it any more until three to six months later when you get a bill from the hospital for thousands of dollars (just a minimal ER visit can easily exceed $5,000). You likely freak out and then call the medishare company to find out how the bill gets paid. That’s when most people are going to be told, and become aware, that the way it works is the covered individual has to pay the bill to the medical provider/hospital first, then they submit the receipt to the medishare company for repayment of the bill.

So what’s the problem with this? Most likely the company is going to pay you back once the bill is taken care of and the receipt provided to them, right? Well, maybe so, I don’t know. I have not seen one of these companies actually process a claim. But what I do know is that most people don’t have the personal funds available to pay a medical bill worth thousands of dollars and then wait, for possibly months, to get reimbursed. Beyond the issue of your money being tied up, what about those folks that can’t pay the medical bill at all? Well, if you can’t provide a receipt showing payment for services, what do you think is going to happen?

Beyond that, it is left to the covered person to deal with the medical provider’s billing department personally. This means that the covered person is not getting the benefit of a significant reduction in their medical bills by having an insurer negotiate the cost of services (most providers might give up to 20% reduction to cash payers whereas they contract with insurers to provide services at set rates which are substantially below a 20% reduction). Don’t get me wrong, I’m not an advocate of health insurers or the health insurance system, but unfortunately they are a necessary evil in our society for self-protection until we are able to come up with a better system to replace them.