I posted the other day that there were two new* health care sharing ministries that had recently come to my attention. The first, Solidarity HealthShare, As I’ve mentioned before, I’m a big fan of the sharing ministry concept (and am a member of one, in fact), and am very happy to see Solidarity finally launch.
Regrettably, my take on the second new-ish entity is not quite so welcoming. At best, it looks like a well-intended operation run by people who are making some poor or questionable decisions. At worst – well, at worst it’s worse than that.
First, a basic review. Medical Cost Sharing, Inc. (MCS) of St. Joseph, Missouri, offers three separate levels of membership, with “personal responsibility” amounts (like a deductible) varying between $1,000 and $5,000. Up to $500,000 in medical needs can be shared annually at the Silver and Bronze levels (with a lifetime cap of $1 million, so after two really, really bad years a member would need to leave), while there is a $1 million annual limit with the Gold membership and no lifetime limit.
The monthly contribution per person for the Gold membership is $285, Silver is $240, while the Bronze level is $175 per person. There are also two additional levels, one for children age 2 months to 18 years and a second for young adults age 18 – 26.
So far, so good – MCS basically looks just like the other ministries, with the standard variations in membership levels that distinguish all of them from one another. But one of the crucial questions when it comes to sharing ministries is whether members are exempt from having to pay a tax/penalty for being uninsured under the Affordable Care Act (better known as Obamacare). And here the red flags begin.
As I’ve mentioned in the past, Obamacare stipulates that to be eligible for this exemption, ministries need to have been in operation since 1999. This is why Altrua, CMF Curo, Liberty, and Solidarity are all affiliated with other, older ministries, in order to ensure their members get this exemption, and it’s why I keep putting an asterisk after the word “new” when describing certain ministries.
MCS, on the other hand, has chosen a different path – they do not qualify for the exemption, and instead offer to pay the tax/penalty for members (up to a maximum amount). Here’s the language they use on their page headlined “No Penalties for MCS Members.”
The new law Affordable Care Act or Obamacare will access a 1% tax penalty for those who choose not to enroll in Obamacare. These funds will only be deducted from your tax REFUND.
- Example A – if you made $60,000.00 this year and you owe $900.00 your penalty would be ZERO dollars.
- Remember your tax penalty is only if you’re receiving a refund.
- Example B – using the same criteria from above but your receiving a refund of $900.00 your penalty would be 2% (2% of $60,000.00) or $1200.00.
- C.S would confirm this on your tax return and reimburse you $1200.00
- There are income limits on how much M.C.S. will reimburse
- Ages 18 to 26 maximum annual salary of $40,000.00 per person
- Ages 27 to 65 maximum annual salary of $85,000.00 per person
- Example C – if you were 50 years old and made $95,000.00 M.C.S. would reimburse a maximum of $1700.00 your responsibility would be $200.00 or 2% of $10,000.00
- Example D – if you made $95,000.00 that $10,000.00 above the maximum limit that we reimburse leaving you with $200.00 not being paid by M.C.S.
MCS Medical Cost Sharing strives to be the leader in our industry, providing the most comprehensive, and complete healthcare Solutions affordable to you today. M.C.S. says No Penalties!
According to the laws passed by congress (A.C.A Obamacare) all Christian Medical Cost Sharing organizations formed prior to Dec 31, 1999 that have been in continuous service are exempt from all penalties from Obamacare. We here at MCS Medical Cost Sharing Inc. were not in business prior to Dec of 1999. Does this mean you are responsible for any penalties “NO Penalties ” All penalties are paid by M.C.S, However what sets us apart from any other medical cost sharing organization is are added benefit program at no additional cost to you. Benefits like are Return of Contribution (ROC) are Contribution Cap (CC) and are Vanishing Personal Responsibility (VPR) Please click here to compare us and a complete list of our added benefits.
The page is correct in that the penalty can only be collected if you have a refund, something I’ve pointed out in the past. But the headline is misleading. Example A, for instance, suggests that if you don’t have a refund due then there is no penalty. This isn’t quite correct – because those penalties do not simply disappear because you aren’t owed a refund, they remain on the IRS’ books (which is what really counts) for future years, and while you may not have a refund this year to have the penalty taken from, you might next year. Or ten years from now.
Second, the language repeatedly states that members don’t have to pay penalties – which is false, as examples 2-4 demonstrate. Each of them states that there is a maximum amount they will reimburse, and penalty amounts that exceed those levels are in fact the responsibility of members. So “No Penalties” is really “Reduced Penalties,” not quite the same thing.
It’s probably worth noting that the only way this can be done is by increasing the monthly membership contributions in order to fund this pledge.
And it also occurs to me this may not even be legal – there are strict limits on what charitable funds can be used for, and I’m not sure reimbursing tax penalties for members qualifies (would love to hear from anybody knowledgeable on this subject).
If it were just this one thing, I probably wouldn’t be quite so alarmed. But a few additional items are raising red flags with me:
- MCS has a web site aimed at the Kansas City area in particular. Nothing wrong with that, but the site uses the term “Christian medical insurance.” In the headline. That’s basically an invitation to the state department of insurance to come in and shut them down, since as every other sharing ministry goes to extensive pains to explain, repeatedly, sharing ministries are not insurance. It is, to the best of my understanding, illegal to market something as insurance that is not, in fact, insurance. They also have a web site using the term: http://christianhealthinsurance.weebly.com/ Being ignorant of this basic distinction between sharing ministries and insurance, or worse fraudulently marketing something as insurance that is emphatically not insurance, is deeply troubling.
- MCS on the same site touts a nurse hotline. Here’s how they phrase it:
24 Hour Nurse Hotline: Would it help if you could talk to a nurse any day, any hour? Call our hotline here: 24/7 Nurse Hotline – free and confidential: Call (816) 271-4000 or (800) 455-2476.
The problem is, those phone numbers belong to a medical organization, Mosaic Life Care, that is also headquartered in St. Joseph but that has no affiliation with MCS. A spokesperson for Mosaic Life Care described the nurse hotline to me as a free community service not affiliated with or connected to any other organization, and they seemed more than a little annoyed that MCS was claiming and promoting it as their own.
- One of the two founders of MCS, Craig A. Reynolds of St. Joseph, Missouri, is a former insurance agent licensed in both Kansas and Missouri (and therefore ought to understand that marketing MCS as “Christian insurance” is a big no-no). Perhaps more relevant, he lost both licenses based on his problematic business practices (here is the Kansas revocation, and here is Missouri).
- Despite receiving an IRS ruling in 2014 recognizing them as a 501(c)3 organization, I could not find their 990 form that every nonprofit is supposed to file.
Finally (and I should really say firstly, since it was this communication that sent me investigating this operation), I heard from a very dissatisfied former member:
You should know “Medical Cost Sharing” which is a .com is apparently TOTALLY FRAUDULENT! We are now out $3990.00. No medical bill paid. We called the local news outlet in St. Joseph, Missouri have told us the address listed for them is a defunct bar. All this since we filled a claim after 7 months of paying them.
I followed up with this person asking for more information, and this is what she replied:
We joined them in January. The premium membership. $570. Per month. My Husband began having knee problems in the spring we went to the dr they filed and nothing! The dr office nor the MRI folks heard from them. Neither did we. Now they because of a “comprised” payment card and them not returning my 6 or so calls we are “dropped by them and they refuse to deal with us over claims made during the time we “supposedly had coverage. They hung up on us when we finally did get someone to answer the phone by calling repeatedly in the same hour. My husband contacted St Joseph news and they looked up the address and said it is a closed bar. That there hasn’t been a business at that address for years. We called the nurses number on the card from medical cost sharing and the nurses that answered the phone said they had never heard of them. That they were not affiliated with Medical Cost Sharing.
I did place a call to MCS, and spoke with one of the co-founders and the chief operating officer, Jim McGinnis. He seemed like a nice enough guy, and he assured me they are not operating out of a closed bar (and the address on the web site is for an office building, at least as near as I can dig up). He claimed MCS has actually been in operation since 2009, which is possible of course, but the LinkedIn profile of Reynolds indicates he’s been CEO since 2012, and in terms of internet searches there’s not much to indicate they began operation any time before 2014. Jim also said they’d be getting the tax filings taken care of at some point in the near future.
Regarding the nurse hotline, the web site currently notes the following:
We recently had to discontinue the use of the 800 number to reach a nurse 24/7. A phone number for this service was printed on some of our older membership cards. We are planning to upgrade this service to better serve our members in the very near future. We apologize for any inconvenience this may have caused.
I don’t recall seeing this notice the last time I was on the page (yesterday), but I could have just missed it, or it could have been added since I contacted them a few days ago.
It’s entirely possible I’m misunderstanding some key facts here, and a few modest or irrelevant mistakes by the MCS leadership team and the tale of one dissatisfied former member are obscuring an otherwise fine and valuable organization. But as self-pay patients look for options that fit best fit their needs, the cautionary principle caveat emptor (let the buyer beware) is always a good rule, and it shouldn’t be ignored by anyone looking at MCS as an option.
Thought I would do a brief update on Medical Cost Sharing, Inc. In the few days since I first posted this report, they have substantially revised several sections of the web site, particularly those that I singled out for attention. For example, the deeply problematic language regarding paying the tax/penalty for being uninsured has all disappeared, and it now reads:
According to the laws passed by congress (A.C.A Obamacare) all Christian Medical Cost Sharing organizations formed prior to Dec 31, 1999 that have been in continuous service are exempt from all penalties from Obamacare. We here at MCS Medical Cost Sharing Inc. were not in business prior to Dec of 1999, but we have set aside 2.5% of all sharing contributions into a separate account that will ONLY be used if there are MCS Members that need the funds. As of 2016, NO MCS MEMBERS has had to pay a single penny out of their pocket in ACA Fines. We are here for you!
That’s quite a bit different than what was there before, of course. Hard to tell what it means, as no guidelines are provided – are there still limits on how much any person can be reimbursed, and if so are they lower or higher than previously stated?
The plans have been changed as well. For starters, they are now much more expensive – a single person joining at the Gold level now pays $362 per month, compared to $285 last week. And all plans now have a $200,000 annual limit for sharing medical bills, down from $1 million for Gold and $500,000 for Silver and Bronze. They’ve also added a basic plan and dropped the two plans for children and young adults. These seem to be very major changes to the MCS plans, bigger than I would expect (some tweaking and adjustments are to be expected, of course, particularly for a new entity).
The Kansas City-specific site has been changed as well, with references to “Christian health insurance” having disappeared, replaced with the following statement:
Please note that we are a Christian Healthcare Sharing Ministry. We are NOT insurance or an insurance company and should not be misconstrued as such
The web site http://christianhealthinsurance.weebly.com also appears to have been scrubbed of the problematic term.
In addition, the community nurse hotline MCS was directing members to and touting as their own despite no affiliation with the hotline provider has disappeared, replaced with a reference to a telemedicine program that members enjoy.
There is one feature of MCS that I didn’t pay much attention to last week but upon further review raises further red flags with me – the “return of contribution” pledge. Here’s how it’s described:
The ROC is one of Medical Cost Sharing’s most unique features. This concept is unheard of in the health care industry. What it means is this: after ten years of continuous membership minus any hospitalization or outpatient services, 100% of all remaining contribution will be refunded back to you. What does that mean to you? Lets take a look at a few different examples.
- Let’s say your monthly contribution is $362.00 per month. Over 10 years you paid in $43,440.00. Now let’s suppose the only funds used were when you had minor knee surgery and the total cost for that surgery was $8,000.00. Your refund would be $35,440.00!
- Let’s say you made the same contribution as above. However, this time you needed heart surgery and the total cost of the procedure was $250,000.00. Your refund would now be zero but your claim would be PAID IN FULL.
- Next, let’s look at a different scenario. Suppose your monthly contribution is $565.00 per month. Over 10 years you pay in $67,800.00 (This would be for yourself and your spouse). Now let’s assume that you and your spouse had no healthcare claims over that 10 year period. Your refund would be $67,800.00! What a smart way to save for college or retirement and be covered at the same time, and what a reward for healthy living?
This doesn’t make a lot of sense to me, to be honest. I mean, I get the concept, I’m just not sure why a sharing ministry would make such a promise and how this doesn’t end in disappointment.
MCS is assuming, probably correctly, that only a small number of individuals will stick around for ten years and put in significantly more than they receive. But even if only one or two percent of its membership manage to do this, the cost will be very significant. For example, if MCS had 10,000 members and in a given year 100 of them hit the 10-year mark, and on average they had submitted claims equal to half of what they contributed, then using the numbers above ($342/month x 120 months) MCS is going to need to pay out more than $2.1 million.
The only way to do this, of course, is to be setting aside some portion of the funds sent in right now, or to plan to raise the membership cost in ten years to cover this expense. And it’s really, really important that they get the numbers right – if they’ve calculated it will be one percent of members get half their contribution back and it turns out to be two percent get three-quarters back on average, it’s a serious problem. Either way, this program adds to the cost of membership.
Another concern with this is that it makes pledges for ten years into the future when, as anyone familiar with how sharing ministries operate can tell you, these are private, voluntary entities that make no promise for even next month, let alone a decade down the road. At any time the members can decide to stop contributing and go elsewhere, potentially reducing the number of people willing to stick around and pay for this pledge. In some ways it’s similar to the problems many traditional pension funds are facing – too many people drawing and not enough contributing to make the math work.
Oh, and it’s worth mentioning that in example #2, the claim for a $250,000 heart surgery (actually, not a claim – that’s an insurance term – it should probably read shared amount) is incorrect, or at least seriously misleading – all the plans at MCS now have a $200,000 annual limit, so the member’s medical bill of $250,000 would still leave them with $50,000 to pay.
Readers can draw their own conclusions about what all of this means and whether they wish to consider MCS as an alternative to conventional health insurance, but given the sudden changes to its offerings and marketing I thought an update would be helpful.